Report: Ad-Wise, Facebook to Leave MySpace in Dust

In the social media space, two vastly different ad stories are playing out: Facebook is soaring toward must-buy territory, while MySpace appears to have completely lost its mojo.Advertisers will spend $1.28 billion globally on Facebook this year, while handing out just $347 million to MySpace—which just a few years ago was the hottest property on the Web—according to a new report issued by industry research firm eMarketer. In fact, according to eMarketer, in the U.S. advertisers will spend $835 million on Facebook this year, just shy of the company’s spending prediction for online advertising pioneer AOL. By next year, U.S. brands should spend over $1 billion on Facebook.It seems as though the conventional wisdom that social media impressions are near impossible to monetize is quickly fading. Facebook’s $1 billion–plus revenue—which meshes with several other recent analyst estimates—is being driven by both large and small advertisers. Its self-serve ad product, which appeals to smaller and local brands, is an unqualified success story—accounting for half of its ad revenue, per eMarketer.But what is quickly becoming apparent is that Facebook’s 500 million global user base has put it near the top of most big brands lists looking to make a splash. “At the root of it is that what advertisers are still interested in is mass reach,” said eMarketer senior analyst Debra Aho Williamson. “When you see brands like Procter & Gamble making a commitment to Facebook—when they move, other marketers move.”And while Facebook is somewhat hindered by the fact that it still lacks high impact, homepage-takeover type units which appeal to TV brands, “They are challenging the portals.”Still, some would argue that $1 billion in revenue indicates Facebook has a way to go to reach its true potential, given that it claims a massive 500 million users. For example, for all of its challenges, Yahoo regularly generates over $1 billion in a given quarter.Meanwhile, Facebook’s onetime rival MySpace is struggling mightily. The News Corp.-owned site is expected to earn just $297 million in ad revenue in 2011, a decline of 14 percent compared to the $347 million it will earn in 2010. As the site undergoes an ongoing reinvention—looking to become a more narrowly focused entertainment hub, “There are naturally going to be fewer marketers interested,” said Williamson.

Performance Marketing

Report: Ad-Wise, Facebook to Leave MySpace in Dust

Mike Shields

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