AOL (America Online) acquires Bebo! This news is all over the place, the last few days. AOL, the online section of Time Warner has acquired Bebo, a big player in the social networking arena for $850 million in cash.
AOL is an American online service provider, bulletin board system and media company operated by Time Warner, which focuses on improving online user experience. In addition to providing internet access, it also offers a wide variety of leading industry features, content and a diverse online community for beginners as well as experts.
Bebo which means “Blog early, blog often,” is an online social media network that is similar to MySpace and Facebook. It is currently ranked the third largest social networking site in the United States and the second most visited site in the UK. This site was founded in January 2005 by Michael and Xochi Birch, a husband and wife team, who still own a big part of Bebo. It is one of the most prominent sites on the net today, with 40 million members who view about 78 pages per day on an average.
Social networking sites are invaluable for online advertisers because of the huge number of members that post their personal information on the sites and can be great targets to sell products and services.
Analysts say that the acquisition of Bebo could not have been timed better. This is because AOL has experienced a huge decline in dial-up internet subscriptions and their advertising has been slowing down too. They have been looking at ways to increase their ad revenue. Time Warner was ready to give up on AOL and was considering parting company with the AOL unit.
Bebo is sure to help AOL with their Web 2.0 agenda and adding millions of users to their group. It will skyrocket AOL’s ad inventory for Platform-A upwards, because of the young adult demographic.
Another great advantage is that Bebo opens AOL’s entry into OpenSocial and Facebook as Bebo supports both these platforms. AOL will also be able to provide their advertisers greater reach and marketers very significant insight into the needs of the consumers.
Although, in comparison, MySpace and Facebook overshadow Bebo, it has a strong presence in some foreign markets, which includes Britain. According to comScore, Bebo’s audience outside the United States is huge.
Executives at AOL say that their plan is to tap this audience and drive traffic to the other free, ad-supported websites belonging to AOL, mainly internationally, while at the same time leveraging AOL’s instant messaging communities, ICQ and AIM, to try and grow Bebo in the United States.
AOL chairman and CEO, Randy Falco admits that acquiring Bebo gives the company a social media play. In his own words, “Bebo is the perfect complement to AOL’s personal communications network and puts us in a leading position in social media.”
According to Alex Burmaster, European Internet Analyst for Nielsen Online, “Bebo has an incredibly strong brand identity, particularly with the teenage and young adult market, so it will be very interesting to see how AOL makes best use of their new youthful Trojan horse.”
It is also being said that the price-tag of $850 million is small when compared to the Microsoft buy of 1.6% of Facebook for $240 million last year. AOL has been lucky in clinching this great deal but most people are eagerly waiting to see how they turn it to their advantage.