MySpace Changes Look To Lift Sagging Revenues
By Anna Johnson on June 27th, 2008It may have 118 million users… but MySpace has missed its $1 billion revenue target and its owner of 3 years, News Corporation, is looking for ways to increase revenues and appease the increasingly unhappy financial analysts who follow the company.
One such initiative is a redesigned website. Expected to be complete by early fall, the redesign will see MySpace sporting a less cluttered look, include a new navigation bar, search tool and video player, and be more “advertising-friendly”.
According to MySpace’s president of sales and marketing, Jeff Berman, revenue per MySpace user has increased by 50 percent since last year, but is still hovering around $6 to $7 per user per year. Meanwhile, eMarketer expects MySpace to announce revenue of $755 million for the financial year ending June 30, 2008, far below the $1 billion target. At the same time, healthy profits continue to elude the social networking site – the word is that Fox Interactive Media (the News Corporation unit based around MySpace) will barely break even this year.
Unfortunately for MySpace, social network advertising is expected to soften, with eMarketer revising its December forecast of $1.6 billion to an April prediction that such spending would be $1.4 billion.
This isn’t all that surprising, given a growing awareness among advertisers (including our clients) that, for all their popularity, social network sites are extremely difficult to monetize.
The good news for Internet marketers – specifically advertisers – is that MySpace intends to become more ad friendly. And although further commercializing MySpace may deter some (or many) of its users, the benefit of turning away unprofitable MySpace users may well be to increase the revenues and profits generated from the remaining users.
Sources: Brian Stelter, “MySpace Might Have Friends, but It Wants Ad Money”, The New York Times, June 16, 2008, News Corporation, “News Corporation to Acquire Intermix Media, Inc.”, July 18, 2005, Peter Kafka, “News Corp. Blows MySpace Targets, Dumps Sales Chief (NWS)”, Silicon Alley Insider, April 4, 2008
