Google buys Myspace (traffic)
Google Inc. on Monday agreed to pay News Corp. $900 million over three years to provide search and distribute advertising on the popular social network MySpace.com and the rest of the media company’s Fox online network.
Under the agreement, Google, based in Mountain View, Calif., would be the exclusive provider of text-based advertising and keyword-targeted ads on the Fox Interactive Media network. It would also have the right of first refusal on display advertising sold through third parties.
In return, Google would make guaranteed minimum revenue share payments to News Corp. of $900 million… more
It’s a bold, aggressive move from Google, and the significance of this deal goes beyond the mere capture of market share. I see 2 of Google’s most important strategic directives at work in the Myspace deal.
1. In spite of what many would describe as growing “click cynicism” among surfers, Adsense publishers (of which Myspace will now become a monster) are doing rather radical things with their ads… at Google’s urging, of course. The line between ad and page content is disappearing. Google argues that the “context awareness” of Adsense ads qualifies them to be considered valuable content in their own right. You can see from this Adsense Heatmap, that Google wants their ads to occupy the most important real estate on the page. Publishers who devise clever integration schemes for their ads and content will be amply rewarded. I look forward to seeing what Myspace comes up with.
2. “Google will make minimum guaranteed revenue share payments of $900 million…” I see this as a giant cake being wheeled out by Google with the words “Site Targeting Works” written on it in big blue, red, yellow, blue, green and red letters. Contextual is great, but Site Targeting is going to be big, also. Google, its publishers and its advertisers have been doign this for a while now I have to imagine that the aggregate performance data collected is simply AWESOME. On the strength of that data, and under the Site Targeting model, I predict Google is going to make more mega-buck deals with big publishers like Myspace. The traffic has been quantified. Google is buying traffic.