• Financial Times, Wednesday, July 11, 2007 1:15 PM

The news from the U.K. today shows that MySpace -- in about 12 months -- has easily catapulted to the top of the social networking pile, attracting more than 10 million visitors in the U.K. last month, more than double second-place Bebo, with 3.96 million uniques, and Facebook, 3.2 million. However, in a separate study, GroupM media forecasters said that the surging popularity of social networks in Britain is proving to be a drain on the growth of Web advertising.

Why? Two reasons: one, consumers are spending more time social networking at the expense of professional news and entertainment publishers; two, the fact that users create the content is a detractor to big-spending global advertisers, which don't want their brands placed on content with no corporate control. Does the same hold true for the U.S.? You bet, which underscores the need for marketers and social networks to figure out the advertising conundrum.

As the GroupM report says, "Running in the opposite direction is the growth of social networks which are much more ad-resistant. Unless we can find more ways of shoe-horning advertising into sites or vendors increase the amount of advertising inventory they sell, then at some point it has to slow." Of course, any slowdown in U.K. Web advertising would be relative, especially when compared with the stagnant growth rates of U.K. broadcast and print advertising. The firm predicts Web spending in the U.K. will rise 34% this year, down from a 48% rise in 2006.

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