Will MySpace Revenues Add Up?

The drumbeat of skepticism over social network advertising has gotten louder in recent months. Much of the focus has been on MySpace, the US leader with a 41.5% share of US visits to social networking and community sites in March, according to Hitwise.

IM reorganized its ad sales group in early April, leading to the departure of sales chief Michael Barrett. At the same time, news leaked that FIM might come up $100 million short of achieving the $1-billion fiscal 2008 revenue target set by News Corp. chairman and CEO Rupert Murdoch last June. (News Corp.'s fiscal year ends June 30.)

Financial analysts and the media have assumed that blame for the shortfall lies with MySpace, FIM's flagship, but FIM manages 12 other Internet properties, including IGN, FoxSports.com, RottenTomatoes.com and AmericanIdol.com. AmericanIdol.com will no doubt show strong revenues since the hot TV show is currently on-air. The smaller properties may not have fared as well and could very well take some of the blame.

eMarketer estimated last December that US marketers would spend $850 million to advertise on MySpace in calendar year 2008. Facebook is projected to reach $305 million in US revenue this year.

Even if MySpace does come up short of revenue goals, that should not sound the death knell for social network marketing. The conversation between brands and consumers has only just begun, and the advertising experimentation will continue.

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