Chernin on MySpace: Growing Slower Than Expected

I was wrong - News Corp.’s Peter Chernin talked at length about MySpace and Fox Interactive Media on today’s quarterly earnings call. As expected, FIM revenue for fiscal 2008 (ending June 30) will be down about 10% from the original $1 billion projection. Revenue for the third fiscal quarter was $210 million, up 55% from a year ago but down 10% from the second fiscal quarter. For FIM to reach the new $900 million target, it needs to earn $270 million in the current quarter.

Key challenges to monetization, according to Chernin: huge quantity of ad inventory; the fact that ad models that marketers are used to (read: banners, search) don’t work as well in social media; and the difficulty of quantifying the economic value of a “friend” vs. other metrics from the TV and radio space that marketers are used to looking at.

Chernin acknowledged that growth is coming slower than expected at FIM. While he and other News Corp. execs did not explicitly say how much of FIM revenue is attributable to MySpace, in the past they have put it at about 80%, which works out to about $720 million in MySpace revenue in the current fiscal year.

BBC Clips Facebook for Lax App Security

The BBC posts the results of an investigation into the security of personal information on Facebook. It created an application designed to mine user data and made up a fake profile. Then, it used the application to gain access to the personal information of “Bob Smith,” including his name, hometown, interests and school.

That applications can do this shouldn’t be surprising, since nearly every application requires you to allow it to access your profile in order for you to install it. Still, the reminder of this fact is unsettling.

For its part, Facebook defends its practices, saying in an online Q&A: “Access by applications to Facebook user data is strictly regulated and if we find that an application is in violation of our terms and policies, we take appropriate action to bring it into compliance or remove it entirely.” It also repeated the idea that users have the ability to report a rogue application.

The problem is that the way someone might become aware of their private information being misused is by it being, in fact, misused. What Facebook needs to do (and I’ve said this before) is to prevent personal data from being misused in the first place.

Sad but kind of true (and pretty funny)

“Social Networking Wars” by Current TV.

Where Will Facebook’s Developers Get Revenue?

First, apologies for the extended absense from posting. It’s not very blogger-like, I know. Between travel and presentations, my schedule got away from me.

TechCrunch reported yesterday that some developers are dissatisfied with Facebook. This is nothing new. What is new is the public debate over the (lack of) revenues developers are getting from being on Facebook. According to the blog post:

“The session started off with a disagreement over how much money developers are actually making through Facebook. Naval Ravikant from Venturehacks estimated that over $100M would be made in 2008, whereas Joyce Park of Renkoo and Matt Sanchez of VideoEgg predicted revenues as low as $10-35M this year.

All panelists agreed, however, that CPM rates on Facebook are miserably low, perhaps averaging 15 cents.”

I’ve believed for some time now that the widget and app space will not be the giant revenue generator that developers seem to think it is. Why? Too much clutter, not enough measurement, rogue apps, spam, to list a few quick reasons. Add in a messy US economy and things are starting to look dicey.

Cue the Carpenters

“We’ve only just begun….”

I hear that a lot lately when I talk to folks who are trying to figure out the best marketing models for brands to reach consumers in the social media realm. Though the skepticism over ad models for social networking is growing, some people lately seem to have very little hindsight.

Just think how far we’ve come already, from marketers building profile pages on MySpace to counting friends to tracking influencers to widgets and applications to Open Social. (OK, that last one’s just a maybe, since we haven’t exactly seen much from OS other than talk.)

And yet the conversation between brands and consumers has only just begun. It’s in that early, awkward stage. You know, the one where you run into a friend from college you haven’t seen in a long time and once you get past the “what are you up to” and “how many kids do you have” questions you start looking over their shoulder for something else to focus on. Or the conference cocktail party where you meet someone who wants to gab your ear off and you need to figure out how to gently extricate yourself. (No, this has never happened to me. I’m always interested in what you have to say. Always.)

John Battelle describes this uncomfortable dance in a recent Searchblog post:

In essence, brand advertising has been, up till now, an attempt to influence the conversation that potential consumers will have after experiencing the advertising. With conversational media and marketing, that concept is time shifting. Now brand advertising can *join* and even *initiate and convene* those brand conversations. And that requires a different skill set, one media folks are just starting to explore.

The key, as John says, is to find a marketing vehicle that works for brand, content producer and consumer. There will be a lot of awkward, uncomfortable conversations between brands and consumers in the future. But, like the best networkers, the brands that get the message right and know how to develop that first conversation into a lasting friendship will succeed.

Track Social Web Trends with Trendrr

I’ve just started playing around with a data-tracking tool called Trendrr. It allows you to create graphs that track keywords, photos, videos and blog mentions (among other things) for terms that you define. Then, you can view the things other Trendrr members are tracking and grab and post the graphs to your own Web page, social network page or PowerPoint presentation. (The latter is what I’m most interested in, since I have a presentation to give in a couple of weeks.)

One graph tracks news stories that mention “foreclosure” with news stories that mention “Britney Spears.” “Note the strong correlation,” the Trendrr member writes. And he/she is weirdly right.

The first thing I’m tracking is mentions of the terms (”social network” advertising skepticism) on Google Blogs and Google News. So far I’m not sure how to trend backwards (ie, for dates earlier than today) but it will be an interesting experiment. I’ll post results when I have them .

Trendrr will likely appeal to data wonks (like me) and to people with a passing interest in following what’s trendy online.

Do We Really Need a Pepsi Youniverse?

Marketer-sponsored social networks seem so 2006, and yet they keep on coming. The latest: PepsiCo International’s Pepsi Youniverse, a soccer-themed network aimed at an international audience.

The social network uses a novel approach to get people to describe themselves. Instead of typing in their interests and their activities, visitors to the site can answer a series of questions about how they feel about soccer. There are no words, just photographs to choose from (some of which are really challenging to decipher). At the end, you’re launched into the social network, where you can learn what type of soccer fan you are (I’m a Kickabout King, even though the extent of my soccer fandom is watching my grade-schooler play) and compare yourself with Pepsi-backed soccer stars and other soccer enthusiasts.

Problem is, I’m not entirely sure that people will actually participate in the network. Sure, the picture-answers to the questions are intriguing (it’s all based on a concept called VisualDNA from Imagini Holdings, the creator of the Youniverse concept), but the whole socializing-within-a-brand-site idea is as discomfiting as it was back in 2006. And I’m surprised there’s not a way to widgetize any of the content (such as the stunning photographs) and take it to another social network site.

If the whole soccer social network idea sounds familiar, it is. In 2006, Nike launched Joga.com, its own soccer-themed social network. But when you visit the site today, there’s nothing but a placeholder for what appears to be the next iteration of the campaign, Jogatv.

Update: Starbucks is on the SN bandwagon, too. It launched My Starbucks Idea as a way for people to share ideas to make Starbucks relevant again. I like that everything is transparent. You know exactly what the site is for, and the ideas from consumers are front and center. This is a nice example of how companies can sponsor a social network that has a purpose.

More AOL/Bebo Fallout

The press and financial analyst reaction to AOL’s $850 million cash deal to acquire Bebo has been resoundingly negative. Most of the focus seems to be on the fact that AOL is already screwed up (agreed) and that adding Bebo to the mix won’t give it anywhere near the advantage in social networking that AOL seems to think it will.

As Henry Blodget of Silicon Alley Insider put it, “We don’t get it. … The most likely outcome of putting the two companies together, therefore, is that the companies’ weaknesses complement each other. And they go down together.”

AOL does have a history of failed acquisitions (see: Netscape) and its track record in social media has been spotty, granted. But I also believe that if AOL wants to play in this market its only realistic chance is with Bebo. Bebo has an interesting business and has done some creative things in online social network marketing. If AOL can nurture that and grow it, then it has a chance.

I’ll be watching this one closely.

Bebo Finally Gets Acquired

I’m amazed — with so many tech bloggers and tech gossip sites around — that this one never leaked out. Today, AOL bought Bebo, the third-ranked social network site in the US, for $850 million in cash. The two companies supposedly had been talking for five months.

Bebo, to me, has always been the little social network that could: It doesn’t have the huge traffic of MySpace or Facebook — just 22.4 million unique visitors worldwide in January, according to comScore, half of them from the UK. Facebook and comScore each had five times as many visitors that month - 100.7 million for Facebook and 109.3 million for MySpace. And, its revenues are paltry (see Kara Swisher’s post at AllThingsD on this matter).

And yet, it has been quietly innovative in other areas. It was a pioneer of widget marketing, partnering with prominent widget firms six months before Facebook opened up its platform. Bebo also developed and fostered KateModern, a minor online video hit. But more importantly, it developed unique ways of integrating marketers into the video storyline and allowed Bebo members to interact with the characters and even the marketers themselves.

I’m not convinced that Bebo will big as big a deal for AOL as Randy Falco claimed it would be in the press release (“Bebo is the perfect complement to AOL’s personal communications network and puts us in a leading position in social media,” he said.) But it’s a social network with staying power and there are a lot of things that Bebo can teach AOL.

Zuckerberg Still Believes in Beacon, Social Advertising

Even though most in the ad community have deemed Beacon a disaster for Facebook, Mark Zuckerberg still believes in the basic idea. In other words, bad execution doesn’t necessarily mean bad idea.

In an interview with GigaOm, Zuckerberg says:

“Beacon was … part of this while [sic] effort to blur the boundaries between what’s inside Facebook and what’s outside Facebook. Beacon was our first cut at a protocol to do that.

When it comes to social ads we really want to line up what people are trying to do on Facebook and the utility it offers with monetization. If you look at what people are trying to do on the site, it’s communicating and connecting with each other and sharing information, so the business model should be around people sharing information and staying connected.”

He makes a valuable point. Businessweek, among others, has criticized social network advertising because click-through rates are terrible. But focusing on click-through is a content-site mentality, and it doesn’t work on a social network site.

Engaging social network users isn’t about interrupting them while they’re trying to interact with their friends; it’s about finding a way to participate in the conversation. Or make the conversation easier. Or more fun. Or more productive. And if Beacon was a bad execution, it won’t be the last one. But the breakthrough idea is still out there, I’m confident of that.