What is the future for Social Media Advertising?

I recently ran across this article from BusinessWeek that discusses the challenges of advertising on social media sites. Websites,  such as MySpace, seemed to come right out of the gate with display advertising,  while others treaded more cautiously before heading down this avenue.

Today, it would appear that neither has found the magic  recipe of pleasing both their advertisers and users at the same time. According  to the BusinessWeek article, advertisers find that “as  few as 4 in 10,000 people who see their ads on social networking sites click on  them, compared with 20 in 10,000 across the Web.” In  addition, users are feeling invaded and frustrated, some going as far enough as  to start petitions against the sites!

Although  predictions for growth on social media sites will be down from last year, we  can still expect a 75% increase in ad spend. Aggravated visitors may choose to  cancel their accounts, but the fact still remains that these sites aren’t going  anywhere! They continue to make great efforts to update their advertising platforms  with future promises of, for example, additional targeting options to reach a  more engaged visitor.

My thought is that it can still be a smart way to reach your target  demographic, but you have to be sensitive to that fact that they don’t want to  feel like their MySpace is a walking advertisement for your product or service.  More to come on this revolution, I am sure!