While online advertising overall continues to grow explosively, a new report from eMarketer (as well as common sense) suggests that there are many challenges in the Social Network advertising arena.

Debra Aho Williamson, senior analyst specializing in social networking at eMarketer said:

“Tapping into consumers’ conversations and spreading brand awareness virally has proven more challenging than companies originally thought.”

Challenging indeed. As we have noted here at WebGuild several times nobody has found the holy grail of Social Networking: Good monetization of user bases and spectacular page view traffic.

eMarketer has revised its worldwide social network ad spending estimates, now projecting that advertisers will spend £1 billion on social networks worldwide in 2008, rising to only £2.2 billion in 2011. The previous figure for 2011 was £2.4 billion. Source

Will Facebook, Myspace, YouTube, or others find better ways to make money from social networking? Yes this is likely but I think *no future advertising* will rival the profits that have flowed mostly to Google from pay per click ads which are the best monetization scheme ever invented for a publishing entity.

So far advertisers are happy because pay per click generally outperforms offline media and many other forms of online advertising, though eventually advertisers will demand pay for performance campaigns. I predict this will be the beginning of the stabilization of online advertising because the accountability will shift powerfully to the publishers who will be held more directly accountable for effective campaigns.

In the meantime a lot of money will continue to flow offline and online to ineffective campaigns where effectiveness is rarely measured or poorly measured, and often measured by the very agencies who are entrusted with the online advertising dollars.