AOL Buys Social Network Bebo

Yesterday, AOL announced its pending acquisition of Bebo, the third largest social network in the United States, for $850 million. The announcement comes amid ongoing speculation of where AOL and its parent company Time Warner fit in Microsoft's battle for Yahoo! as well as a recent report in The New York Times about AOL's advertising network, Platform A, which so far has yet to gain significant ground.

From AOL and Bebo's conference call this morning, which included Randy Falco, CEO of AOL; Ron Grant, president and COO of AOL; and Joanna Shields, president of Bebo, it appears that AOL hopes to leverage Bebo in order to bolster Platform A. The term "engagement marketing" was peppered throughout the call, in reference to Bebo's existing advertiser relationships and the deployment of now-familiar "viral marketing" tools.

Bebo most significantly offers AOL an even larger entry into the social Web. There was much emphasis on the fact that Bebo and messaging services AIM and ICQ together attract over 80 million users; Bebo alone has over 40 million. Presumably, AOL will work toward integrating these services, as Shields stated this as a goal. And although MySpace and Facebook rank higher in the US, Bebo is the top social network in the UK and New Zealand and number two in Australia. The network intends to expand its presence in Europe by launching in France, Germany, Spain, Italy, and the Netherlands in the next five to six months.

While Bebo officially brings AOL into the social network space, it doesn't necessarily mean that both are now angling for Facebook and MySpace. Perhaps Bebo, with its global reach, might strength AOL's brand abroad, but that possibility didn't seem to factor in very significantly. Interestingly, however, Bebo describes itself as a social media network. Grant stressed this distinction at the beginning of his remarks, noting, "Most social networks are confined to one-dimensional or utilitarian, informational based functions."

Is this an apt observation? The distinction isn't quite that clear-cut, but I would say that Facebook and its elder, bigger rival MySpace are mainly about the people, though both have made inroads -- not necessarily consciously -- into media by acting as a platform for discovery. As a social network, Bebo is certainly about the people, but it has not only built a conscious strategy to attract media companies but also has delved into original programming, with its next show, "Gap Year," set to debut on Monday.

While the two camps overlap significantly -- which is why analyzing AOL's acquisition as a move after the big two social networks is faulty -- Bebo's strategy in ways has more in common with imeem, another "social media network." Bebo's community component, however, is much stronger than imeem's -- overall, it seems to strike a nice balance between community and content.

As a result, Bebo may have a better chance than its larger peers of wooing advertisers and eventually monetizing. Marketing on social networks continues to be a tricky endeavor, and users aren't very receptive to advertising on these networks -- hence complaints such as News Corp.'s about MySpace. But, despite users' grumbling about ads, media and advertising continue to fit together well, provided that advertisers use engaging, not overly invasive, strategies. This is where Bebo has the edge, which is good news for AOL.

Add New Comment

0 Comments