By the end of this year US advertisers will have spent only $1.2bn on social media ads - down 14% from eMarketer's prediction of $1.4bn in May.
US online social network ad spending represents just 5% of the total $23.6 billion spent online, but the medium has been the marketing obsession of 2008.
eMarketer is curtailing its prediction of social net spending growth by nearly 28% for next year as well, lowering its projection of $1.8bn to $1.3bn next year.
The recession and slower-than-expected revenue growth at MySpace are two main reasons for this cut.
While online advertising has been one bright spot in the economic downturn, its explosive growth is slowing. Marketers are slashing the amount of money they devote to more experimental forms of media - like social networking - as they seek to ensure a return on spend.
In its new estimates, eMarketer revised downward its forecasts for MySpace and Facebook, the two largest social-networking sites by traffic. The biggest share of social-networking ad spend remains with MySpace, which is expected to generate $585 million in ad revenues this year, down 22.5% from earlier estimates of $755 million.
US marketing spend on Facebook will reach $210 million in 2008, down 20.8% from earlier estimates of $265 million.
See ‘Was P&G being anti-social?' at Chris Barraclough's blog