AOL and Bebo become buddies

13-03-2008

by Charlie Taylor

In a move aimed at ensuring that it doesn't miss out on any of the action, AOL has jumped aboard the social networking bandwagon by purchasing Bebo.

AOL said on Thursday that it is to acquire the popular website for a whopping USD850 million. Bebo boasts a worldwide membership of more than 40 million users, most of whom are in the US, UK, Ireland and New Zealand. At present it is the most popular social networking website in Ireland with around 1 million registered users.

AOL, which has struggled since its merger with Time Warner back in 2001, claimed that together with its AIM and ICQ personal communications network, the acquisition gives it a 'premier position' in the world of social media with a network of approximately 80 million unique users.

The deal comes just a week after AOL launched Open AIM 2.0 a new initiative that allows the developer community greater access to its AIM network.

Speaking on Thursday, Randy Falco, chairman and CEO of AOL said that Bebo was 'the perfect complement' to AOL's personal communications network.

"What drew us to Bebo was its substantial and fast-growing worldwide user-base, its vision of a truly social web, and the monetisation opportunities that leverage Platform-A (AOL's integrated ad buying platform) across our combined global audience. This positions us to offer advertisers even greater reach and marketers significant insights into the desires and needs of consumers," said Falco.

While many critics will baulk at the price that AOL is paying for Bebo, the internet firm obviously believes it will be able to claw back the money and goes so far to as to quote figures from eMarketer, which predict a huge rise in spending on social networking advertising.

According to those figures, by 2011, USD4.1 billion will be spent worldwide for social network advertising, up from USD480 million in 2006. In 2008 alone, global ad spend in the social networking arena is expected to increase 75 percent year-over-year to USD2.1 billion

In recent months, AOL has moved aggressively to bolster its position in areas critical to its status as an advertising-supported web media and marketing company. The company has spent nearly USD1 billion on online advertising acquisitions, including ADTECH, buy.at, Lightningcast, Quigo, TACODA and Third Screen Media to create Platform-A.

In addition, it's also launched 17 international websites over the last year and has plans to expand to 30 countries outside the US by the end of 2008.

Bebo, which has announced plans to launch in five countries this year, will be featured prominently in AOL's international expansion efforts after the deal is closed, AOL said.

The social networking site has approximately 100 employees operating in offices in the UK, San Francisco and Austin, Texas. The company's president Joanna Shields will continue to run Bebo once the deal is completed.