Does MySpace Matter in Google's Deal with News Corp?
2 min read

Does MySpace Matter in Google's Deal with News Corp?

Om Malik took an interesting critical look at the Google deal with News Corp, which got me thinking about whether MySpace matters much at all to this deal, despite all the hype:

In a conference call, FIM executives noted that a very large number of people leave MySpace to go to Google. According to data collected by Hitwise, an Internet traffic tracking service, nearly 10.8% of Google’s traffic was coming from for the week ending July 29, 2006. Had Fox gone with Yahoo or Microsoft, it could have been a serious blow to Google.

It also gives them access to inventory to sell more ads, and thus become even a bigger player in the fast-growing online advertising business. But the ad-inventory that can be sold is unlikely to come from MySpace. Rich Greenfield of Pali Capital notes that most of the safer (read advertiser friendly) “Myspace-programmed� sections such as the homepage, main Music page, main Comedy page, etc are off limits for Google. Eric Schmidt, Google CEO during the conference call said that they would not serve ads on all MySpace pages and in fact they will let a lot of ad inventory go unserved.

First, I disagree with Om that FIM’s going with Yahoo or Microsoft could have been a serious blow to Google because of the loss of traffic from MySpace. Here’s what Bill Tancer of Hitwise observes about the 10.8% statistic:

Since over the last year there has been no formal relationship between the two companies, this high volume of traffic flowing from MySpace to Google would most likely be the result of users using their Google toolbar or manually navigating to Google while engaged in their MySpace session.

Google gets 10.8% of its traffic from MySpace because so many Google users are also MySpace users, and so they just happen to be on MySpace when they decide to do a search. Does that mean these MySpace users would suddenly stop wanting to use Google if Yahoo or Microsoft was the default search for MySpace? Unlikely. Perhaps Google will gain more search users from other FIM properties, but I’m not sure that was worth paying for.

So what about the advertising component of the deal? As Om observed, “the ad-inventory that can be sold is unlikely to come from MySpace” — Google is even more savvy than most corporate advertisers when it comes to avoiding ads running next to questionable content.

Through Om, Robert Young speculates:

“The real story here (in my opinion) is how Google is now going to adjust/modify their ad network to optimize for social networks.�

It seems on the face of that there should be a huge opportunity to better “monetize” social networks, but I don’t see how this deal is going to make the problem of uncontrollable MySpace content any easier to solve.

MySpace still can’t get more than $1 for a big chunk of its page views. Maybe Google can figure out how they can do better…good luck!