Bebo for $550 Million, Anyone?

And the frenzy among the old media dinosaurs continues in the aftermath of NewsCorp’s $580M purchase of that “shiny” MySpace universe of teeny-boppers, spammers and porn star wannabes.

I tried Bebo before and it truly isn’t anything to shout about. No innovation there, its all about the user base which we all know to be finicky once the novelty of a social network dies down as the teens grow up. I say, if anyone wants to build a sustainable social network today, please create some meaningful online activity besides just checking out each others’ profiles voyeuristically cos that will just generate attention of the teens during their teenage years. I.E. very short lifespan. Just how many Facebook-ers still devote even half the amount of time on Facebook after their graduation?

Different life priorities + Incongruent business models = Unsustainability.

On a different note, I think other social networks such as Linkedin.com, OpenBC that cater to the professional networks have greater appeal. I think professional networking services have greater use over the long run for their users although a revenue model that is dependent on online advertising might not hold weight for investors. And I am beginning to like blog-centric social networks such as MyBlogLog that actually foster greater online interaction tightly bonded around common interests and facilitating that reader-blogger conversation.

Here’s an excerpt from TechCrunch that I liked:

MySpace is apparently charging $0.10 CPM for banner ads. That’s horrible and indicates they have a massive supply of inventory that they can’t sell unless they practically give it away. There’s a lot of hype around the advertising potential on these sites, and I don’t disagree with the potential, but when you look at the silly “Congratulations! You’ve won our hourly prize” banner ads and Google text ads on these sites, you have to start questioning why none of the big agencies are advertising and paying the premiums that lots of people believe these sites should and will command.Incidentally, I have been involved in the operation of traditional message board sites in several very “sticky” verticals for the past 6 years. On paper, the demographics look incredible and the “stickiness” of the sites is mind-boggling. But getting top brands/advertisers and keeping them is extremely difficult. I’ve had candid conversations with some of our advertisers about this and the issues they have apply to the social networking sites:

Users on these sites are adept at mentally blocking out the ads. They are there to socialize, not to be marketed to. It doesn’t matter if you have the perfect audience and that users visit the site like it’s Mecca if they ignore the ads. Advertisers want ROI (or some proof of effective branding) and when they don’t get it, their willingness to pay a premium goes away or they drop their spend with you entirely.

User-created content is a risky proposition for most brands. The idea that their ad could be displayed alongside questionable content that they don’t want their brand associated with is a huge factor in their ad purchasing. On our message boards, we had to recruit a 24/7 moderation team and set up procedures to reduce abusive users from signing up in the first place. I read somewhere that MySpace has 220 full-time employees, most of which have customer support and moderation duties. The site has 80+ million people. You just can’t police it effectively with those numbers. Go on to any of these sites and you’ll find they’re filled with sleezy stuff (sexually explicit content, hate speech, glorification of vice, etc.). Then ask an ad buyer at a major brand whether he or she is going to want to advertise when there’s a very high probability their ad is going to be displayed alongside that stuff at least some of the time.

Bottom line: if you’re going to run a successful site and business that’s based on user-created content, it requires work. The sites I’m involved with are profitable, but they’re not the US mint. You need to actively manage and maintain community sites if you want to have any level of quality. I haven’t seen any evidence that you can do it profitably with tens of millions of users. Maybe MySpace, Bebo, and the rest of the herd will prove me wrong, but one look at the content on there now shows they have a lot of work to do.

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2 thoughts on “Bebo for $550 Million, Anyone?

  1. Hi, Thanks for mentioning MyBlogLog. If there’s more we can do to help you get our various bits installed (blog click tracking, Recent Readers widget, etc.) to build your community, just let me know.

  2. Hi, there!..f12a4c504efb8caa9d3cacf1ba10ec10

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