MySpace and Google have always garnered their fare share of press, and the level of inherent interest has only increased upon the announced of their 39 month, almost one billion dollar deal to work together. While Google has money to throw around, and some of its ventures suggest they do so whimsically, Google would not enter such a sizeable, long term deal unless the company feels it must. And, as other articles pointed out, the Google / MySpace deal was not the only major partnership signed during this time frame. Google entered into an agreement with Associated Press only days before the MySpace announcement. Then, a day or two later, but still before MySpace, Google shared another impressive (sounding) arrangement, one with Viacom to distribute selected video content through Google’s AdSense Network. (We’ll have to save the implications of MySpace as a publisher for Viacom content for another time.)
For some, the Google / MySpace deal bails out MySpace; for me, the deal validates MySpace as a company and profiles pages as the newest evolution of digital communication. Whether Google’s products feel cohesive or even intentional is one thing, but their most necessary products try to play some role not just in organizing / making information searchable, but also during the exchange of information. For example, GMail and GTalk represent Google’s attempt at two of the most popular methods for people to communicate, and they are areas where Google has historically had limited presence. As far as information generation, an unimaginable amount comes from email and chat; it’s where people spend most of their time and as a result among the largest inventory sources for ads. Google needs that extra ad space.
Google invested into AOL because of its need for ad space, and the same holds true for Google’s investment in MySpace. But, the deal feels more symbolic than a means to secure AdSense and search inventory. It really feels like (and this was mentioned last week too) the passing of the guard. AOL had been where users congregated. Today, with 45 million members, MySpace trumps AOL and probably has just as many active users. In this sense, MySpace is AOL 2.0. It is the site that brings users online, that brings them together. (For Google, it’s get the users. For the rest of us, it’s figure out Google.)
One topic worth mentioning further that has a greater relevancy to our space is just what the MySpace / Google deal means in terms of monetization. Google mentioned in one of its interviews, and it’s a point echoed by the execs at MySpace, that by working more closely together the two companies can maximize pre-existing user activity. By Google and MySpace working together Google makes sure they get the users and MySpace gets money. The deal terms all reference traffic numbers, but they don’t necessarily discuss how that traffic will guarantee revenue. I’m sure some back of the envelope figures could take the expected number of searches, ad impressions, search ad clicks, and price per click to arrive at some rough estimates. And, while I have no doubt that the volume will exist to meet the metrics, what I have less faith in the quality of traffic.
John DeMayo wrote a little while ago about Google moving to the fringe of behavioral marketing. As most know, Google’s ads helped define the notion of contextual advertising. Overture was in many ways the first to do paid contextual advertising, but it was Google that took the same principle of context and applied it to display advertising in scale. Google turned content into context by boiling down an article into keywords. For many sites, especially smaller niche sites and even sites such as news sites that had a lot of inventory across a wide range of topics, Google’s contextual ads performed far superior than the other options available. But, by definition, though, contextual ads need some context. And, one reason why GMail ads don’t make a lot of money and why email sites in general have such low eCPMs compared to other inventory is the lack of context.
Given that MySpace in many ways resembles the next evolution of email, it too lacks a lot of context. Users reveal a lot about themselves, provide copious amounts of information in their profiles, comments, and in the linking of their relationships, but none of that translates readily into context. If it did, then there would be no Google deal, because MySpace would have already monetized its content so well that it didn’t need to be rescued or validated by Google. So, while the deal presents a challenge to many companies that currently rely on MySpace inventory, it does not invalidate the need and opportunity for behavioral marketing. The question now is perhaps not if, but when, Google will start to leverage its immense user profile data and become a behavioral marketing company, not just a contextual marketing one. The sheer volume of MySpace traffic might force their hand into creating added relevance or alternatively accelerate alternate media formats. And if that happens, it could drastically change the way direct marketers use the engine – hopefully for the best, although history has yet to fall on our side.