Smaller MySpace Much Less to Buy for Advertisers

In Wake of 500 Firings, Some Brand Support and a New Shopping Unit on the Way

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SAN FRANCISCO ( -- Today MySpace announced it's laying off nearly half its global work force -- about 500 people -- in an effort to streamline the company and bring it more in-line with dimmer prospects. But as bad as it sounds, advertisers say all is not lost for the once-powerful social network, which still has 110 million users.
Sprite took MySpace's home page on this inauspicious day for the company, and the bottom of the page has an ad for $39 flights on JetBlue. Julie Coulton, head of digital media at Mullen, JetBlue's agency of record, said that MySpace has slivers of an audience that JetBlue wants to reach, but mostly as a re-targeting opportunity on other sites, rather than direct brand engagement. That's the opposite of JetBlue's Facebook strategy.

"Facebook has many levels of content synergy and we can take advantage of that through a strategic partnership between JetBlue and Facebook," Ms. Coulton said. "MySpace has lost its utility and consumers are getting very smart, so if they don't feel that an environment is meeting their needs they will go elsewhere."

Along with the layoffs, MySpace announced the restructuring of the company that relies heavily on News Corp.'s far-flung resources. The international offices in the U.K., Germany and Australia are partnering with Fox Networks to keep running and serving content partners and advertisers there. Chief Revenue Officer Nada Stirratt is staying on with the company, along with the rest of the operating committee, a sign of at least some continuity in the executive suite.

CEO Mike Jones said in today's statement that he is "committed to rebuilding the company with an entrepreneurial culture and an emphasis on technical innovation." The San Francisco office was opened in 2007 with technology in mind, and sources say that office will remain in operation.

As news of today's layoffs spread across the web, Twitter posts proliferated, such as: "Is there still a MySpace?" or "I haven't been on MySpace in four years!" Rival tech execs such as YouTube product manager Hunter Walk and Klout CEO Joe Fernandez reached out to the newly unemployed on Twitter.

But MySpace says it has seen some growth on its new terms: "A boost in viral activities, with over 10 million social actions and 90 million 'follows' within the Hubs and Topics categories," according to Mr. Jones' statement, as well as a rise of 4% in mobile users from November to December, now totaling over 22 million.

Whacked by both declining audiences and recession, MySpace ad dollars fell 38% to $300 million in 2010, down from $470 million in 2009, according to eMarketer. But even as MySpace has undergone immense upheaval, it has a few things going for it that could make it attractive to some marketers.

"MySpace has continued to explore new ways to make advertising more social, and in this it stands apart from Facebook, whose ad formats have remained relatively static over the past few years," said Deborah Williamson of eMarketer. "One of its most popular ad units is a splash page that can bleed into the gutter, pull data from other sources, and the user never has to leave the page."

Ms. Williamson said MySpace has an ad format slated to appear in February that will offer a twist on social shopping. "In an example shown to eMarketer, the ad loads a short video and changes to showcase user reviews and information on people within the viewer's social graph who may have interacted with the ad or shopped at the retailer. Then, if the user ends up making a purchase, the information is disseminated to their social graph, along with the option of sending a discount to their friends."

MySpace also built a Usability Lab in its New York office, where consumers participate in sophisticated monitoring of their response to advertising on MySpace, including pulse rate and eye tracking.

Even if all this works, the company once known as News Corp. Chairman Rupert Murdoch's savviest internet bet is destined to be much smaller, and likely packaged for the earliest possible sale. When Ad Age asked Mr. Jones in October if the company was getting close to its last stand, he said: "No, this is a first step toward a long-term strategy for the Gen Y audience."

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