March 13th, 2008
AOL acquires Bebo for $850 million; Social networking field narrows
AOL has made its social networking move, acquiring Bebo and getting access to its membership of 40 million worldwide.
In a statement Thursday, AOL said Bebo is a “perfect complement to AOL’s personal communications network and puts us in a leading position in social media.”
Indeed, Bebo does make AOL a player in social networking (see Techmeme). Meanwhile, if you couple Bebo with AOL’s ad networks and other initiatives like Open AIM 2.0 Time Warner’s online unit has some mojo.
Let’s add up AOL’s assets:
- AOL has spent almost $1 billion on ad acquisitions including ADTECH, buy.at, Lightningcast, Quigo, TACODA and Third Screen Media to create Platform-A.
- AOL has a lot of inventory through AOL.com, Moviefone, TMZ and Engadget, which is surprisingly never mentioned in Time Warner propoganda.
- And now it has Bebo.
The big question is this: Can AOL monetize Bebo as well as its other inventory? AOL talked a lot about “engagement advertising,” but the jury is still out on that one. AOL has struggled of late. And if Google has headaches monetizing social media I’m not sure AOL can figure it out any better.
Figuring out that social media monetization equation will fall to Bebo president Joanna Shields, who will continue to run the social network and report to AOL exec Ron Grant. Shields did mention that Platform-A will be critical to juicing Bebo’s ad potential (Allen Stern has a nice recap of the conference call).
Bebo’s assets are clear:
- Bebo users view 78 pages a day;
- Bebo gives AOL some social networking cred;
- And Bebo is popular abroad being No. 1 in the U.K., Ireland and New Zealand. In the U.S. it’s the third largest social network behind MySpace and Facebook.
Now it’s up to AOL to do something with Bebo within the bureaucratic structure of parent Time Warner. Another key thread is that the social networking field has narrowed dramatically. AOL has Bebo. News Corp. has MySpace. And Facebook is in bed with Microsoft.
As for the rest of the field, AOL’s purchase of Bebo is likely to set off a round of consolidation among smaller players that would be fine tuck-in deals in a larger setting.
With Bebo off the table sites like Ning and LinkedIn have just become more valuable–especially to a company like Yahoo, which appears to be left out of the social networking party.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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