August 17 , 2010

Ad spending on Facebook to hit $1.2 billion

MySpace expected to net $347 million

Advertisers will spend $1.28 billion worldwide this year to reach Facebook’s more than 500 million users, according to new research by eMarketer. At the same time, MySpace is diminishing in importance, with an expected $297 million in ad revenues worldwide next year, down 14% from $347 million this year, the firm reports.

“Brand advertisers are making Facebook a core buy,” said eMarketer senior analyst Debra Aho Williamson. “Ad spending is building quickly and the mass audience is one that marketers cannot ignore any longer.”

One reason for Facebook’s success has been its self-serve ad system, the tool advertisers use to create, buy and target the small ads that appear on the right side of most users’ pages, Ms. Williamson said. eMarketer estimates the tool accounts for at least half of Facebook’s revenue. Previous forecasts did not fully account for the size of this business.

The ad dollars flowing to Facebook show that it is asserting itself not only as a social networking giant but also as a real rival to major portals. US ad spending on Facebook is estimated to be $835 million this year, within shouting distance of eMarketer’s forecast of $890 million in net US ad revenues for AOL.