Bebo offers targeted media in wake of takeover by AOL

by Sarah Crawley-Boevey and Andrew McCormick, Media Week 18-Mar-08

Bebo plans to deliver targeted media to users for the first time, which will then act as a basis for delivering ads, following AOL's $850m (£424) takeover of the social network.

Bebo intends to use the array of targeting technologies housed within
AOL's Platform A unit (see box below) to deliver relevant content from
media owners such as Sky, ITV and Channel 4 - three of the 400 media

owners that have signed up to Bebo's Open Social project.

Joanna Shields, Bebo president, said the social network's policy of
carrying one ad per page was unlikely to change. She added: "We have to
be clever in preserving the user experience and delivering ads that
people want. What's exciting is that we can target media to our users
and deliver the right ad on that basis.

"It's not like we're combining with the AOL portal. What it gives us is
access to amazing social networking products such as AIM and ICQ."

Time Warner's investment also suggests the company is not looking to
sell AOL, despite recent speculation that it might do so.

"The deal is very interesting and shows AOL clearly trying to catch up,
recognising that social networks are the next generation of portals,"
said Stuart Sullivan-Martin, chief strategy officer at
Mediaedge:cia.

Alex Burmaster, European internet analyst for Nielsen Online, said:
"It's crucial that AOL does not alienate or antagonise Bebo users. There
will always be churn in situations like this, but AOL will have to work
hard to maximise commercial opportunity, while minimising churn."

Onlookers are nervous about how AOL will handle ads for the network.
Alex Millar, head of Jam, I-Level's social media unit, said: "Bebo sells
its integrated solutions and standard display advertising separately and
it should keep those teams separate, retaining the Bebo sales team,
which seems very good."

THE DEAL IN NUMBERS

- AOL spent £424m acquiring Bebo

- The two companies have a combined total of 80 million worldwide online
users

- Bebo is thought to have earned £9m in revenue in 2007 and was
expected to earn £24m over 2008

- The Microsoft deal values Facebook at £15bn, while the AOL deal
values Bebo at £424m

- MySpace was acquired by News Corp for £290m in 2005

INDUSTRY REACTION

- Joanna Shields, President of Bebo - "The way Bebo has evolved means it
is not surprising that a media company has bought us"

- Alex Burmaster, European internet analyst, Nielsen Online - "AOL's
Platform A offering certainly seems interesting as it shows it is
looking at the whole picture. We are seeing a land-grab for advertising
tools, which I think will continue"

- Alex Marks, Head of UK marketing, Microsoft - "I don't think you can
say whether or not AOL overpaid, because it's trying to bank on the
future impact of the acquisition on its business. The full value of
social media has not yet been realised"