I’d like some way to confirm this, but if it’s true, as has been claimed by the company, that MySpace has 10% of all available advertising inventory on the Web, then Murdoch got a deal at $600 million or so. The web is surely worth more than ten times that number…and MySpace is a very, very desired demographic by marketers.
MySpace
I'd like some way to confirm this, but if it's true, as has been claimed by the company, that MySpace has 10% of all available advertising inventory on the Web, then Murdoch got a deal at $600 million or so. The web is surely worth more than ten times…
It seems some of the shareholders of Intermnix media who own Mtspace think the deal is way too low and have filed a lawsuit to stop it. I am not sure what the current status of it is.
See: http://today.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?view=PR&symbol=MIX.A&storyID=258917+31-Aug-2005+BW
I tend to agree with the shareholders. I think many people tend to see Myspace as kind of the World Championship wrestling crowd of the internet and have not paid attention to them. But it is where young people hang out, seems to not be going away. Murdoch is late to the game, but he is keen to the rise of interactive media. I personally do not like his politics, but he is savvy, and is not afraid to make bold decisions.
We shall see where the lawsuit goes,
It’s a done deal. Murdoch owns it. He made the smartest business move of 05 in my opinion. Buying the game site (IGN) was a close second.
10% of advertising on the net? I don’t buy it for a second.
Murdoch gets it, unlike his fellow offline publishers. MySpace will go down as one of the best and cheapest deals. Just wait for Fox’s content hammer. I will be commenting on this more on my blog today, hope you will get the chance to read it tomorrow John.
John,
Its funny how timely your post is. I received an email this morning from a MySpace ad rep looking for business. It turns out that we already have a rep. My reply was this, “I’m sure Mr. Murdoch appreciates the aggressiveness.” To which the rep replied “Ha, I hope so!”
I guess not only did Murdoch get a great deal, but he’s looking to capitalize on it in a big way.
– BC
November 2005 Pageviews
Yahoo.com: 32,331,345,618
MySpace.com: 25,486,727,147
Google.com: 9,770,452,351
Amazon.com: 1,726,709,163
mspaceads.com: 1,115,154,774
Source: Compete, Inc.
When the comments are taken at face value they are true. Those adveritising numbers are released by the internet advertising bureu every month.
However when looking at the details they will never get anywhere near 10% of the advertising dollars.
1. The average myspace user views 500 pages per month.
The click through rate on a myspace campaign is probably 1 in 15,000 page impressions. If you look at google the CTR is around 80%.
In other words not all page impressions are created equally. 1 Google page impression is probably worth 13,000 page impressions on myspace.
No one doing direct response marketing would be dumb enough to try and recruit people from myspace. That leaves only brand advertisers, who get a very quesionable return as myspace users basically ignor every ad.
We discussed this last month on Techdirt:
http://www.techdirt.com/articles/20051102/1118219_F.shtml
The reporter in that case claimed that the numbers come from Nielsen. I’ve seen other reports saying they found similar numbers at Comscore.
Still, something is very fishy about the numbers. If it’s true that they’re really getting 10% to 12% (as the article we discussed claimed) of all online ad views, then their ad sales people are doing a terrible job — because they’re making very little off of those ads.
So, either the numbers are wrong or they need to fire their ad sales staff — neither situation reflects well on MySpace.
At the same time, I’m sick of reporters simply parroting this claim without questioning it (as I noted in my original post), so thanks, John, for questioning it.
Any reporter worth his or her notebook should be asking these questions rather than simply repeating what MySpace’s PR staff is claiming.
The youth crowd is pretty fickle though… take a look at the mass exodus from friendster. That, and they often use more than one social networking service (see facebook for example). Myspace differentiates on music and personalization, but that’s a model that can be replicated.
My question – right now Myspace is hot, but what if something more compelling comes along in the social networking scene? I’m not sure Myspace is as safe a bet as a Google/Yahoo/MSN for keeping those numbers, whereas its harder to imagine someone showing up and outdoing the search giants anytime soon due to the sheer difficulty of the problem (and the technology & IP involved). Nevertheless it looks like Fox got a great deal.
I wrote a social networking story last week for BusinessWeek, and I’ve referred to the 10% figure you mention in your blog a couple of times in various stories. It’s Nielsen/NetRatings’ calculation for the share of advertising impressions for October. It has lingered around 10% the last couple of months. According to folks at Nielsen/Netratings, this means that one of every ten ads viewed online in October was viewed on MySpace – it does not mean that 10% of all internet ads were on MySpace and it does not give any indication as to the effectiveness of the advertising. It does signal that a grand number of folks are spending loads of time on the site.
Here’s the story, in case you are interested: http://www.businessweek.com/magazine/content/05_50/b3963001.htm
I don’t think Friendster is a great precedent for the sustainability of MySpace’s business. I don’t have the exact number on hand, but I think Friendster peaked at about 900k monthly uniques whereas MySpace is at about 24m right now. The scale is completely different and given that this business has, by definition, network effects, I think the sustainability is pretty good.
I wrote about this topic as well, about a month ago over on Om Malik’s blog… http://gigaom.com/2005/11/03/my-space-part-deux/.
By my calculations, MySpace’s optimal revenue model should yield them about $500 million (assuming current traffic/ad inventory levels).
Consequently, Ross Levinsohn (ceo of FIM) just last week projected fiscal 2006 revenues to increase sixfold to $300 million… http://www.foxnews.com/story/0,2933,177856,00.html. Not too shabby, and right on track!
John’s noted that the relationship between user, advertiser, and medium is critical, and that community sites and blogs need a better advertising paradigm than adsense to optimize things for everybody.
Somebody get on that right away!
Hey John,
I just wanted to point out my second post on social networks is up, well a working draft atleast. Your post about Myspace really got me going with it. Hopefully, you’ve had time to read the first one. Same pasword to log-in.
Brad
I think the nielson and comscore numbers are highly suspect. Both of them use spyware applications to get installed on users machine. Nielson and comscore report my site as having 185 uniques a month. Webtrends, google analytics etc report it as having over 2.2 million uniques a month. At any rate even if the numbers are correct the higher your uniques to pageviews ratio the lower your max CPM rate. I talked to the company that fills myspaces inventory and they said they are lucky if they get 5 cents a CPM. Not only that there aren’t enough advertisers willing to buy up the inventory at that price.
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