A friend of mine recently pointed me to an article located on MarketWatch which discussed the implications of Google, Microsoft, and Yahoo all facing unexpected competition in the online advertising industry. The competition would be coming from MySpace (for those unaware, MySpace is an online social networking website). The article also states that MySpace had 5.7 billion page views in comparison to Google during the month of March according to Nielsen/NetRatings.
On a regular basis, my Internet Marketing professor, Dr. Hair, will send us on a quest of figuring out how websites like MySpace, FaceBook, and even HamsterDance.com (back in the day) would rake in their revenues. The answer evidently, obviously, and simply is through advertisements. A quick visit to the MySpace website reveals that Google is the selected advertiser for MySpace. Google obviously benefits from the current advertising business that it receives from MySpace and benefits even more as over 8% of all traffic to Google comes from MySpace.
What are the implications of MySpace potentially entering the online advertising business in the near future? Well if MySpace is able to get their own in-house advertising system implemented, then Google, Microsoft, and Yahoo will face some serious trouble as MySpace will be able to display more relevant advertisements due to the abundance of demographic information that is available to them, in comparison to the information that the current top advertisers have at their disposal.
Is it likely for MySpace to enter the advertising industry on their own? In my opinion, no, that would require a lot more time and effort than what is required with their current business model. I foresee MySpace taking advantage of an alliance or partnership and teaming up with the likes of Google and using the technology and know-how a big player in the industry has to develop a more specific and targeted advertising system that potentially could rake in some big money.
I think some fair assessments are made, however, if myspace was able to acquire a small player in the online advertising world under the radar, and then invest in revamping the systems, it could be a different story…
Bob, you make a very valid point, but if it was a small company that was under the radar, that would mean that the company didn’t have a big enough base of advertisers (in comparison to what Google, Microsoft, and Yahoo have) that use their services. This could potentially mean a lack of diversified advertisements.
Agreed, but Myspace has the capital to invest in such a risky venture like Google has in the past (not as much, but enough to get it up and operational) which allows myspace to not depend on Google or Yahoo. It wouldn’t be an over night deal, however, myspace has an extremely focused and captive audience that they could capitalize on. This in turn could be the makings of an exclusive marketing service that myspace has much knowledge on already since they have a very defined client base.
Agreed 100% on the fact that MySpace has a captive audience, and MySpace has alot of demographic information about its audience that would be hard for others to get. That is why I think MySpace will go with an experienced player in the market, such as Google who helped the Mozilla rake in upwards of $72 million last year through implementing Google AdWords in Firefox’s search results.
Very true… we shall see what happens.