Mahdi Choudhury considers the proliferation of websites such as MySpace.com and YouTube.com into the US online arena. As the players consider their positions in the context of recent claims of MySpace.com’s success, the impact on the US advertising industry could be significant
Topic: On-line advertising
Who: News Corporation
Where: United States
When: July 2006
What happened:
This month it has been reported by Hitwise, the internet audience measurement company, that the MySpace.com, the social networking website, is now ranked number one in the States, toppling other household names in the process.
News Corporation, the company run by media mogul Rupert Murdoch, made its first internet purchase in July 2005 when it paid a staggering $580 million for Intermix Media, which owns Myspace.com. At that time, Myspace.com was the fifth most visited internet domain in the US. Since the deal almost a year ago, subscription to the site has almost quadrupled. From being a virtual unknown two years ago, the site has reached the very top of the internet tree.
News Corporation certainly feels that advertising on Myspace.com, although not as lucrative as it should be now, will definitely take off and generate vast amounts of revenue in the future.
One idea would be to introduce mini portals focusing on user's specific interests such as film, music or theatre. Another is to strike deals with the big search engines to use their functions on the site. Either way it looks as though significant amounts of advertising dollars will continue to move across from traditional outlets, such as newspapers, over to the internet
Why it matters:
Murdoch readily admits that he has missed a trick by not expanding into the online sector sooner. With the acquisition of Intermix, he has tapped into the important teen market which will only grow from strength to strength – for the foreseeable future at least. The recent survey results have proved that he has made the correct decision in purchasing an online media company and the advertising money should roll in soon.
Not only that but Myspace.com has detailed logs of users' personal information, preferences and online behaviour – a further marketing tool that the big media players will be able to take advantage of. A spin off of the increase in marketing data available to advertisers, is the success of associated behavioural analysis software, with a number of competitors now providing bespoke marketing data analysis within the US and Europe.
With other relatively new, hip websites such as YouTube.com, the video sharing domain, also experiencing an explosion (the site is now serving up over 100 million free videos per day to over 20 million users a month) – is this where the future of advertising and marketing lies?
What is for sure is that the future of online ad technology is looking bright.
