Everyone knows that advertising on social networks and video sites is challenging, but the WSJ rehashes the story anyway (using three reporters!): CPMs remain low, most inventory goes unsold, marketers are connecting their brand with any anything-goes site, etc.
What the Journal doesn’t play up, most likely because the news popped late Monday afternoon: News Corp.’s MySpace is finally making some headway selling ads. Its Fox Interactive Media unit, which is basically MySpace, generated $233 million in sales last quarter, up 86% y/y and up 24% from the previous quarter. Most encouraging is that Google’s guaranteed search dollars made up just $62 million of that total, meaning that FIM’s non-search dollars increased 43% y/y and 32% from last quarter.
That’s why News Corp. COO Peter Chernin can afford to be blase about Google’s complaint that it’s not generating enough revenue on the search ads it sells on MySpace. Asked about it during yesterday’s earnings call, Chernin more or less shrugged: “That’s not a particular issue for us.”
What is an issue – making sure that MySpace’s hyper-targeting system, designed to match up advertisers with users based on profile data, continues to work. News Corp. continues to boast that advertisers who use the system have seen click-through rates increase up to 300%; yesterday they also said that they’ve been able to raise rates for those ads by up to 50%, and that advertisers who use the system spend twice as much on the site.
We’ve been sceptical in the past about News Corp.’s FY08 $1B revenue target for its Web sites, but yesterday the company made a point of reiterating them. And if they continue at this trajectory, they’re going to hit them — and prove that social networks may not be an advertising dead zone, after all.
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