March 20th, 2008
Report: AOL ignored senior management doubts over Bebo buy
Compared to many in the tech press and blogosphere, I came out quite positive on AOL’s acquisition of Bebo — citing its fairly modest price tag ($850M) compared to what News Corp. paid for MySpace nearly three years ago ($580M) and the ludicrously high valuation of Facebook ($15B) that Microsoft’s recent investment in the so-called “social utility” implied.
However, according to Silicon Alley Insider, my optimism also runs contrary to many of AOL’s senior management who, according to the report, had serious doubts over the business case for buying Bebo.
Among the concerns, says Silicon Alley Insider, were the following:
An inability for AOL to monetize more social-networking inventory.
According to Silicon Alley Insider’s sources, AOL’s Advertising.com is already unable to monetize all the MySpace (NWS) and Facebook inventory it has available. This would tally with recent comments made by Sergey Brin, Google’s co-founder, who admitted that with regards to Google’s “social networking inventory as a whole” the company’s “monetization work” hasn’t panned out as well as they had hoped. Facebook is also finding monetization problematic, as demonstrated by its controversial roll out of its Beacon platform, which, frankly, stank of desperation. In other words this isn’t a problem unique to Bebo or AOL.
On the upside, Bebo users appear to be more “engaged” than on other social networks and the site has at least had some success with aligning brands with original episodic video content (KateModern).
Flattening traffic growth at Bebo
Is AOL buying Bebo at its peak? The comScore chart suggests this may be the case (for now) but, looking forward, Bebo is currently working on plans to launch in a further 5 countries and AOL has very ambitious non-U.S. expansion plans. It’s still early days - Internationally - for social networking sites.
Belief that the Bebo founders would bolt the moment the check cleared.
This one has already proved to be true - though it must be noted that Bebo President Joanna Shields (ex-Google) is going nowhere and has been, in effect, running the company over the last year.
What do you think: has AOL done a good piece of business or bought a dud? Comments please :-)
Steve O'Hear is a London-based consultant, educator, and journalist, focussing on the Internet and all aspects of digital technology. See his full profile and disclosure of his industry affiliations.
