Could it be? Will advertisers finally sour on the ad format that no one clicks on but everyone thinks is necessary?

The analyst firm Research and Markets is predicting that spending on display ads will peak this year at $12.6 billion, and then enter a steep decline. Within four years, the firm estimates that that segment of the online advertising economy will drop to less than half of this year's mark.

Why? Clever brands are warming up to the social Web, and realizing that they can do more with less. It's what R&M calls "promotion," as opposed to traditional (and paid) "advertising."

Advertisers are desperate to unlock the marketing potential of the democratizing Web. How to build a brand online and insert it into the conversations taking place across the social networks and UGC sites is a favorite topic at advertising conferences these days.

Problem is, advertisers are having a tough time figuring out how to do it. Some don't think it will ever happen. MySpace and Facebook have captured the imagination of a generation of content producers, and their output has been prolific. But is that really the sort of material that you want your company's logo next to?

While it refers to the Internet as growing "more legs than a centipede," R&M isn't going too far out on the social networking limb with its advertising/promotion prediction. The firm's looking ahead to a spike in spending on, among other things, old-fashioned PR. It's predicting that the broad category of online promotions will nearly triple over the next five years to $22.8 billion.

If that prediction holds, there will be a seismic shift in how ad dollars are spent online. If the display market is going to hollow out to half its current size, with paid search "likewise facing a luster loss," does this research firm see something that Google and Microsoft don't?

A tech policy group of the University of Ottawa's law school is petitioning the Privacy Commissioner of Canada to investigate Facebook for violating Canada's privacy laws.

The complaint filed by the Canadian Internet Policy and Public Interest Clinic (CIPPIC) charges Facebook with 22 distinct privacy violations, including the claim that the social network shares more personal information with advertisers than it lets on.

"Facebook purports to provide users with a high level of control over their data," said Harley Finkelstein, one of the law students who wrote the complaint. "But our investigation found that this is not entirely true -- for example, even if you select the strongest privacy settings, your information may be shared more widely if your Facebook friends have lower privacy settings. As well, if you add a third-party application offered on Facebook, you have no choice but to let the application developer access all your information even if they don't need it."

This is of course not the first time that Facebook has run into trouble over privacy concerns. First it was the news feed, which began broadcasting a people's Facebook activities to all the members of their network, whether they wanted to share them or not. Facebook, eventually, adjusted the settings of that feature giving users control over what information was shared.

But that was a minor skirmish compared to the Beacon fiasco, a story that snowballed into something much larger than it had to be when we started hearing about people's Christmas shopping lists being revealed to their loved ones and MoveOn.org got on the case.

"Facebook Ruins Christmas" was a solid-gold headline, but, hyperbole aside, there is a real lesson to be found in the Beacon flap. People who love Facebook don't tend to be the most privacy-conscious folks out there. Those who value anonymity on the Web aren't the ones building online monuments to themselves with their personal effects like pictures, videos and their latest musings about girlfriends and boyfriends or the splendor of Barak Obama, or whatever. But that's not the point. It's not that they would necessarily object to sharing certain bits of information about themselves with advertisers or developers, but the protest becomes shrill when they feel that they are being deceived.

The Facebook demographic reacts poorly when companies that self-style an image of fun, hip Web 2.0 community are outed as closet commercialists. They don't like companies making decisions for them, they don't like being lied to and don't like being "handled." Facebook, for all of its brainpower and innovation and popularity, does a very poor job of managing its public perception when it steps over the line.

Of late, the company has been bringing in high-profile executives whose experience could help improve the young company's PR image. But Facebook and its laconic CEO don't seem to be ready just yet to cast off the fortress mentality. Let's see if anything comes out of this fracas up north.

NEW YORK -- Oh, if only there were more iPhones. To many playing in the mobile marketing space, that device has changed the game. It's a pity it's the only one of its kind, and holds just 2 percent of the market share.

Speaking this morning at the MediaBistro Circus media conference, a panel of mobile experts outlined the lay of the land, describing the prospects and pitfalls of an emerging marketplace where many major Web companies are placing big bets.

That device, which currently represents about a 2 percent U.S. market share, changed the mobile game.

To the presenters, the iPhone changed the rules of the game. Unlike many other mobile devices, the iPhone can read the Flash and Javascript and AJAX common to traditional Web sites.

Of course, in the meantime, they're all waiting for the iPhone to make its 3G debut, and for other handset makers to come out with devices that offer a similar Web experience.

Then, too, there's the nettlesome problem of the carriers. For their part, Verizon and AT&T have begun making signs that they are willing to open their networks to outside devices and applications. But that's only a start. The mobile market will only take off once the U.S. carriers catch up to their European and Asian peers and embrace common standards for their networks. Google's Android initiative could be an important step forward, but the carriers are still dragging their feet, panelists noted.

Until the day that changes, the domestic mobile market seems destined to remain an also-ran.

With the acquisition of the social network Bebo now officially closed, AOL is undertaking an internal reorganization. Joanna Shields, who had served as Bebo's CEO, will become an executive vice president of AOL, and take the title of president of the new People Networks division, which will also include the AIM and ICQ messaging services.

Shields will report to AOL President and COO Ron Grant.

AOL, which will soon be spinning off its dial-up Internet service unit, is now organized into three divisions: the publishing and newly created people networks, and its Platform A advertising network. Per comScore, Platform A has the widest reach of any advertising network on the Web.

With the Bebo acquisition, AOL bought itself a stake in the frothy social networking world that everyone wants to be a part of but no one's figured out how to make money from yet.

"Unlike other social networks, which have had a difficult time monetizing their sites without jeopardizing the user experience, Bebo created an environment that enables advertisers, brands and media companies to engage in meaningful, relevant conversations with its users," Grant said in a statement.

Bebo prides itself on what it calls "engagement marketing." AOL is boasting that big-name advertisers such as Nike and Apple have successfully inserted their brands into the conversations that go on among friends on Bebo, taking advantage of the unique promise of the social networking communities. Facebook and MySpace, AOL is quick to point out, have so far failed to live up to their promise on the advertising front.

AOL said it will work quickly to roll its IM, mail and chat applications into Bebo, and will allow users to merge their AIM and Bebo profiles so they can work under a common screen name.

The deal to end all deals is not to be.

After three months of saber rattling, back-room negotiations and calculated media leaks, Microsoft CEO Steve Ballmer has walked away from its bid to buy Yahoo.

In a letter sent to Yahoo CEO Jerry Yang dated today, Ballmer announced that Microsoft was pulling the acquisition offer off the table after raising the initial offer of $31 per share to $33.

"Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo has not moved toward accepting our offer," Ballmer said. "After careful consideration, we believe the economics demanded by Yahoo do not make sense for us, and it is the best interests of Microsoft shareholders, employees and stakeholders to withdraw our proposal."

After negotiations between the two companies this week broke down, Microsoft determined that taking the bid hostile by attempting to oust Yahoo's board of directors would be ill advised.

Specifically, Ballmer said that Yahoo's pursuit of a deal to outsource its search advertising services to Google made the company "undesirable" to a potential acquirer for the regulatory issues it would raise, and that it would erode the long-term value of Yahoo's internal advertising platform.

In prompt response to the withdrawal of the bid, Yahoo issued a statement reiterating its long-held position that Microsoft's offer shortsighted the company's brand value and its prospects for future growth.

"From the beginning of this process," said Yahoo Chairman Roy Bostock, Yahoo "has been steadfast in our belief that Microsoft's offer undervalued the company, and we are pleased that so many of our shareholders joined us in expressing that view."

Looking forward, Yang added that "with the distraction of Microsoft's unsolicited proposal now behind us, we will be able to focus all of our energies on executing the most important transition in our history."