News Corp. yesterday reported that advertising sales on MySpace, the Web's No. 1 social network, surged 87 percent in the fourth quarter, "primarily due to revenue growth for search and advertising," the company said. Fox Interactive Media, the conglomerate's online division, is now on pace to reach $1 billion by the end of 2008. Operating profit showed exponential growth, up from $1 million in 2006 to $23 million in 2007.

Impressive stuff, but MySpace partners and advertisers aren't seeing the kind of results they were promised. Even Internet ad giant Google, which struck a guaranteed $900 million multiyear deal with MySpace, isn't seeing its search and contextual efforts pay off like they normally do. Under that deal, Google pays a certain amount per quarter for the exclusive right to place its ads on MySpace pages; the total was $62 million in the fourth quarter, or 26 percent of FIM's revenue.

Marketers, meanwhile, complain that the increases shown by MySpace's new hyper-targeting system aren't enough. COO Peter Chernin touts a 300 percent increase in response for some marketers, while the marketers claim those increases are an improvement from a comparatively low response rate to other Web sites.

Read the whole story at Business Week.

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