During yesterday’s News Corp. earnings call, Rupert Murdoch and COO Peter Chernin talked a little bit about the weakness at MySpace. They expect Fox Interactive Media (which includes MySpace, Photobucket, IGN, and other properties) to miss its $1 billion revenue goal by the end of News Corp.’s fiscal year next quarter. Instead, they expect FIM to reach $900 million for the fiscal year. (No surprise there. We predicted the shortfall a month ago). And in the quarter they just reported, revenues for FIM were actually down 10 percent, from $233 million to $210 million.
The culprit: There is too much inventory, and not enough clickthroughs. As a result both brands (and, more importantly, “friends” on MySpace) remain skeptical. Dumping ads on MySpace without targeting them simply doesn’t work.
Google is also partly to blame, as its ad deal represents about a third of FIM’s revenues. Altough, Google is working on the problem. Google founder Larry Page said as much during Google’s last earnings call:
On social networking monetization, it is an area where we have tried a lot of new technologies. Demographic targeting has been successful. The challenge and the opportunity is that there is a lot of inventory. Part of it is just getting the advertising ecosystem built up and targeting in a way that makes sense. We have made some improvements but there are more improvements to be made. It takes time for advertisers to [get up to speed].
(That’s right, Larry. Blame the advertisers.)
It wasn’t all bad news coming from MySpace, though. It continues to make improvements in bringing in branded advertisers (up 21 percent), revenues per user (up 49 percent), and audience. Traffic and time spent continues to rise at a healthy clip at MySpace, MySpace TV, Foxsports.com, PhotoBucket, and IGN.
The bigger issue for MySpace is that the longer it keeps missing targets, the less incentive its top executive talent has to stick around. Compensation for top executives is tied to meeting profit targets at the business. If they don’t meet those targets, nobody gets paid any upside. And for these folks, it’s all about the upside.
The new design to be rolled out soon with address some of these issues.
I think the real problem that MySpace is facing of ‘crossing the chasm’ to be accepted and clicked through on a broader (consumer) level is the eye sore that the majority of their pages are. How about contests that drive their users towards creating more aesthetically appealing page and becoming role models of others
myspace is always weak and will continue to be.
There is definitely no stopping myspace from crashing.
I disliked it right from the start.
Folks, even highly targeted banner ads won’t solve the problem for MySpace. Click through rates are miserable not so much because advertisers can’t differentiate between a 14 year-old girl versus an 18 year-old boy… but because:
1. Teens are generally not in an “ad receptive mode” when they are socializing and communicating on MySpace or Facebook, and
2. Teens have learned to block out force-fed advertising, such as display ads. This is why opt-in, social advertising is becoming such a compelling alternative for advertisers.
Bad user experience equals less ad revenue. About time Tom learned that.
It’s hard to get a spam bot to click through, eh?
Major problem with Adsense: the ads are simply repeating and repeating and repeating… too much inventory? doubt it.. Google will just need to improve this problem.. this is boring, to everybody. Google is aware of this problem very well, but, where is the solution?? and WHEN?’
SERIOUSLY.
Another empire begins its fall….
Guys and Gals,
Don’t fight about how myspace is going to make money. They have proven that they reached their peak and now are linearly falling down until their demographic starts to get married and have children. It’s like that cool hangout place you remember using for 5 years as a teenager and then forgot about it.
So here is my plead to you all, forget about myspace and create a new meme like youtube or twitter, sell it for 500 million – 1 billion and let the old money suckers deal with the headaches in the years to come. Meanwhile you and your friends are laughing all the way to the bank.
Friendster – MySpace – FaceBook – what is next? These sites get only a few years on top. I am already sick of facebook.
social network just dont get many clicks’
has nothing to do with a myspace weakness
“If they don’t meet those targets, nobody gets paid any upside. And for these folks, it’s all about the upside.”
cough….. Where the hell would Tom Anderson work if he wasn’t at MySpace?
http://freemysp...e.com/?q=node/2
I don’t have anything against Tom, and certainly less so since I’m living in the same city as them now. BUT
If he wasn’t at myspace, do you think maybe he would be serving up slushies at Dairy Queen?
He’s not going to get an exec position elsewhere.
If myspace is doing bad I guess fakebook is a total failure right?
Myspace is still #1 by a long shot.
Being in bed with fakebook doesn’t change that fact, right arrington?
right?
lol @ #13 exposing tom
Larry has it right — advertisers are leaving money on the table.
I worked for a startup that had to change markets because advertisers just DON’T GET the power of demographic disambiguation. After all, how long did it take for advertisers to get key word advertisement? DD is the next level, but advertisers don’t want to take a chance on it.
The technology is ready — where are the advertisers?