Hollywood Reporter
Newly installed MySpace CEO Owen Van Natta has got his work cut out for him, as MySpace’s advertising outlook is so poor that it is now dragging down the once scorching-hot social networking category. According to a new report issued by eMarketer, U.S. ad spending on social networking sites is expected to skid by 3% in 2009 to $1.14 billion, primarily due to “problems at MySpace.” And while the online ad business is suffering across the board, and spending declines are becoming the norm, the anticipated decline in spending on social nets is stunning considering the meteoric rises in spending and usage of the past few years. eMarketer tracked revenue gains of 33% in 2008 and a whopping 129% in 2007 for the category. But clearly, momentum for social networking advertising has plummeted in the past year — despite the mass adoption of sites like Facebook and MySpace. eMarketer had already revised its growth predictions downward for the segment at least twice in 2008. Back in December, when the researcher lowered its 2008 ad spending estimates for both Facebook and MySpace (which account for the lion’s share of dollars in the category) — it also cited MySpace’s ad challenges as a key factor in the slowdown.