One of the biggest challenges with web 2.0 is creating a relevant ad model. Considering the traffic and time spent on Myspace, Facebook, YouTube, blogs, these sites aren’t getting their fair share of online ad dollars.

Finding the right ad model is very tricky. Banners on your Facebook or Myspace page feel very intrusive.  Adsense works but there text links are limited.  Creating branded groups or “friends” works if you have very entertaining content.  That’s OK if you are promoting a movie but a lot harder if you are selling insurance.  Frankly, none of these leverage the real potential of web 2.0 for marketers – word of mouth.

Squidoo may have found the answer with Squidoo Offers.  Here’s how it works.  If you have an offer, you pay for it to be to shown to people on Squidoo in a relevant category. If they like it, they vote it up. The better the offer, the more votes you get, the more you traffic you get.

It’s early days yet but it could be very powerful. It combines the relevance of Adsense with the power of real user referral.