MySpace and Facebook are locked in a head-to-head battle for users and advertising dollars, but it seems both will bring in less advertising revenue this year than predicted.

A new report from eMarketer says that advertising on social networking sites will not grow as quickly as predicted earlier this year and now forecasts spending on social networks at around $1.4 billion, less than an initial estimate of $1.6 billion. The new number would still represent a 55 percent growth, but thats about a third of the 163 percent growth in 2007.

Predictions for MySpace and Facebook, which account for 72 percent of all social network advertising, were downgraded as well.

MySpace missed revenue projections set by parent company News Corp. earlier this year by nearly $100 million, and eMarketer’s latest forecast for ad revenue is $755 million, down from a previous estimate of $850 million.

The predictions for Facebook dropped from $305 million to $265 million, and it appears the platform is cooling for developers as well.

The lower predictions are the result of an uncertain economy, according to eMarketer, but online advertising seems to be showing signs of slowing across the board. According to a study by PubMatic, CPM rates dropped significantly in the past few months for websites the draw more than 100 million monthly page views, from 38 cents in March to 18 cents in April.