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AOL to Users: We've Got you Surrounded

I'm trying to figure this AOL - Bebo thing out. No, not the $850M price, although that is interesting. Almost 3 years ago Rupert Murdoch pays $560 million for the then rising star MySpace. Two years later, new star of the net Facebook gets valued at $15 billion. Now AOL pays $850M for Bebo, the little social network you think you heard of but no one you know uses. It's the second largest UK social network. Hmmmm.

AOL is an interesting company. Ever since merging with Time Warner, it seems like they're perpetually on the block. First, Google doesn't want to lose their search business so they invest $1B for 5% of the company. Next, with Yahoo under a bit of pressure itself, the idea of combining it with AOL has come up. Even the CEO of Time Warner says the company's in play.

Usually, this type of "activity" has a paralyzing effect on the company. Internally, no one has any directional sense so no one takes ownership of new initiatives. Externally, with the future ownership being so uncertain, people don't feel comfortable doing deals. Not AOL though. They keep trucking on. $850M in cash has a way of convincing people otherwise I guess.

Anyway, so what's in it for AOL. What do they get for their $850 million. Well, since AOL sells two things - access and ads - and this deal has nothing to do with access, then they're buying impressions. Presumably targeted impressions. Because people reveal so much about themselves on their social network pages (age, location, interest, etc.), the thought is that these impressions are more valuable than generic page impressions from a CPM standpoint. Thus far, this has not proven to be the case, but that could change in the future.

But, with respect to AOL, how much MORE targeted can they get. First, for their access customers, they already know all sorts of information about them. Their names, locations, email addresses, REAL addresses, time spent online, their credit card number, etc. On top of this, AOL just bought Tacoda for a crap load of money. Tacoda is a behavioral targeting ad network. They watch where you go and then serve you up ads based on your surfing.

Oh yeah, AOL also owns Ad.com - one of the biggest ad networks out there. I've advertised with Ad.com before - they too sell demographic and targetted buys. On top of that AOL bought Quigo - the text ad provider. Text ads are the ones most people click on and Quigo tracks.

Imagine being an AOL access customer, a more closely watched web surfer doesn't exist. Now add Bebo.com users to this mix. They have their data to target ads with too. OK, we get it. You like user info. Makes sense. Now if you actually do something prodcutive with it, perhaps you might not be on the block....

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This page contains a single entry from the blog posted on March 13, 2008 4:34 PM.

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