|Photo: Sebastian Mlynarski|
|MySpace CEO Chris DeWolfe
NEWS CORP. COO DETAILS INTERNET STRATEGIES
MySpace Acquisition Provides Treasure Trove of Demographic Data
Super-hot sites like News Corp.’s MySpace, now the fifth-largest in the world, offer a potential eyeball windfall, achieving the kind of reach that advertisers dream about in this age of fragmentation and consumer control. But as news emerges that they’re also attracting the worst kind of audience, namely sexual predators, the fear of negative publicity has some marketers wondering whether buying into such sites is too big a gamble.
'Living, breathing thing'
“Even before the particularly bad publicity recently it had to be a very considered purchase,” said Eric Valk Peterson, VP-media, Agency.com. “The content environment on these sites is never fixed -- it’s a living, breathing thing. Even if you do due diligence, today it could be fine and the next day, anything but.”
“We tell our clients there is a risk. Know there is a risk and you can control some of it,” said Jeff Lanctot, VP-media and client services at interactive agency Avenue A/ Razorfish, acknowledging that consumer-generated content has always been a red flag to advertisers. But he added that the sexual-predator issue makes it more serious. “We are learning along with everyone else how big that problem could be.”
Pretty big. Witness the headlines: “Trendy Web Site Raises Red Flags” and “Teens MySpace Web Site a Boon for ‘Predators.’” Connecticut Attorney General Richard Blumenthal has launched an investigation into the site and said he wants MySpace to “impose more effective controls about who participates.”
One buyer from a major media agency who did not wish to be identified said: “This might be a situation in which advertising is pulled down in the short term until we find out how these things can be minimized.” Others felt they had already worked out how to minimize the risk, saying they buy space on the home page or general areas, but avoid placing ads next to user-generated content.
No one knows exactly how much MySpace is making from advertisers. “It’s as mysterious as Google before its IPO in terms of what its profit or loss could be,” said Richard Doherty, research director, Envisioneering Group. But many big brands, including HSBC, Cingular and H&R Block, have bought space on MySpace, and Nielsen/NetRatings estimates that its ad revenue in January would have been around $40 million and that it accounts for around 10% of all Internet display ad impressions in the U.S.
Without the advertising, MySpace doesn’t have a business. As Mr. Doherty puts it, “no advertising, no site.”
Mr. Blumenthal was even more blunt. “MySpace does not have as part of its business model pornography and sexual assault,” he said. “They make money from advertisers who wouldn’t touch a pornographic magazine with a 10-foot pole.”
So it was imperative that MySpace showed advertisers, as well as an increasingly skeptical public, that it was combating the problem. It has tried: CEO Chris DeWolfe has detailed how the site uses algorithm and scanning technology to identify and boot users under the required age of 14, and how employees spent time reviewing every image and scanning for words that might betray a too-young user’s age. “We want to keep our site as safe as possible,” he said.
Not exclusive to MySpace
He has also pointed out that the problem is hardly exclusive to his site. “I don’t think there is a foolproof way -- I don’t think you can filter people’s private communications in any way,” he said. “I don’t think cellphone or instant messaging or e-mail companies can do that either.”
His point is hard to argue, and may be the reason that some advertisers will stand their ground. “If you pull away from MySpace, where do you go?” Mr. Doherty said. “Do you do due diligence on the next 10 [social networking sites]? Advertisers need this audience. This is a new double-digits-minutes eyeball magnet and advertisers have to be there.”