Slower Growth Coming to Social-Networking Sites in 2009

EMarketer Drops Ad Spending Estimate Nearly 28%

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NEW YORK (AdAge.com) -- Marketers remain reticent toward social-networking sites, and the recession isn't helping. MySpace and Facebook attract more than 100 million unique visitors a month in the U.S., but the ad dollars aren't following, and 2009 won't be much better.

The shift in eMarketer's view is partly due to the poor performance of MySpace and Facebook in 2008.
The shift in eMarketer's view is partly due to the poor performance of MySpace and Facebook in 2008.
Research firm eMarketer dropped its 2009 ad-spending estimate for social-networking sites nearly 28% today to $1.3 billion from a $1.8 billion prediction it made in May. That would be just a slight increase (8.3%) from the $1.2 billion the firm is expecting advertisers will spend on social-networking sites in 2008.

Unknown quantities
"The recession will affect all forms of online ad spending, but experimental formats, such as the ones available on social networks, which cannot always demonstrate a proven return on investment, will be hit particularly hard," wrote eMarketer analyst Debra Aho Williamson.

The shift in eMarketer's view is partly due to the poor performance of MySpace and Facebook in 2008. The firm is estimating that News Corp.'s MySpace will bring in $585 million in advertising dollars in 2008, down 22.5% from its earlier estimate of $755 million. Facebook is expected to earn $210 million, a 20.8% drop from an earlier forecast of $265 million.

Revenues still on upswing
In 2009, eMarketer is estimating that MySpace will bring in $630 million in advertising, a 7.6% increase from 2008; Facebook will earn $230 million, a 9.5% increase.

All other social networks will earn $356 million in online advertising in 2009, a 7.4% increase. Widgets and other ad-supported applications are expected to earn $70 million in advertising in 2009, a 75% increase from the $40 million spent in 2008.

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