Haydn Shaughnessyreports on Facebook, one of a growing number of social networking sites, which is ramping up visitor numbers at a dramatic pace

Before Google bought the video-sharing website YouTube for $1.6 billion last year, analysts speculated on how and if such a popular site could generate revenue through advertising. The same challenges are now facing the growing number of social networking sites, such as Facebook, which is ramping up visitor numbers. It would seem that internet advertising is coming of age and at last advertisers are queuing up for a piece of the action.

Facebook reached 30 million users in July this year, jumping from 24 million in May. "It's still very early days for these sites, and the sheer volume of social networking sites says to me that there'll be lots of change ahead and people will learn which ones to be on," says Tom Murphy at Microsoft in Dublin, who is also a Facebook user. "Facebook is the hot property right now. It has the broadest church of users of any other site." IT giant Hewlett-Packard already has over 9,000 of its employees networking on Facebook.

So why is Facebook becoming the most successful example of this new genre?

The best-known social networks, MySpace and Bebo, allow their users to create mini, personal websites using photos, text and video, but above all they make it very easy for users to connect with each other. By inviting your contacts to join a social network you, the user, become the network's sales force.

Facebook is no different in that respect, but crucially places a lot of emphasis on providing instant knowledge of what your network is doing. Its newsfeed is in fact a running account of where your network members are, what they are doing, and even what they are thinking.

By posting their location, thoughts or current activities to their profiles, Facebook users make it possible to organise around them. In part because of this continuous knowledge, Facebook is growing at a rate of 3 per cent per week. Its success also relies on allowing external companies to develop software applications that Facebook users insert into their home page or profile.

These applications are called widgets, and widgets are introducing a new dynamic into internet usage and advertising. One Facebook "application", iLike, saw user numbers grow from zero to one million within a week and nearly five million in six weeks.

Rarely have people turned on to new products from small start-ups at such a dramatic pace.

In addition to the iLike widget, there are widgets allowing people to play Scrabble, listen to music and share videos, or to create maps of their travels, the latter built by internet travel site TripAdvisor.

Though these might seem like trivial applications, they are backed by big names in the internet business. iLike was developed by iLike.com, a new music website that is staffed and funded by internet heavyweight figures such as Khosla Ventures and Hadi Partovi, former general manager of MSN.com, Microsoft's flagship website.

"Facebook will become a big player in Ireland over the next three months," says Rob Reid of Dublin-based online marketing agency Cybercom, who have already created user-generated competitions for Coca Cola on Bebo. "They've grown so quickly they don't have an offer in the Irish market yet."

The reason is the success of widgets. Widgets make sites "sticky". And they are well distributed across the web. Web measurement company ComScore estimates there are now 178 million unique widget users each month on the web. That is 20 per cent of the total online audience.

In recognition of that, another major internet measurement company, Nielsen Net Ratings, last month announced it would in future use time spent on a site rather than page views as the metric for a website's overall performance.

The change in metrics is highly significant, indicating the extent to which social networks and widgets are changing the face of the web. "For people in their 20s, social networks are replacing portals," says Reid. "When you look at the top five or top 10 sites for people in their 20s, IOL and Eircom.net are no longer there."

That view is not universally accepted. "Portals are so big and intrinsic a part of the web I don't think they are being hurt by the growth of social networks and won't be threatened for quite a while," claims Alex Burmaster, European internet analyst at Nielsen Net Ratings.

In Britain, Nielsen's data shows Google, Yahoo and the BBC still comfortably ruling monthly page views. But statistics from Cybercom show that in Ireland, while 79.5 per cent of 15 to 24-year-olds visit social network Bebo at least once a month only 19.5 per cent of them visit Eircom.net once a month. Conversely, the reach of portals increases with the age of the user.

Clearly the seeds of change are germinating, fertilised by instantaneous connections and widgets the mechanism companies will use to exploit Facebook and Bebo's advertising potential. "There's evidence already that display ads are not as effective on social networks as they are on portals," says Reid.

In the case of iLike, it used its success on Facebook to attract five million users from its widget on Facebook to its own music-sharing site, giving it an unprecedented head start and instant global recognition.

The key difference with advertising though is that the widget itself is a product development and design task.

Any more successes on this scale and advertising could be forced to sing to a different tune.