• by Mark Walsh  @markfwal, September 22, 2008

By fawning over Facebook, social media marketers may be missing out on advertising opportunities on MySpace. According to a new JupiterResearch study, MySpace has twice as many U.S. users as Facebook. But three times as many marketers favor Facebook in their spending plans in 2008.

In comparing the pros and cons of advertising on the Coke and Pepsi of social networking sites, the report broadly recommends that marketers turn to MySpace for high-profile brand campaigns and to Facebook for viral efforts.

Jupiter asserts that Silicon Valley's "infatuation" with Facebook has warped marketers' opinions and prejudiced them against MySpace. As a result, one-quarter of social media advertisers cite Facebook an important part of future marketing plans, compared to only 7% for MySpace.

But consumer opinion is the reverse: 53% of social networking users prefer MySpace, while 28% opt for Facebook, according to Jupiter.

Whatever marketers' intentions, MySpace still commands the majority of social networking ad dollars. For the fiscal year ending in June, Fox Interactive Media--the News Corp. unit housing MySpace--had revenue of nearly $1 billion. Emarketer estimates that Facebook will have ad revenue of $265 million this year.

Although MySpace has a far larger U.S. audience than Facebook, both sites' users are similar in how they respond to advertising and pass along recommendations. For example, 11% of MySpace users forward information to friends to influence their opinions, while 10% of their Facebook counterparts do the same.

Facebook members have a slightly higher aversion to advertising, but are more likely to act as brand advocates. Among other differences, 64% of Facebook members use the site mainly for communications, compared to only 52% of MySpace users. The report does not get into demographic differences between the sites' audiences.

Jupiter says marketers must reconsider their advertising plans regarding the two largest social networks in light of their relative strengths and weaknesses.

For MySpace, that means advertisers should take advantage of its better branding options, including a redesigned home page featuring a large sponsorship placement that includes video. Advertiser pages on the site are now more versatile--allowing for richer designs and applications--and MySpace has begun to offer ads based on user interests.

On the down side, "the site is still plagued by unattractive user pages and low engagement with ads, sometimes making it difficult for advertisers to run successful banner campaigns," according to the report authored by Jupiter analyst Emily Riley. As a result, the front page and content sections dominate advertiser interest.

When it comes to Facebook, viral advertising is king. Through its social ads and Beacon program, the site aims to integrate ad messages into core features, chiefly the news feed on user profile pages. Facebook has more recently added "engagement" ads, which allow for interaction within the ad creative itself, such as posting comments on a movie trailer.

As part of its redesign, Facebook also created a new display unit on the right side of the home page to bolster its branding options.

But the Jupiter notes the privacy problems Facebook ran into with Beacon, and says the social ads are peripheral and easy to ignore. "There is no splashy location for branded ads except on pages, which require users to actually visit them, or on widgets that rely on viral activity to proliferate," states the report.

Despite the hype surrounding social networking, both Facebook and MySpace suffer from a dearth of ad activity. Less than 20% of social media marketers have created a page or group on either MySpace or Facebook. And among other hurdles, response rates on many social network ads are even lower than on other remnant placements, according to Jupiter.