AFI BLOG: Media and Technology

The Wall Street Journal

Firms to Compete With Social Sites That Host Them

The start-up companies that create games and other popular applications for big social-networking sites like Facebook and MySpace are trying to break into a new business: ad selling.

Backed by venture-capital money, these companies, including start-ups such as RockYou and iLike, are under pressure to find new ways to earn revenue. One way they are doing that is by hiring teams to sell ads on services they build for social-networking sites. In some cases, that means they are courting the same big marketers their partners Facebook and MySpace are pursuing.

It is a tough time to be building up an advertising business for social media. While the biggest social-networking sites boast tens of millions of monthly users and are among the fastest-growing online services, some analysts are skeptical about the longevity of that trend. Even the biggest social-networking sites face skepticism from some advertisers, who argue that these sites have underperformed for them as advertising vehicles.

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