MySpace touts more than 100 million MySpace “friends” and YouTube touts more than 100 million “clip-culture” videos viewed daily.
One hundred million is an impressive sounding number. The millions of MySpace social networkers and YouTube video sharers the sites boast are what attracted News Corp. and Google to acquire the respective Websites.
I have asked at this Digital Micro Markets Blog how much are 100 million non-paying users worth?
News Corp. paid $580 million for MySpace when it hosted less than 100 million “friends”; Google acquired YouTube’s 100 million claimed video views daily for $1.65 billion in Google stock.
Rupert Murdoch tells News Corp. shareholders that MySpace is now worth $6 billion (see “$6 billion MySpace: Will this Levinsohn cash in?”).
Just as “beauty is in the eye of the beholder,” the valuation formula for strategic M & A deals is often simply the price willing buyers and sellers agree upon.
Perhaps a better estimation of the worth of the two advertising-supported Web 2.0 acquisitions is the amount advertisers are willing to pay to reach the audiences of the Web properties.
In “Web 2.0 hype: Popularity without profits” and “MySpace: What are 62,171 friends worth?” and ““Can Google, Fox turn YouTube, MySpace buzz into cash?” I discuss how brand marketers are questioning the bottom-line marketing worth of “popular” online social media destinations and holding back ad spends from social networking properties.
I heard Mary Bermel, Director Interactive, HP, itemize her reluctance to allocate marketing budgets to MySpace, as I recount in “HP: Social networking not marketer friendly”:
HP is all about selling product and Bermel cited research indicating that 'people involved in social networking tend not to trust products advertised in the social network'… Bermel asked 'Why does HP have to 'be there'.
In “Fox Interactive to Yahoo: watch out, we are on your digital tail!” I recount my Q & A with Ross Levinsohn at Advertising Week last September in NYC.
Levinsohn touted that MySpace commands “rich CPMs” from “hyper-targeted advertising.” I put forth to Levinsohn, however, that user-generated content generally nets “junk” CPMs and I pointed out that I had written about one particular MySpace friend–Sexxy Sangria–and noted that even Google had shown little interest in trying to sell ads against her style of very friendly profile.
MySpace’s Sexxy Sangria now appears tame, however, compared to the “very, very friendly” fare featured at Google’s YouTube. The prominent “Channels” tab on the YouTube homepage leads to the members page showcasing the twenty “most subscribed this week” clip-culture videos. Below is one of the YouTuber member channels featured: “hot lesbians kissing.”
In “Why Google wants YouTube independent” and ““Google + Chevrolet: ‘Have a YouTube New Year!’” I discuss and present brand marketer Chevrolet’s “takeover” of the YouTube homepage New Year’s eve. The Chevrolet sponsorship illustrates YouTube will be able to sell its “front door” to high-quality marketers.
MySpace also is able to sell access to its “front door” to high-quality marketers. MySpace is stymied by the very 100 million friends it touts inside MySpace, however.
John Trimble, SVP Branded Sales, FOX Interactive Media, put the “best” MySpace face forward, a sanitized one, in response to HP’s Bermel citing her reluctance to market to MySpace “friends”:
Trimble offered that MySpace conveniently offers “protected areas” within MySpace to provide marketers with a “trusted environment.” Trimble cited the MySpace homepage and brand sponsored sections saying there are areas in the site that “are not fully user generated.
I asked Trimble how his “protected area” brand sales pitch jibes with MySpace’s everyone is Tom’s friend positioning. After all, if the MySpace rasion d’etre is to promote the unfettered creation of user-generated content, wouldn’t advertisers be missing out on the real MySpace experience if advertising against “non MySpace” content.
Trimble reiterated his “protected area” sales pitch as a response.
With “Sexxy Sangria” at MySpace and “hot lesbian kissers” at YouTube, News Corp. and Google will need to make the case for why marketing in “unprotected areas” of social networking properties is advantageous, if they hope to command more than “junk" CPMs based on their hundreds of millions of friends and video sharers.