Fotolog-Google Deal Worth Est. $75 Million


New York-based Fotolog CEO John Borthwick said today that the search and advertising deal his company announced last week with Google is proportional in scale to the deals struck last summer between Google and MySpace and Microsoft and Facebook.  We estimate that this amounts to about  $75 million over the three year term.  [NOTE: We originally estimated a deal size of $200-$250 million, based on the analysis below, but we have since received better information.]

While Borthwick wouldn’t talk specifics, he acknowledged that Fotolog is very similar in traffic to Facebook, the second-most visited social network after MySpace. Facebook reportedly received an estimated $200 million in its agreement to carry Microsoft ads and search technology for three years.

When MySpace agreed to its $900 million, 3-year deal with Google last year, it had nearly 100 million registered users. At the time Facebook signed with Microsoft, meanwhile, it had an estimated 9 million users. Fotolog expects to pass the 10-million user mark in the next 10 days and says it gets 140 million page views per day.  Users spend an average of 25 minutes on the site, a number that Borthwick said is also comparable to Facebook.

Under the terms of the agreement, Fotolog will place Google search boxes on every page of its site. In addition to searching within the site, users will be able to perform Google searches and see Google keyword ads.

“If the implementation is done well, then it’s not only a way to make money; you’re also offering functionality to members,” said Borthwick.

Before signing the deal with Google, which took a couple of months to hammer out, Borthwick said Fotolog spoke to Yahoo, Microsoft, as well as all the rest of the usual players and “even some unusual players.”

“The Google offer was just a better offer,” he said.

Borthwick believes that the size of the deal reflects the site’s fast growth. “We’re really not a photo site,” he said. “We’re a social media network, and because of that it’s a great network to offer search.”

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