Posts Tagged ‘Bebo.com’

Social Networking Throwdown: AOL Acquires Bebo for $850 Million

March 13, 2008

Talk about coming out of nowhere. This morning, AOL announced it acquired the social network Bebo.com for $850 million–the most money ever paid for a social networking site (if you don’t count YouTube).

I actually think is a pretty smart strategic bet–though it comes with its share of risks. This is AOL’s boldest move yet as it shifts from selling Internet access to an advertising-based business model on the open Web. It has already spent more than $1 billion scooping up online ad firms such as Quigo, TACODA and Third Screen Media. And it recently appointed the head of Advertising.com, Lynda Clarizio, to run AOL’s broader ad-network group, Platform A. But this puts a large stake in the ground that AOL intends to be a leading player in the global social media market.

It’s also a good tactical move. As Microsoft and Yahoo! do their mating dance, AOL can use the distraction of a merger to steal a beat on its rivals in the online ad market. Lord knows AOL will need it–as Google just closed its acquisition of DoubleClick.

In fact, this deal could make AOL the most popular Web site on the Internet. Right now, AOL claimed about 109 million unique visitors, making it the fourth largest Web property, after Yahoo! (138M), Google Sites (135M) and Microsoft Sites (119M). Add in Bebo.com’s 40 million worldwide users and that puts AOL on the top of the heap.

“Bebo is the perfect complement to AOL’s personal communications network and puts us in a leading position in social media,” said Randy Falco, Chairman and CEO, AOL. “What drew us to Bebo was its substantial and fast-growing worldwide user-base, its vision of a truly social web, and the monetization opportunities that leverage Platform-A across our combined global audience. This positions us to offer advertisers even greater reach and marketers significant insights into the desires and needs of consumers.”

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Sure, this deal gives AOL scale. And Bebo’s growth will likely pick up as it “will be featured prominently in AOL’s international expansion efforts after the deal is closed,” according to the press release. AOL is in the midst of a big global push right now. Over the last year, AOL has launched 17 international web sites, and it has plans to expand to 30 countries outside the U.S. by the end of 2008, says today’s release.

But the advertising model for social networks is not fully baked. Growth rates on these networks are slowing. The ads suffer from very low click-through rates compared to other parts of the Web. And the current enthusiasm for advertising on social networks may be exaggerated by guaranteed ad deals and hopeful experimentation. Like MySpace and Facebook, AOL must now figure out how to crack the code of social network advertising. That is the Holy Grail of the Internet now. And AOL just announced it is part of the chase.

Generation MySpace is Getting Fed Up

February 7, 2008

My post about social networks triggered a torrent of commentary and links. Well, here’s what I really think is going on after doing a bunch of reporting and thinking. The story by Spencer Ante and Catherine Holahan will be in this week’s issue of BusinessWeek, and it is called “Generation MySpace is Getting Fed Up.” And it just went up our Web site.

It’s Official: U.S. Social Networking Sites See Slow Down

January 29, 2008

I just got a hold of the ComScore numbers for U.S. social networking sites, and it ain’t pretty folks. (See an abridged version of the chart below this post.) After peaking in October of 2007 with 71.9 million users, MySpace, the leading social network, has seen its audience fall back to around 68.9 million unique visitors. December saw no growth over November, though visitors were up 13% from last December.

More alarming are the engagement metrics. Since December 2006, when MySpace engagement peaked at about 234 minutes spent per visitor, time spent on the site has dropped consistently throughout the year. In December, time spent per visitor saw its biggest month-to-month drop, of about 8.5%, to 179 minutes per visitor per month, down from 196 minutes in November. That equates to a 24% year-over-year drop.

But the pain is not just a MySpace problem. It seems to be an industry-wide issue. The total audience of U.S. social networks seems to be stuck at a low-to-mid-single digit growth rate, while the engagment metrics are falling for just about everyone. Time spent on Bebo.com has been sliced in half over the last four months, while Friendster’s time spent has plummeted nearly 75% in the same time period. Overall, minutes spent per site fell 5% in December 2007 compared to the year-ago period.

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Even Web darling Facebook can’t buck the entire trend. The good news for Zuckerberg & Co. is that the company continues to grow its U.S. audience. In December, Facebook claimed abut 35 million visitors, almost double its year-ago audience of 19 million. The bad news is that Facebook’s engagement is down sequentially, and only up 13% year-over year.

So what does this all mean? For starters, slowing and/or decling growth will make it harder to generate sales and profit growth from these sites. That will put more pressure on the advertising programs to deliver results. Of course, they could offset the declines through overseas gains. But so far, advertisers have been leary of marketing on social networking sites outside of the U.S.

All eyes will be on the News Corp. earning announcement on Feb. 4 at 4pm. Then we’ll find out how the slowing growth has actually impacted the sales and profit potential of these sites. My hunch is that the numbers won’t be as rosy as the company would like.

Average Minutes per Visitor Dec-06 Jan-07 Feb-07     Oct-07 Nov-07 Dec-07
Total Internet : Total Audience  1,764.90 1,746.90 1,721.90     1,817.70 1,732.70 1,684.90
MYSPACE.COM 234.6 227.5 184.8     192.9 196 179.3
BEBO.COM 213.3 417 302.7     231.8 246.8 173.9
FACEBOOK.COM 150.4 170.2 199.9     195.6 189.7 169.4
HI5.COM 22.7 34 28.1     53.6 62.5 56.6
FRIENDSTER.COM 39.5 38.6 31.5     109.2 69.8 39.2
Windows Live Spaces 17.3 14.6 17.2     14 13.2 14.9
LINKEDIN.COM 8 6.7 5     8.7 9.9 7.1
                 
                 
Unique Visitors (000) Dec-06 Jan-07 Feb-07     Oct-07 Nov-07 Dec-07
Total Internet : Total Audience  174,199 175,559 175,653     182,206 182,362 183,619
MYSPACE.COM 60,887 61,524 64,443     71,982 68,746 68,905
FACEBOOK.COM 19,105 18,961 16,737     32,910 33,660 34,658
Windows Live Spaces 9,589 9,057 8,320     9,854 9,884 8,912
BEBO.COM 2,977 3,602 2,641     4,442 3,674 4,279
LINKEDIN.COM 872 1,122 1,211     2,782 2,784 2,868
HI5.COM 3,029 2,299 2,640     2,454 2,165 2,483
FRIENDSTER.COM 1,103 1,288 1,379     1,668 1,687 1,791

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