The new form of advertising that is growing rapidly is social network advertising. It is a kind of online advertising with a focus on social networking sites like Face Book. This is a relatively immature market. It has created ripples in western media due to its ability to provide demographic information of target market.

A social network focuses on building online community of people who share interests and activities, people who are interested in exploring new ideas. Most social network services are internet based and provide a range of ways for users to interact, such as instant messaging and e-mail services. As a result, social networking has created new ways to communicate and share information.

Millions of people use social networking websites regularly and it now seems that they will be an enduring part of everyday life. The main types of social networking services are those which contain directories of categories means to connect with friends and business associates, and recommender systems linked to trust. In 2007, Orkut won the MTV Youth Icon of The Year award. This shows acceptance of social networking sites among current generation.

The value of using social networking sites has not been firmly established in customers' minds. Due to this a very few social networking sites currently charge money for membership. Most of these websites use advertising to raise revenue. MySpace and Facebook sell online advertising on their websites. Some believe that the deeper information that the sites have on each user will allow much better targeted advertising than any other medium can currently provide. Social networking has become most sought after for professional and other services advertisers.

There are thousands of networking sites on web. With MySpace, Facebook being the most widely used in North America; Bebo, Hi5 in most parts of Europe; and Friendster, Orkut in Asia advertisers have clear idea of where to invest to reach their target audience.
Social networks operate under a unique business model; user generated content i.e. a social network's members serve dual roles as the suppliers and the consumers of content. A social networking company acts as a mediator. Revenue is typically gained in this autonomous business model via advertisements. Subscription-based revenue is possible when membership and content levels are sufficiently high and this form of revenue generation is gaining slowly.

Most social networks sell their ads at $1 CPMs (cost per thousand impressions). But, established players like LinkedIn charge from $30 CPMs and going up to $75 for display ads. Text ads range from $10 to $20 CPMs. Ads on social networking sites is here to stay. Success of social networking sites depends on having large audience that advertisers want to reach.