According to comScore research, the total number of ad impressions on all social sites put together accounts for 21.1% of the total online ad displays in the U.S.

The most popular social sites, MySpace and Facebook, together received the vast majority of ad impressions. Individually, MySpace received 9.2% and Facebook received 8.2% of all online ad impressions.

Less popular sites like Tagged.com, Hi5, Bebo, Classmates.com and many others account for the remaining 3.7% of all online ad impressions. Each of them receives about 0.1% of the total, with the exception of Tagged.com which has 0.6% and MocoSpace.com which has 0.2%.

The popularity of social networks has increased rapidly in the last few years, so it is quite natural that advertisers would try and make use of this medium to reach the maximum possible target audience. Another motivating factor for using the social networks is the high reach and frequency of usage among target segments against low costs .

Jeff Hackett, Senior VP at comScore, says, “Social media is becoming an increasingly attractive vehicle for major advertisers seeking to optimise campaign reach and frequency, and small advertisers desiring to reach a highly targeted audience.”

One should, however, note the fact that although the number of ad impressions on social sites is over 20%, the actual number of clicks and conversions received from social networks could be significantly lower. If that is the case, social networks are no more than excellent branding channels.

The annnouncement came just one day after Yahoo! announced its intention to support Google’s OpenSocial platform. Microsoft has never been truly open, and so joining any alliance like OpenSocial or even forming a truly similar initiative of its own is out of the question. Microsoft has however taken some big strides to improve data portability and allow users better control over the use of their information.

Several new APIs and tools that help third-parties develop more applications were announced during MIX08 last month. And now a new ‘Windows Live Contacts API‘ has been launched to allow users to transfer and share their contact lists, without any security concerns.

Social networks partnered with Microsoft through this initiative will gradually shift to using Windows Live Contacts API instead of using the method called ‘screen scraping’, which was not a very secure means and exposed users to spam and, worse still, identity fraud.

Users will be given ultimate control in deciding which of their contacts, if any, get shared with each of the participating social networks.

Read the full announcement from Microsoft

Microsoft has also created a new site where users from the partner social networks can download Live Messenger and invite their friends from the social networks to chat with them. This would normally seem a surprising move from Facebook, given that they are likely to launch their own chat client in the near future. However, Microsoft’s stake in the company has probably influenced the decision to support a competing product.

www.invite2messenger.net

OpenSocial will be accessible at the URL: http://code.google.com/apis/opensocial, which will go live on Thursday.

When launched, OpenSocial will consist of three common APIs, defined by Google with input from partners, which allow developers to access core functions and information on social networks:

• Profile Information (user data)
• Friends Information (social graph)
• Activities (things that happen, News Feed type stuff)

Unlike the most popular social networks, OpenSocial will allow developers to code using ordinary JavaScript and HTML. This will help it gain tremendous popularity as it precludes the need for application developers to learn and code in various proprietary languages created by the numerous social networks.

Orkut, Salesforce, LinkedIn, Ning, Hi5, Plaxo, Friendster, Viadeo and Oracle are the platforms that have already agreed to partner with Google on OpenSocial. Application developers Flixster, iLike, RockYou and Slide are also on board. Interestingly, all these application developers have seen great success on Facebook.

Hints that Google might plan to expand further into the social networking arena surfaced last month when a leaked video showed Google employees discussed the company’s plans to introduce more social features into Google Reader.

Advertising on Social Networks

Google has not mentioned any specifics at present about whether or not advertising will be accepted, but it is obvious that this will be their way to gain access to most of the popular social networks without needing to buy them outright!

Once a number of developers build popular apps that get included by scores of users on their profiles, Google will be able to easily set up revenue-share schemes, similar to AdSense for regular content publishers, which will allow developers to include ads in their apps and make money for themselves and Google with minimum effort. The image below shows what this might look like conceptually:

Rather than using brute force to gain access to a number of users, Google has used a cunning method to reach the same attractive user base without spending too much money. They were probably not too bothered when Microsoft bought a stake in Facebook either.

The success of such an ad placement strategy depends on two factors: (1) whether the host social networks will allow applications to carry ads that don’t earn them any money, and (2) whether Google will provide enough incentives for the developers to include ads alongside their applications. For now, one can only wait and watch how Google will monetise this new channel.