UPDATE 1-Google social network ad business "improving"-Brin

(Adds details, quotes, background)

By Steven Scheer and Rebecca Harrison

JERUSALEM, May 15 (Reuters) - Google Inc (GOOG.O: Quote, Profile, Research, Stock Buzz) co-founder Sergey Brin said on Thursday advertising on social networking sites such as Facebook and MySpace was getting better, but was still not perfect.

"In general, it's been improving but we still have a long way to go," Brin told reporters on the sidelines of a conference in Jerusalem to mark Israel's 60th anniversary.

"Things have been going well this year...it's hard to predict where social networking will come out."

Google Chief Executive Eric Schmidt said in January the company was having trouble making inroads selling advertising into what is now the hottest market on the Internet.

Brin said it would take time to find the best formula to develop the social networking advertising business, to develop the right technology and to educate advertisers and users.

"People are expecting overnight to wake up to a miracle... but these things take time," he added.

Brin also repeated that he was "very happy" with a two-week test this month in which rival Yahoo (YHOO.O: Quote, Profile, Research, Stock Buzz) used Google search advertisements. But he said he had nothing to add at this stage on any possible further tie-ups.