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Facebook says ad spending is rocketing

While not so long ago social networks were considered poor destinations for ad dollars, it looks like Madison Avenue has finally warmed up to Facebook.

The very same advertisers who were once skeptical that buying up inventory on social networks could possibly do any good are now, apparently, going completely nuts about ads on Facebook.

Chief Operating Officer Sheryl Sandberg, the company's most prominent liaison to Madison Avenue, said in an interview with BusinessWeek published Wednesday that the company's biggest advertisers have boosted their spending on Facebook by tenfold, or even 20-fold, in the past year.

"Two years ago the big brands were experimenting with us," Sandberg told BusinessWeek. "They started buying with us a year ago. Now, they're going big."

Not that long ago, the common wisdom was that advertising on a social network simply wouldn't translate into profits, a position held by figures as high-up as Google's chief financial officer. His rationale was that people use social networks for communication and connection with friends, not for researching potential future buying decisions the way they would with a search engine. Since then, Facebook has been working hard to dispel that notion by claiming that someone's network of trusted friends provides valuable advertising opportunities--something it's promoted through its "social ads" product.

Facebook launched a new feature last week called Questions, which lets its members ask any kind of question and have it broadcast from their profiles to solicit answers from their social networks. This sort of "social search" feature has not yet been publicly pitched as a boon for advertisers, but shows promise as a new area for search targeting.

Facebook's reign in the social-networking world is also unequivocal now, whereas as recently as 18 months ago it would have still been considered appropriate in many situations for an advertiser to choose MySpace instead. The News Corp.-owned social network has long since fallen from favor, but it remained bigger than Facebook in the U.S. until late last spring, and its splashy display ads would be of a far more familiar breed to an old-school agency.

Now, it's difficult to argue against a destination that has 500 million active users around the world.