AOL Buy BEBO in Multi-Million Dollar Cash Acquisition
by Liam Bailey
2008-03-16 15:45:00 **news**
AOL is paying $580 million dollars in cash to buy the second most popular social bookmarking site BEBO. The deal will bring AOL's advertising reach to 80 million viewers. BEBO had been level-pegging with MySpace for many months but has just started to pull ahead. Comscore put BEBO at 10.6 unique page-views, while MySpace had only 10.2, and BEBO users stayed on the site an average 38 minutes, MySpace users stayed on only 27.
There is no denying that MySpace and Facebook are the two most popular social networking sites in America, but in Britain BEBO reigns supreme. BEBO's uniquely winning feature is its online TV show Kate Modern. The show is named after the main character, a straggly art student, whose name: Kate Modern is a play on the London art gallery the Tate Modern.
BEBO has been in the news a lot lately, firstly signing a deal with Yahoo, to display their ads in return for Yahoo linking BEBO to its answers search facility, and adding BEBO functionality to the Yahoo toolbar. Then signing a deal with Microsoft so BEBO users can IM anyone friend or not using MSN messenger. It is unclear what will happen to these collaborative services when AOL takes BEBO on, because both companies are AOL rivals.
It is also unclear just how much good BEBO will do AOL's profits, as advertising hasn't proven very successful on social networking platforms. In a March 9 interview at SXSW, Facebook CEO Mark Zuckerberg said his company was close to breaking even -- in other words the company isn't yet making a profit despite its being valued at $15billion. Google has also been disappointed that its deal to display ads on MySpace hasn't been generating the returns they imagined.
With this knowledge, companies are now hoping widgets and applications will prove a successful way of monetising the social networking platform. "We used to look at social network sites like we would any ad-supported sites, like the NYTimes," said Tim Armstrong Google's president of advertising at a Bear Sterns media conference on March 10. "Now we think differently. We look at social networks as a platform and see an opportunity to monetize widgets and social network applications."
BEBO has recently added widgets to its program, and AOL will benefit from its platform A demographic targeting capabilities, which may make advertising with BEBO's audience more successful than other social networking advertising endeavours. When all is said and done only time will tell how successful BEBO's acquisition will be for AOL, but they have a history of failing to properly integrate their acquisitions, like advertising firms Advertising.com and Tacoda, both bought by AOL in billion dollar deals, and both not achieving their full potential for AOL.
