Facebook has built an ad strategy that relies heavily on engagement ads and other social media-appropriate ads - a strategy that could well be the reason why the site is set to pass MySpace in ad revenue next year.

That milestone is expected to be reached in 2010, eMarketer predicts (via MediaBuyerPlanner) when Facebook is expected to bring in $605 million in ad revenue. MySpace, by contrast, will nab $385 million.

25% of Ad Spend

The social networking site will account for nearly 25% of all social network ad spending next year, up from 20% in 2009. Total social network ad spending is expected to be $2.2 billion this year - an increase of 3.9% from last year - with $1.2 billion spent in the U.S, eMarketer says.

There are a number of reasons why Facebook is taking the lead: it is more than double the size of MySpace, with 350 million users. It is also increasingly supplanting other forms of communication such as email and text messaging, according to MarketingCharts.

No Banners, Engaging Users

Its ad strategy - a departure from typical social media networks - is another factor. Facebook runs few banner ads, preferring instead to focus on engagement ads - such as games or quizzes. Facebook's approach, which does include some remnant inventory through Microsoft, has been to focus on more social media-appropriate ads, according to Mike Murphy, Facebook's VP of global media sale. "We aren't seeing ad network type CPMs" he said (via Media Week).

"Banners, as they were once defined, don't exist much on Facebook."

Other social media sites tend to rely more heavily on display ads - to their apparent detriment. comScore reported recently that social networking sites now account for more than 20% of all display ads viewed on the web - with CPMs as low as 20 cents on some sites.