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Social networking meets old media: Maybe the ad model can work

Now that two of the three largest social networks are now subsidiaries of traditional media companies--Time Warner and News Corp, which own Bebo and MySpace, respectively--we're about to see whether the marriage of Web 2.0 with old media will have a happy ending.
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Written by Larry Dignan, Contributing Editor on

Now that two of the three largest social networks are now subsidiaries of traditional media companies--Time Warner and News Corp, which own Bebo and MySpace, respectively--we're about to see whether the marriage of Web 2.0 with old media will have a happy ending.

And an economic slowdown may reveal the outcome sooner than later as advertisers flock to familiar faces.

Here's the $850 million bet that Time Warner's AOL unit is making with Bebo (Techmeme): AOL can figure out how to better monetize Bebo with something dubbed "engagement advertising."

Now it's not immediately clear how engagement advertising will work other than it'll involve AOL's Platform.A ad network and its behavioral and contextual marketing capabilities, but chances are good introductions to Time Warner's big advertisers are part of the plan.

Ditto for News Corp. and MySpace.

Could it be that Google is having issues with figuring out how to monetize social networks because it lacks the history with advertisers? Let's face it, the relationship between Time Warner and News Corp. with advertisers is decidedly different than the vibe between Google and its advertisers. Google is inventory--ad widgets if you will. Old media has this emotional attachment thing going. The big question is whether that touchy feely stuff will matter.

Top 10 Social Network Sites, February 2008        
Morgan Stanley analyst Benjamin Swinburne sums up the old-media bets on social networking thing:

Questions remain, in our view, regarding the near-term appetite for advertisers to shift meaningful levels of their existing budgets to social networking sites (particularly in the current weak ad environment), which is why social networking advertising growth has lagged usage growth. Time Warner, like News and its MySpace asset, hope the targetability of the advertising on social nets (users effectively volunteer their consumer tastes for advertising use) and their existing relationships with advertisers are synergistic.

Hope isn't strategy, but we'll find out whether this synergy bet pays off soon enough.

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