As an advertiser, you want to get your message in front of as many faces as possible. The more people who see your ad, the better chance of scoring that all-important conversion, right?

So when advertisers move online, they may examine popular online destinations and immediately feel the urge to drop their ads on those sites. Generally speaking, the more popular a website, the more expensive the advertising on that site. So in essence, advertisers are looking for the most popular websites and spending more money on getting their message into those spaces.

The so-called “Web 2.0″ sites are some of the most popular places to spend time online. So it’s no surprise that advertisers are flocking to these sites in droves. Web 2.0 is all about the user-generated content and folks seem to love contributing to and consuming that content. So when advertisers buy spots on these sites, they’re advertising against content that is being created by the very same people they hope will click on their ads.

It’s a seductive circle.

But, as MarketingSherpa points out, new research suggests that advertising on Web 2.0 sites doesn’t convert quite as well as ads on traditional “Web 1.0″ sites.

Citing a study conducted by BlueLithium Labs, MarketingSherpa President Anne Holland had this to say about ads on Web 2.0 sites:

This is actually no big shock (except perhaps to Madison Avenue.) Human beings are all about *THEMSELVES*. Web 2.0 is incredibly appealing content because it’s all about you. Ads are generally not all about you. They are about the advertiser. […]

Which is why you can be sure we’ll be seeing lots of less-then-targeted TV ads on YouTube someday soon. And when the ads invariably don’t pull as many clicks as expected, Madison Avenue will shake their heads and say, “I told you the Internet wasn’t as good as it seemed.”

In addition, Holland has pulled three highlights from the study that underscore the point she’s making:

1. Ads on traditional editorial-based sites convert 31% better than ads on user-generated content sites
2. Ads on top non-user-generated content sites convert 175% better than ads on user-generated content sites
3. User-generated content is cheap enough to warrant further investigation

And I think that last highlight is the most important of the three. Web 2.0 advertising might not be converting as well as advertising on traditional websites now. But these newer, user-generated content driven sites are still new in the grand scheme of the Internet.

Sure… places like MySpace, Facebook, and YouTube draw in millions of users every month. But they don’t have mature audiences yet. Those places are still building their initial user base. They’re still trying to figure out exactly how to monetize themselves. They’re wildly popular, no doubt… but they’re still in the “baby steps” stage of their lives.

Look at site like Yahoo or CNN or even MSN. They’ve all been around the block more than a few times. They have established, mature user bases. They’ve tweaked and changed and played with various monetization techniques over the years and are quite possibly to the point where their advertising potential has reached its peak.

So should it be surprising that the new guys on the block are converting less? No. Should we give them time to mature before we decide to look for other options? Yes. New technologies and new options that could make the monetization of user-generated content more effective are still in the works. As content publishers, technology firms, and advertisers continue to work on new solutions, I think we’ll see these numbers change.

So, Madison Avenue… don’t write off the UGC just yet.