Google Losing Out On MySpace Ad Deal

Posted by Admin | 9:32 PM

Users of social networks are spending less time on sites like Facebook and MySpace and it could be due to the number of ads.

The average amount of time spent by users on social networking sites decreased by 14 percent over the past four months according to comScore. MySpace has seen its users dip from 72 million in October to 68.9 million in December, comScore says. The total number of users is still growing at an 11.5 percent rate, but that's a decrease from past growth rates.

"What you have with social networks is the most over hyped scenario in online advertising," Tim Vandehook CEO of Specific Media told BusinessWeek. Still advertising on social networks is rapidly growing. Last year ad spending worldwide on these sites increased 155 percent, to $1.2 billion, according to eMarketer. This year, eMarketer predicts it to increase 75 percent, to $2.1 billion.

Social networks have low response rates, advertisers and ad placement companies say. Marketers say as little as 4 in 10,000 users who see their ads on social networking sites click on them, compared to 20 in 10,000 across the Web.

Google, which has a $900 million ad deal with MySpace, said it did not bring in as much revenue from the agreement as expected. "I don't think we have the killer, best way to advertise and monetize social networks yet," said Google co-founder Sergey Brin.

News Corp said its revenues for Fox Interactive Media were up 87 percent to $233 million, but $62 million came from Google's guaranteed ad deal with MySpace. Analysts say that Google is losing money on the deal.

On the Google, MySpace ad deal Donna Bogatin writes," MySpace has its direct hands on the 'good' MySpace ads goods, while Google is an outside ad serving player, playing around with runnerup inventory."

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