Wednesday, March 28, 2007

Underhyped Media.....

When Rupert Murdoch's News Corp made the decision to purchase MySpace, many thought he overpaid at the time for website with little revenue.

At the time of the purchase, estimates were that MySpace was generating $30 Million Dollars per year in gross revenue.

Today, MySpace (according to Barron's) is generating $30 Million PER MONTH.

"Greenfield writes that MySpace is now generating “in excess of $30 million” a month in revenue, with about $24 million in domestic revenue and $6 million internationally. He adds that monthly revenues should more than double over the next 12 months, and “at very high incremental revenue margins.” So in 12 months, he’s saying, MySpace should be doing more than $60 million a month in revenue, for an annual run rate in the neighborhood of $750 million a year. Not too shabby."

Hats of to the folks at MySpace, for a few very important reasons:

* continued growth of consumers using MySpace
* growing sales through innovative packaging to both performance advertisers, as well as branded marketers.
* 20% of revenues coming from INTERNATIONAL media channels ($6 MM)
* the forward thinking purchase of an optimization company (SDC) to handle the "blocking and tackling" of inventory optimization
* understanding and setting proper expectations with advertisers (specifically, that they are buying Media 2.0 -- this is NOT Google keyword placement, therefore, agencies should NOT compare MySpace's media with other is unique, different -- and should be measured differently)

MySpace has excelled, with both consumers and advertisers.

I'm thrilled for our industry, and what it means for the future of MEDIA 2.0.

Other MEDIA 2.0 sites, that have alot of traffic, have loyal consumers, and are thinking about monetization should know that MySpace has paved the way -- and properly laid the strategy for revenue success.

It should not be ignored.....

What should Media 2.0 properties do to build their businesses?

*focus on monetization
*uncover segements of value to advertisers - and look at advanced, easy to use technology
*sell better performance metrics
*differentiation of media (build USP's)
*selling media to marketers, in the manner that users consume it
*looking at media 2.0 and pulling out unique data points
*focus and lift from INTERNATIONAL users and inventory

Bottom line here, is that the market is advancing quickly -- and it is our believe that Media 2.0 is UNDERHYPED.

Our core belief at Lotame is 2 fold:

1) The CPM's that media 2.0 properties are charging, are WAY too low for the POTENTIAL value that they can provide to advertisers

2) Advertisers need an alternative to buying Media 2.0.

We understand the challenges that destination sites face....

The OVERHYPE, does not exist in User Generated Content, or Web 2.0 Media for one simple reason......

It's just starting to take off, and with enhanced segmentation as well as continued differentiation --- you will see that the sites (like MySpace) where, CONSUMERS SPEND MOST OF THEIR TIME -- AND INTERACT THE MOST WITH MEDIA -- becomes the primary driver for advertisers -- and HUGE VALUE for Publishers.

Hats off to the folks at Myspace for their continued domination....

Media 2.0 is undervalued, if the proper tools are applied.

Rock on.


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