eMarketer has revised downward its projections for US social network ad spending, now estimating that advertisers will spend $1.4 billion to place ads on social networks this year, down from the previous projection of $1.6 billion.
The poor economy is partly responsible for the revised estimates, particularly for those companies who will cut experimental ad dollars first.
But as importantly, “social network sites are still trying to figure out what sort of advertising works,” said Debra Aho Williamson, senior analyst, who authors the social networking reports. “Tapping into consumers’ conversations and spreading brand awareness virally has proven more challenging than companies originally thought.”
eMarketer has revised its forecast for the two largest social networks, MySpace and Facebook. In its previous prediction, eMarketer said MySpace would bring in $850 million in the US, but that estimate has now dropped 11.2% to $755 million.
At Facebook, advertisers will spend $265 million, a 12.9% drop from the earlier forecast of $305 million.
Earlier this month Datamonitor released a report which said that online social networking is booming, with the membership of social networking sites in the UK set to triple by 2012 (see Online Social Networking Participation Is Booming).
The general feeling at the MediaTel Group ‘Future Of Online’ seminar held in February was that the dramatic growth experienced by social networking sites in recent times will soon settle and marketers and advertisers will have to discover the best ways to capitalise on the format (see Social Networking Growth To Settle).
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