The huge traffic numbers at the likes of MySpace, Facebook, Bebo are not translating into advertising revenues, according to eMarketer.
The media analyst warns that social networks attract users who want to communicate with each other, not brands.
More than 75 per cent of social network site users logged in at least once a week and 57 per cent did so daily.
While social networking continues to remain popular and grow, advertisers looking to grab users attention are seeing low click-through rates according to a new survey from IDC.
There are four major reasons why people use social networks: to connect and communicate; in response to peer-pressure; for entertainment; and for work-related purposes.
More than 61 per cent of survey respondents spend more than 30 minutes per session on social network sites, and 38 per cent remained parked for one hour or more.
However, only 57 per cent of social network site users said they clicked on an ad in the past year, compared with 79 per cent of all internet consumers.
Despite its phenomenal growth, social networks have yet to reach online advertising nirvana. It’s a place where marketers are able to serve ads, promotions and offers to friends of friends based on a pal’s recommendation, and where word-of-mouth marketing spreads to create waves of self-selecting consumers eager to interact with marketers, according to eMarketer.
In May 2008, eMarketer projected advertisers would spend $1.4 billion (£750m) to place ads on online social networks this year. eMarketer also forecast ad spending on social networks would reach $2.4 billion (£1.3bn) in 2011.