A new report shows that more than $2 billion is estimated to be spent on social network advertising in the US by 2010. Social networking and user-generated content will feature prominently among a range of new applications in the Web 2.0 world. But also flourishing are travel-related services, gambling, adult content, music and health services.

Solid new business models, backed by spectacular growth in online advertising, are quickly laying the foundations of the new internet economy.

According to the authors of the report there has been an explosion of online content and services, largely driven by the internet media giants like Google, News Corp and Yahoo.

Web 2.0 has also led to a host of new developments: Instant Messaging; Peer-to-Peer services; Wikis (user-sourced content); Really Simple Syndication (RSS feeds) for news and information; blogs and other forms of social networking; and alternative revenue streams, such as pay-per-click advertising.

The report shows that it is the growing number of households and businesses with broadband connections, which has been the main driver behind the current boom. In several European countries, 75%, or higher, of households have the internet, which gives e-commerce a strong platform from which to do business.

Some of the basic and more popular online advertising models include pay per click (a company pays every time its ad is clicked), pay per visitor (to a website) and pay per action. But many other forms are emerging, such as permission-based and interactive advertising, which take a more targeted approach to consumers, and thus are likely to become widespread.

Online payment gateways, such as PayPal, have also made a vital contribution to the growth of e-commerce, creating quick and simple ways for consumers to pay for goods and services online.