(via the Financial Times)

The rise of social networking websites such as FaceBook and MySpace could bring the rapid growth of UK internet advertising down a gear this year, according to media forecasters at WPP, the marketing services group. GroupM, the umbrella forecasting group for WPP’s media buying teams, cites the increasing time that audiences are spending on such websites as one reason to anticipate a slowdown in the “warp” speed expansion of web advertising. Any deceleration in internet growth would be relative, especially compared with the sluggish state of UK broadcast and press advertising. (…)

Advertisers are interested in the fast-growing social networks but still grappling with how to market on them. The sites have fewer obvious advertising slots to sell than conventional web publishers and portals or search engines. Using techniques such as branded banners or pop-up windows to reach online networkers can appear intrusive to users primarily logged on to communicate with other individuals and share music and video clips. Networking audiences also tend to spread thinly over many different website areas and focus on their own content, such as blogs or homepages. That distinguishes them from portal audiences, which usually congregate in popular areas such as news, sport or entertainment channels, making them easier for advertisers to target.

What it means: remember my predictions for 2007? Clearly, Atomization/Deportalization and Verticalization are happening within social networks, which means that traditional online ad vehicles are not as efficient as in centralized portals. New ad models might have to be invented. A good example is the soon-to-be launched Lookery, discussed today on GigaOM. Lookery is an ad network for Facebook Apps.