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May 8, 2008

News Corp: Selling Ads For MySpace Is Hard Work!

News Corp: Selling Ads For MySpace Is Hard Work!

Silicon Alley Insider by 

News Corp. execs did more than just admit that they weren't going to hit their revenue goals for MySpace and Fox Interactive Media today. They also fessed up to another open secret: Selling ads on social networks is a really difficult.

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.

Coming Soon To The Endangered Species List: Online Ad Sales Teams?

from paidContent.org by 

The self-serve ads option has been all the rage for search ads the last few years. Increasingly, now, do-it-yourself is becoming similarly popular for the display ad space. Over the past several months, a number of companies have come up with DIY offerings: Fox Interactive Media (NYSE: NWS)began testing a self-serve option for its local TV websites and on MySpace, as Facebook's DIY program has been drawing interest from small advertisers as well.  Meanwhile, a slew of relatively new vendors like AdBrite, AdReady and AdItAll have all been pushing self-serve display-buying options as well. On the web publisher side, AOL (NYSE: TWXjust released PubAccess, a self-serve tool aimed at small publishers as a way to manage their display ads. Google (NSDQ: GOOG), which was credited with helping spur the rise of search ads with its self-serve system, has launched a similar service. Lots more after the jump

-- Less hassles at low prices: The WSJ points out that the emergence of DIY ad services for display have the potential bring in greater numbers of small advertisers who can't afford display ads through the current route. Self-service also appeals to those marketers who can't afford demands like Yahoo's (NSDQ: YHOO) usual service, which requires advertisers to commit thousands of dollars per month as a price of admission to place display ads across its portal. Contrast that with the few cents its costs to reach a thousand users with Facebook's and MySpace's DIY systems. Aside from the cost, the typical DIY method of buying display ads is a tortuous, time-consuming one: as the WSJ explains, the exercise generally entails choosing among 15 standard sizes and several basic formats; then advertisers have to pay someone to design the ad; once that's done, they have to pick which network to buy space from, test the ads and ultimately track them. The other option involves paying an agency still more thousands to handle the job for them, something smaller marketers can't do.

-- Going the way of travel agents?: Display ads are expected to be 40 percent of the $20 billion online ad market over the next few years. That growth is dependent on the process becoming more simple and less expensive. As the self-serve option takes hold, WSJ compares the likely shakeup in the online ad industry to that of travel agents, a business that has been marginalized as consumers have tended to plan their own trips online as well. So although ad sales teams function might be as essential as a result of all this increased automation, the current system isn't like to hold either, given that sites are already having trouble hiking their prices and stagnation is a possibility. The prospect of self-serve options bringing a wider class of advertisers into the system and making the practice less costly and arduous is, in the end, considered crucial to the growth of the online ad industry.

TV Ad Sellers To Ad Buyers: Don't Even Think About Spending Money On The Web!

Silicon Alley Insider by 

onlineadvertising.jpgJust in time for the network upfronts, which start next week, the Television Bureau of Advertising and Nielsen roll out a study to remind everyone that Americans still spend 53% of their media time in front of the tube.

Not sold on TV ads? Then the study has another nugget for you: When Nielsen asked 1,246 adults which ads were "most persuasive," only 5.1% said ads on the Internet. That's a lot lower than TV (69.9%), newspapers (9.5%), and even radio (7.5%).

Of course, most of the ads consumers are exposed to on the Web are crappy, low CPM ads anyway. And we'll point out again who's sponsoring this study: TV advertisers.

But we bet that there's likely an underlying truth here: Consumers have become hardened to the barrage of commercial messages they're served on the Web. None of this, though, solves TV's fundamental problem: That it has been losing viewers over time, and that the trend is certain to accelerate.

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