Google (GOOG) isn’t shy about telling everyone what a bad deal its $900 million search pact with MySpace (NWS) turned out to be. The company basically laid its Q4 earnings miss on the deal, claiming social network inventory “is not monetizing as well as expected.”
But what if Google, and not MySpace, is the problem? Pali Research media guru Rich Greenfield thinks MySpace is doing just fine selling ads ($500 million excluding the Google deal in FY 2008) but Google isn’t doing such a good job on search, and thus is not delivering the right ads to MySpace users.
How does Rich figure? He tried a few basic searches on MySpace and got incredibly irrelevant ads served through Google’s AdSense — ads that would never result in a click, or in a payment to MySpace or Google. Rich tried a search for “Dan” and got ads for DNA testing. We gave it a try: A search for “Mike” got ads for Nike’s Summer Sale.
No surprise to Rich, then, that MySpace’s search monetization is weak. Will Google walk when its current search deal with MySpace expires? No. More likely: they’ll realise they’re at least part of the problem and work to get their social network search algorithms right. Then they can start minting money from MySpace’s 120 million global users.