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A new report predicts that ad spending on social networks is growing rapidly as more advertisers take advantage of the huge audiences generated by such websites.

According to the eMarketer report, ad spending on social network sites is predicted to reach $2.15 billion by 2010, with MySpace predicted to continue its dominance.

The report predicts that ad spending on US social networking sites will rise from $350 million in 2006 to $865 million in 2007. Outside the US, spending could rise to $260 million, from $95 million this year. 

One potential barrier to ad spending growth highlighted by the report is the problem of how to quantify the results of ad campaigns on social networks.

Emarketer analyst Debra Williamson believes social networks need to improve measurement of ROI:

"The longer existing social networks take to develop adequate ROI metrics, the bigger the opening for a next generation of networks that are built from the ground up to accommodate advertising."

The report also predicted that MySpace would continue to dominate in this market, attracting 60% of all social network ad revenue in 2007. The News Corporation site is expected to generate $525 million in 2007, up from $180 million in 2006.

Graham Charlton

Published 2 November, 2006 by Graham Charlton

Graham Charlton is the former Editor-in-Chief at Econsultancy. Follow him on Twitter or connect via Linkedin or Google+

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