• Business Week, Friday, February 8, 2008 11 AM

Just when marketers are starting to ramp up spending on social networks like MySpace and Facebook, usage metrics are starting to fall. Consumers are either becoming bored with social networking, or they're sick of being bombarded by ads. The boom isn't booming which is bad news because social networking was supposed to be the Next Big Thing on the Web.

The average time spent per user on social networks has fallen 14 percent in the last four months, according to ComScore. MySpace, the No. 1 social network, has seen its traffic fall from 72 million users in October to 68.9 million in December. "What you have with social networks is the most over-hyped scenario in online advertising," says Tim Vanderhook, CEO of Specific Media.

That said, advertising on social networks is growing fast: eMarketer, a research firm, expects advertising on social networks to surge 75 percent to $2.1 billion this year, up from $1.2 billion in 2007. But could it be that advertisers are late to a party that's ending? Perhaps. Business Week calls the projection "unrealistic", because aside from slowing growth, advertisers and ad network operators say social networking users are becoming less responsive to ads. If that trend continues, social networking could end up just another niche market, "smashing hopes and valuations across Silicon Valley."

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