MySpace hunts revenue in the ecosystem

Peter Levinsohn, the new head of News Corp’s digital division, has every reason to be in a good mood, having just watched a presentation in which online social networking was heralded as the advertising medium of the future.

The presentation, by Marketing Evolution, a market research firm, extolled social networking’s ability to create a viral “momentum effect” for brands. It suggested social networking was more effective for advertisers than television as it creates more engagement between individual brands and consumers.

With MySpace one of the companies under Mr Levinsohn’s wing, this is positive news for News Corp. “Advertisers used to say: ‘why MySpace?’. Now it’s: ‘how MySpace?’,” he says in his first interview since becoming head of Fox Interactive Media six months ago.

Adidas and Electronic Arts are among the companies to have launched branded viral marketing campaigns on MySpace. Branded clips, online wallpaper and other features can be pasted on to personal pages and passed around within the MySpace community.

The success of such campaigns has changed MySpace’s revenue mix. A year ago, 70 per cent of the site’s advertising income came from “performance” or click-through advertising, with the rest coming from branded advertising. In the past few months that ratio has reversed, with branded advertising now accounting for 70 per cent.

The group has doubled its advertising sales force to more than 200 people since the start of the year to manage this growth. “We took a very small sales organisation and built it into a first-class sales organisation and in doing so have really strengthened our relationships with advertisers.

“We build these custom communities within the MySpace ecosystem. And the more integrated they are, the more we can charge advertisers.”

News Corp, which bought MySpace in 2005 for $580m, also owns and IGN, a site for video gamers. MySpace, though, is the largest business in the division, and is five months into a three-year search deal with Google worth $900m.

The deal has yet to be fully signed off, though. “We have a good relationship [with Google],” says Mr Levinsohn. “We are working on signing a long form document and whatever issues we have with them we expect to be worked out.”

When Mr Levinsohn replaced his cousin Ross as president of FIM, his appointment came amid a spending spree by News Corp on online businesses as it sought to beef up its internet division.

Reports at the time of the appointment suggested Mr Levinsohn would concentrate on operations rather than doing deals, as his predecessor had done. This, he says, is not entirely right: deals remain a priority. “Any type of technology that will help us to monetise the site better is something that we will be very aggressive in pursuing.”

The group will also “aggressively pursue” companies that “help us create a better experience” for users. It recently acquired Strategic Data Corporation, a Santa Monica-based technology company that specialises in sending targeted advertisements to niche audiences on the web.

“We have more data about our users than any other network,” says Mr Levinsohn. “Ultimately, we will be able to effectively target the advertising on the site. You will be sent an ad that you will be more likely to click on and respond to.”

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