Another Social Misstep?, another in a long line of social networks like MySpace, has turned down an offer to buy them for $552 million dollars by a British Telecom group, according to an article from TechCrunch. Their asking price? A little over 1 billion dollars. Much like Facebook, who I hear is wanting 2 billion dollars, once reason cited was so that the owner could be the youngest billionaire.

Now, I’ve been an online marketer, affiliate marketer for several years now, so I know a little bit about making money on the internet, maybe not as much as these bebo and Facebook people, but I know a good deal when I see one, and neither of these sites are worth anywhere near a billion dollars, I don’t care how many users they have.

In the past all the talk has been about getting the “eyeballs” to your page, or to get users to your site to view your stuff, now, Bebo and MySpace may have the eyeballs, but they don’t have the type I am used to dealing with, ones that are looking to purchase something. The users at MySpace aren’t looking to buy anything, most are either young kids in middle school, high Scholl and college, or they are looking to exploit the network, like pedophiles, spammers and adware pushers, such as this article, Teenagers used to push Zango on MySpace? from the Paperghost, where he documents how affiliates of 180Solutions are pushing their products on the unsuspecting masses. None of these users are looking to buy anything, make anyone any kind of money at all, they are looking to hang out, chat and be cool, like everyone else.

I have read on many message boards discussions on how to value your site when someone does try to purchase it, the highest one I saw, I believe was three years of your current profits, all the way down to three months of your current profit. Well, in this case and the case of Facebook, how can you be worth millions of dollars, let alone billions of dollars, when you aren’t turning a profit at all? All the millions of users might be worth something, but come on, what are they really worth if you can’t market to them?

The folks at mashable think it was wise to hold out for more money, since they are really taking off in the UK now.

Bebo is probably wise to demand more – the site is growing quickly and the network effect has kicked in. In the UK market, Bebo is ahead of MySpace on pageviews and session times, but behind in terms of marketshare (although they’re catching up quickly). What’s more, UK searches for “bebo” exceed those for “myspace”. The other big players in the UK market are Piczo and MSN spaces (soon to be Windows Live Spaces), which rank third and fourth.

I don’t know, I guess time will tell. But I think Bebo should have taken the money and ran, much the same as Facebook should have. One day, when they are purchased for a lot less than this offer, they will look back and say, what were we thinking?

Added: Quote from Mark Evans,

If you think marketing is a challenge, take a look at the M&A market. After Rupert Murdoch spent $580-million to buy MySpace, the value of popular social networking sites has exploded in a way that harkens back to the dot-com bubble. Bebo, for example, apparently turned down a $550-million offer from BT. How is this value established? Have we gone back to bizarre dot-com tools such as unique visitors (aka as “eyeballs)?
Bottom line: lots of opportunity, lots of potential but lots of questions that should make everyone step back to get some perspective.

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4 Responses to Another Social Misstep?

  1. George Nimeh says:

    Hi Jimmy,

    Hate to disagree, but given Bebo’s phenomenal growth and traction (especially in Europe) along with the exponential growth of the sector, I can easly see how Bebo could be worth upwards of $1B.

    “In many ways, the art-form of self-expression has become the ‘new media,’ and social networks are their distribution channels,” writes Robert Young on GigOm’s blog. The phenomenal growth of social networks is providing marketers with the opportunity to reach younger consumers where they hang out.

    Here’s just one example of how well it can work: The X-Men 3 campaign on MySpace has 3,217,125 friends. 3 million targeted, self-identified, measurable conversations. A marketer’s dream.

    Murdoch’s $500M for MySpace is known from business circles to blogs as a fatastic deal. While blogging this same story, I listed more than 10 potential buyers without even trying.

    One thing is certain, hindsight will either make Birch and Maloney look like visionaries or fools.


  2. I have no problem with disagreements George, if I knew everything I would be sitting on my island somewhere in the bahamas. I can see how it would look like the 3 million xmen fans would be a marketers dream, but how many of them are just linking because they can be linked to by a high profile, profile, hehe. I clicked around on a few and landed on band profiles, comic shop profiles, models, bo yah, porn stars, strip clubs, sigh.

    What was I talking about? Oh ya, I agree on the numbers, and buzz and word of mouth marketing, etc. But it’s hard to put a dollar amount on those. The good thing about the internet is these posts will be around as long as we leave them up and we’ll be able to see wether it was another flop or a good idea. Thanks for commenting.

  3. George Nimeh says:

    Hey, if we never disagreed we’d have nothing to argue about. ;)

    I’d say that it is easier to put a dollar amount on the 3 million X Men “friends” on Bebo than to figure out the impact of a 30-second TV spot.

    Half of new Skype users come from Bebo (see report in,uk). Pretty easy to put a dollar amount on that, too. That makes eBay another potential new “friend” for Bebo, btw.


  4. Interesting, so bebo should be cleaning up in Skype commissions atleast. ;)

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