New Hitwise findings indicate that MySpace sent more US traffic to online retail sites last week than MSN search, the third largest search engine on the web. That’s big news, as it’s tangible evidence that youth oriented online social networking is a market driver of serious proportions.

The Hitwise report puts Yahoo! as the source of 4.69 percent of traffic to online retail sites, MySpace as 2.53 percent and MSN search at 2.33 percent for the week ending August 26th. Google leads the pack at 14.93 percent.

Search related advertising last year was a $5 billion market, still small compared to $22 billion in magazines and $74 billion for TV advertising - but the landscape is changing. The Financial Times ran an article on Tuesday about the belief that the shortage of marketers skilled in negotiating sites like MySpace and YouTube is one of the biggest barriers to the growth of advertising online.

Even in the short term, it’s still up in the air between the big players. Google’s advertising, which is generally believed to be more effective than that of competitors, hasn’t kicked in at MySpace yet. If Google can make MySpace search more bearable when it takes over in the fourth quarter of this year, then you can expect MySpace to drive more traffic to retail sites than ever. At the same time, IE 6 doesn’t have a native search box in the chrome of the browser and IE 7 will - to search either MSN or Live.com. We’ll have to compare these numbers with Live.com in the future.

Read more at TechCrunch.