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Microsoft has struck deal to become the exclusive provider of web advertising to Facebook, the social networking site, as both companies try to keep up with industry leaders Google and MySpace.

Financial terms were not disclosed.

The deal, struck after just one week of talks, comes on the heels of a $900m tie-up announced earlier this month between Google, the world’s biggest online advertisng company, and MySpace, the world’s most popular social networking site.

It is a further sign that big advertisers are beginning to embrace social sites in spite of lingering concerns they may be linked with inappropriate content that could damage their brand.

“We believe the combination of Microsoft and Facebook strengths will be incredibly attractive to advertisers,” said Steve Berkowitz, manager of online services at Microsoft.

Interest in social networking sites, which allow users to share pictures, post journal entries, and create networks of friends online, has soared since Rupert Murdoch’s News Corp bought MySpace for $580m last year. In the months since, MySpace has become the focal point of the company’s online strategy.

Facebook has also benefitted from the intense interest. Its founders are understood to have spurned a buyout offer of $750m earlier this year in hopes of a bigger payday.

Facebook, which claims 9m registered users, ranks well behind MySpace in the battle for eyeballs among social networking sites, however.

MySpace, which is geared towards teenagers, attracted more than 46m unique visitors to its site in July, compared with about 8.5m for Facebook, which is geared towards a slightly older audience, according to Nielsen/NetRatings.

Under the deal announced on Wednesday, Microsoft will provide banner ads and sponsored links on Facebook pages using its Microsoft Adcenter platform, the software maker’s answer to Google’s industry-leading Adwords advertising service. The companies said the first Microsoft-served ads would appear in the early autumn.

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