Friday, February 23, 2007

Boosting MySpace revenue

News Corp, the holding company of MySpace, acquired advertising-technology firm Strategic Data Corp. for a price that could reach $150 million. Strategic Data Corp is developing a technology that helps websites place and target ads aimed at specific audiences. By adopting this technology, News Corp hopes it can increase the ads revenue of MySpace in its member profile pages.

Although MySpace has topped Yahoo! to be the most viewed sites in December last year, its ads revenue is far behind Yahoo! (75M vs 1.5B). As we have discussed in class, the reason is that it has difficult showing advertisers how can member profile pages add value to the advertisers. They have to charge a much lower rate for those ads because of that. By using this new technology, News Corp hopes it can increase the value to the advertisers by allowing them targeting to a specific group of members and so can charge them a higher price.

Moreover, by acquiring this company, MySpace may substantial reduce the reliance (and so the importance) of Google to them as Stategic Data Corp is doing exactly the same thing (to show more relevant ads) as Google is doing for MySpace.

source: WSJ online: News Corp Buys Technology Firm to Boost MySpace

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