Social networks overtake Yahoo and AOL in Internet display ads market

According to a new report by analytics firm comScore, about one of every five Internet display ads in the United States is viewed on a social networking Web site like MySpace and Facebook. The report underscores the increasing prominence of social media sites in the Internet landscape and broadening acceptance of the sites by brand advertisers.

Besides, it also illustrates the increasing competition between social media sites and established Internet companies like Yahoo Inc and Time Warner Inc's AOL which have long billed themselves as the top online destinations for brand advertisers. The study, released on Tuesday, said that social media sites represented 21.1 % of U.S. Internet display ads in July, with MySpace and Facebook accounting for more than 80 % of those ads.

The top three advertisers on social networking sites in July were AT&T Inc, Experian Interactive and IAC/Interactive Corp's Ask Network, comScore said. While social media sites have enjoyed a surge in popularity in recent years, Facebook is now the world's fourth-most visited Web site, some observers have questioned whether the sites can be effectively monetized. Because the content on social media sites is created by users, and could therefore prove racy or offensive, some have questioned the willingness of marketers to place their brands alongside that content.

Talking about advertisers, Sanford Bernstein analyst Jeff Lindsay said: "They are sensitive to some extent, but nowhere near to the extent you might think."

Lindsay said that the price of placing ads on social networking sites is significantly less than on a Web portal like Yahoo or AOL. The vast amount of Web pages available on social networks means that advertisers can purchase a massive volume of ad impressions at bargain prices. The strategy may not be ideally suited to smaller marketers, or advertisers seeking a direct response from their ads, he said.