• The Wall Street Journal, Friday, June 6, 2008 11:15 AM

Application makers on Facebook and MySpace are starting to compete with the mother site for ad dollars, The Wall Street Journal reports. Backed by a hefty dose of venture capital and under pressure to find new ways to make money, companies like RockYou and iLike are hiring teams to sell ads on the applications they build. In many cases, the sellers are going after the very same advertisers as Facebook and MySpace.

Social networking sites say they're happy their partners are finding ways to support their businesses, but The Journal points out that the addition of application makers to the social ad market means that more and more players are competing over a particularly small advertising pie. According to Forrester Research, U.S. marketers spent $600 million on social media last year, as compared with $18 billion for all interactive advertising.

Even so, few advertisers are currently spending money with the application makers. As Richard Castellini, vice president of consumer marketing at CareerBuilder says, "Applications are good to be able to get in here, for small amounts of dollars, and get some learning," he said.

Read the whole story at The Wall Street Journal »