Social-Networking Sites to See Slower Ad Growth

Advertising-spending growth on social networks is going to take a major hit amid the recession and the sites’ continued struggle to develop effective ad models, according to a new report from research firm eMarketer.

The firm plans to release on Wednesday its revised projections for global ad spending on social networks. It forecasts an increase this year of 17 percent, to an estimated $2.3 billion. While any growth in the otherwise dismal ad market is a bright spot, the projection is just over half the 32 percent growth rate the research firm previously projected. In the U.S., ad spending on social networks is expected to increase 10.2 percent, reaching $1.3 billion this year.

Rivals Facebook and News Corp.’s (NWS) MySpace, the two largest social-networking sites by visitors, continue to dominate. The two companies will account for two-thirds of total U.S. social-network ad spending and will hold a smaller share outside the U.S., attracting 40 percent of world-wide spending in 2009, eMarketer says.

Note: News Corp. owns Dow Jones, which owns this site.

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