News Corp: Selling Ads For MySpace Is Hard Work!
How difficult? Consider that even while MySpace and all of the other FIM sites continued to grow, FIM revenues dropped from $233 million in Q2 to $210 million in Q3; about a third of that total came from a 3-year guaranteed deal from Google.
That explains why former FIM chief revenue officer Mike Barrett got shown the door last month. But News Corp. COO Peter Chernin didn't point the finger at Barrett for the shortfall, and he didn't blame the larger economy, either -- even though his boss Rupert Murdoch said that US consumer spending was "stressed".
Instead, Chernin said, FIM/MySpace's problem is endemic to all social networks: It's awfully difficult to turn all those page views into money. Our paraphrase of his remarks:
We remain incredibly optimistic about social media. But there are specific challenges 1) Tons of inventory. Lack of scarcity creates a liquidity challenge. Working on bringing big brands aboard. 2) People who are visiting social networks there for different reasons, different uses. Figuring out how to target. 3) What's the value of a "friend"? Trying to figure out new metrics to communicate with marketers.
None of this is news. The news is that News Corp. is now saying it out loud, and tempering expectations for MySpace, which a couple of years ago looked unstoppable. Now it looks more like a very big, very hard to monetize Web property.
For the record, Chernin spent much of the call talking up MySpace/FIM's prospects, which aren't awful -- they're just not as good as they thought they were a year ago. Here's a summary of his talking points:
- Branded revenue is up 21% over last year and branded sell-through is trending up for the year with a 19% increase from Q1 to Q3.
- Performance revenues were up 24% year over year.
- Most importantly, as MySpace user base continues to grow, we’re actually earning more money per user. FY 08 revenue [display + search] per unique is up 49% over last year.
- 54% of all social network ad dollars are going to MySpace (eMarketer, 12/07)
- Hundreds of HyperTargeting campaigns have been run in last eight months – with 20% or more of all orders today including HyperTargeting.
- Seeing double CPMs for HyperTargeting vs. non-Hyper-Targeted
- Orders with HyperTargeting are about 60% larger
- Enjoying considerable number of repeat orders with about 75% of advertisers ordering HyperTargeting again.
- Also, seeing successes in sales of key pages with sought-after branded advertisers and attracting many high-profile brands for the first time this quarter, including Novartis, Wrigley, Virgin Mobile, Unilever and Toyota. Several have stepped up to the popular branded “skin” of the MySpace home page which goes for a 70% premium on the standard homepage buy.
- Major category growth including Automotive, up 73%, Consumer Electronics, up more than 300%, Beverage, up 600% and Education up 850% year over year.
- MySpace is at an all time high in terms of audience reach and engagement according to both comScore and Neilsen -- more than doubling Facebook’s U.S. audience with 73 million users compared to Facebook’s 36 million.
- And minutes spent on MySpace in the U.S. far surpass Facebook – 242 vs. 167 minutes per user per month.
- MySpace TV continues to grow and is the number two online video site after YouTube.
- IGN and Photobucket are up 40% year to year in unique visitors worldwide. IGN remains the number one games information property and in the past quarter, its Direct2Drive service surpassed one million games sold. Photobucket’s worldwide page views for March 2008 were 2 billion – up 85% year on year
- FoxSports.com is up over 20% in worldwide unique visitors year on year and recently launched its mobile WAP site expanding its reach further – the Number one mobile WAP site for mobile sports information.
See Also:
News Corp Web Unit Sees Revenue Drop; Admits It Won't Hit FY 08 Revenue Goals
News Corp On Microsoft, Yahoo: Talks? What Talks?
http://www.alleyinsider.com/2008/2/everyone_knows_that_advertising_on
Facebook is a Dead Man Walking. Their massively outrageous and bizarre failure to sell when they had the luscious juicy fat chance will earn them the PointCast Award, aka the "Here I Sit, Brokenhearted, Golden Bowl Trophy"
If Murdoch or Zuckerburg are ever interested in generating some real cash from their social networks I suggest they contact us.
I commend MySpace for continuing to foster a massive yet unique audience. So long as they continue to attact their core audience of talented artists they will continue to see success.
I commend MySpace for only partnering with 3rd-parties that are committed to serving ads that meet their defined quality specs.
I commend MySpace for bringing more of their ad-sales in-house and listening to advertisers requests for "hyper-targeting".
I commend MySpace for not hedging their bets entirely on social-network banner inventory, and using their massive audience to build high-quality content; gaming, original video, news, and ..... pending music services?
I hope you take a longer term strategic focus with your own company, then the strategic focus you suggest to your clients.
MySpace's approach to maximizing their value is my definition of "progressive"....good luck with your "progressive" flashy ads.
A) As the newspaper crisis unfolds it is getting
increasingly clear that they want to be advertisers.
And that everybody else has to share their concern,
their worries, to play this role. It is possible
that gradually the newspapers (and other media to
follow) manage to annoy the rest of the population.
In particular, businesses on the one hand and
consumers on the other.
(They never bother to ask whether their services are
wanted.)
B) The media and the ad industry were and are a
really greedy lot. To some extent like feudal lords levying tithes on their underlings.
C) There would be plenty of case studies of ad
spending that was counterproductive. A nasty
example: the ads for credits, mortgages, .. and all those banks now busy with posting losses and write-offs. (Ad strategies that worked out like food poisoning with lots of consumers being economically seriously ill.)
D) The ad industry / media follow the consumers
just about everywhere, into the bathroom, the
bedroom, the cling on to the pubic hair if
necessary, and so forth. This might get a bit too
much.
E) Facebook have increased their ad rates rather
drastically, if I am not mistaken. Sometimes
advertisers learn it the hard way that ad spending is a waste of money, too expensive.
In summary, that's why cost-efficiency (and media/
ad critique) might be far more "sexy" than what
the media come along with. It is all an open
matter now, for hundred other reasons as well.