Monday, August 4, 2008

MySpace Banks On ‘Hypertargeting,’ But Plain Targeted Ads Continue To Suffice

Although MySpace continues to maintain that its hypertargeting
solution will ultimately lead to higher revenues, significant hurdles
remain. A day before the Fox Interactive Media unit’s parent News Corp (NYSE: NWS). releases its Q2 earnings, WSJ outlines the challenges to greater ad spending on MySpace.

-- Engagement: While there’s little question that users of
social net sites like MySpace and its rivals are engaged while they’re
on the site, it is uncertain whether they are too focused on changing
their profile pages and sending messages to friends to pay attention to
ads. And so, basic targeting placements are considered perfectly
adequate for media buyers and their clients’ needs.

-- Privacy: The rumblings from the Federal Trade Commission,
Congress, state lawmakers and digital rights advocates have spooked
some advertisers who don’t want their marketing efforts to turn into an
embarrassing footnote in a legal case. While there wasn’t much backlash
against participants in Facebook’s Beacon ad targeting program last
fall, the initiative still has many marketers and agencies wary of
being associated with the kind of negative publicity it drew.

-- Looking long-term: While FIM has touted the importance of
hypertargeting, executives are taking care not to talk it up too much.
Keeping investors in mind, the company often highlights its $900
million, three-year deal with Google (NSDQ: GOOG)
for featuring sponsored links on MySpace. And ads that take over the
site’s home page are also a source of value. Executives also argue that
the hypertargeting program is beyond being able to charge high ad
rates. Placing the emphasis on the long-term benefits for advertisers
who use the program over time, by offering broader insights into
consumers’ offline behavior beyond the basic targeting on the site.

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