PerthNorg

MySpace Searching for Ways to Make Money

Early last year Peter Chernin, President and COO of News Corp said "People no longer use content that is pushed at them. They are organizing it themselves and organizing things around their interests". If by "content" Mr Chernin also means advertising it makes you wonder what was going through the minds of NewsCorp execs when they bought MySpace for over a billion last year.

MySpace users clearly like to organise their own content, and are averse to anybody pushing ads on them - so how do NewsCorp intend to monetize their billion dollar baby. This challenge was clearly occupying MySpace chief marketing officer Shawn Gold when he spoke at the ad:tech conference in Sydney last week. For whilst he spruked MySpace as the the "Number one video distribution space on the internet, followed by Google and Youtube at number 3", his strategy for making money from all this content was all about pushing ads down users throats. Which meant for much of his presentations he sounded like the traditional ad salesman pushing cost effective audience aggregation, value for money, and the ability to target small market segments.

Currently MySpace serves up 40 million ads a month, which in terms of their total inventory (think of 150million users staring at a screen for hours) is actually quite small, and probably doesn't deliver the type of revenue that justifies a billion plus price tag on the company. So things will only get worse for MySpace users who hated stuff being pushed at them right from the start. Now, I can see why advertisers want to get into MySpace.

After all some research suggests that over 70% of consumer purchases are influenced by information accessed on the Internet. Savvy companies don't kid themselves that consumers run to their corporate website to get the lowdown on the products they buy - They know it's in the exchange of information and opinion between users at sites like MySpace that the real purchasing influence occurs. So is the only response to push ads around the periphery of this crucial information exchange, given that so many users think it's an unwanted intrusion. The simple answer is No. Pushing ads won't work and MySpace will suffer as they try to increase their ad revenues.

After all, it's easy for consumers to go elsewhere if they want to share their content and opinions - And soon someone will work out that there are many consumers who are passionate about the brands they consume and are happy to share their experience. You won't make money pushing ads at these people but you will if you make it easy for them to create cohesive online communities who's opinions and experiences are just what other consumers are looking for - but find so hard to find through search engines like Google.

Find the background to this story at the link below