Social networking tools are proving to be invaluable marketing and engagement platforms for the smart small businesses which have embraced them.

This BBC report provides some anecdotal insight into how several small businesses in the US have benefited by adopting and adapting to the powerful networking potential of websites such as Twitter and Facebook.

Bronze medal social network (behind ever newsworthy Facebook, and MySpace) has announced that they have been taken over by AOL for a cash deal worth US$850 Million. The deal far surpasses the US$500 News Corp paid for MySpace in July 2005 – but the average price for each of their claimed 40 million users is slightly lower – US$21.25 vs. the US$25 Rupert Murdoch paid for each of MySpace’s 20 million users.

However it must be noted that their figure of 40 Million users is slightly contentious with Wikipedia listing some 20.3 million, and some of Bebo’s other claims have been questioned.

Social web king, facebook.com, has seen it’s first ever drop in monthly users according to analytics firm Nielsen Online.

Almost half a million users who visited the site in January 2008 didn’t bother to return in February. Competing sites like Bebo.com and Newscorp’s MySpace have reported similar drops in traffic.

So far Facebook has been able to find investors, and justify their massive spending (In the coming year Facebook plans to spend US$ 200 million on servers alone) with their rapid growth. The end of the growth cycle will increase the pressure on facebook to find a way to turn their popularity into a viable revenue stream.  Facebook’s advertising platform, which allows advertisers to target extremely specific customers, has so far met with a tepid response.

At the peak of the excitement, Facebook was collecting almost 200 thousand new users a day, and Microsoft spent US$ 250 million buying 1.6% of the company – a deal that valued Facebook at $15 billion.

Todays news suggests that those frothy days may be over.