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Social Network Ad Spend Surging

Social networking ads
Advertisers have more than doubled the amount of money they're spending on social networking Web sites since last year, according to a new analysis from market researcher the Nielsen Company.

The roughly $108 million advertisers spent on social sites like Facebook and MySpace in August marked a 119 percent increase from the same month last year.

Nielsen estimated that social networking sites now account for 15 percent of all online ad spending.

The surge in spending found a corollary in Nielsen's analysis of people's media habits. In August, Nielsen found that social networking and blogging sites accounted for 17 percent of the total time Americans spent online, up from 6 percent last year.

"This growth suggests a wholesale change in the way the Internet is used," Nielsen Vice President Jon Gibs said in a statement.

It is worth noting that Nielsen earlier this week unveiled a partnership with social networking giant Facebook to improve the effectiveness of ad campaigns on the social Web.

Advertisers have historically been hesitant to funnel dollars to those sites, which are dominated by user-generated content that doesn't always guarantee an optimal setting for marketing placements.

Nevertheless, an axiom about the ad business mandates that advertisers follow their audience, and Gibs said the new figures could signify a fundamental shift in the way marketers are regarding social sites.

"In the past, advertisers had significant concerns with social media advertising," he said. "The considerable increases we've seen in ad spending over the past year suggest that many of these concerns have subsided or been addressed."

Gibs said that advertisers are increasingly seeing that Facebook and MySpace offer compelling opportunities to seed their messages across a highly engaged community.

The surge in social media spending comes amid a sour economic climate that has sapped advertising budgets. Across all media, Nielsen found that ad spending had declined in many sectors, such as automotive and travel.

But social media bucked the trend, posting across-the-board increases in all categories, including an eye-popping 812 percent year-over-year jump in spending in the entertainment category.

Nielsen's analysis found that Facebook was the preeminent destination for advertisers on the social Web, commanding the most placements in all but three categories the firm analyzed.

Rival social hub MySpace came in second, beating out Facebook in the entertainment, financial services and hardware and electronics sectors.