While the world obsesses over Facebook and its troubled IPO, an older social media entity that used to attract as much attention is trying to rebuild.
In July, Myspace marks the anniversary of its hand-off from News Corp. to ad network Specific Media, and the year has passed more quietly than its new owners had initially hoped. After buying Myspace for the relatively bargain price of $35 million from News Corp. – which paid $850 million for it in 2005 and lost millions on the purchase every year since – Specific Media CEO Tim Vanderhook had hoped the deal would help transform the company from an ad network to a full-fledged media/content play.
Vanderhook, who runs Specific Media with his co-founder brothers Chris and Russell, even managed to attract pop star Justin Timberlake as a partner on the deal and was assigned a role in developing the creative direction of Myspace. As the ink was barely dry on the acquisition last summer, Specific Media had hoped to showcase its plans to reorganize and revive Myspace’s brand by the end of last year. But those plans were put on hold. A few days ago, PR Week UK reported that Specific Media was holding informal talks with agencies about a brand reset that it hopes to launch by the end of the year.
As Specific Media prepares to select players to help chart Myspace’s latest comeback, AdExchanger spoke with several company insiders and ad agency executives to assess the property’s chances and how it might bolster Specific Media’s value as an ad network and content provider.
To be fair, if one were to compare the site’s performance since December, when Myspace completed some product changes, such as a new music player and Facebook integration, the site experienced a slight upward tick for the first time in a very long period and is up about 7 percent since the start of the year. While that’s nothing to cheer about, it does suggest that even subtle changes can help alter Myspace’s negative trajectory.
And that could be crucial. Several sources tell AdExchanger that Specific Media executives have pitched advertisers saying that the real value to the ad network is Myspace’s cookie data. Myspace executives declined to comment, and Tim Vanderhook did not return an email message seeking a response, but sources tell AdExchanger that at the moment, Myspace’s advertising proposition is not a major focus; instead the company is concentrating on building a better consumer experience first.
Still, even if Specific Media and Myspace get their act together, that doesn’t automatically mean the benefits will materialize. “Cookie data is only valuable if there are active users,” noted David Berkowitz, VP emerging media at digital agency 360i, in an interview. “After 30 days, it’s not worth much, so that means you need an active audience. I could see some other user data possibly being useful, but data gets stale fast. If Myspace keeps going downhill, then Specific Media would have to pay too much to drive traffic there to make the cookie data worthwhile; it would be a cat chasing its tail.”
There could be another crimp in any plans to extensively use audience data to support ad targeting. Last month, Myspace agreed to settle a suit brought by the Federal Trade Commission related to charges that “it misrepresented its protection of users’ personal information.” As part of the settlement, Myspace is required to implement a “comprehensive privacy program,” and submit to “regular, independent privacy assessments for the next 20 years.”
In any case, for Myspace to be viewed as successful, it needs to be more than just a repository for audience data. It needs to attract brand advertising. And for that, it needs to promise engagement. According to Nielsen, which counted 15 million uniques for Myspace in March 2012 (a decline of 45 percent from the year before), the average time spent on the site that month was 15 minutes 13 seconds, a decrease of 2.6 percent from the year before on Home/Work computers only.
To achieve the necessary scale, Myspace, like most plaforms, needs to enlist users are the promoters. When it acquired Myspace, Specific Media sought to extend the plan that was already put in place: create a showcase for musicians to connect directly with their fans. But as the years have gone on, musicians already have Twitter and Facebook to do that, while Pandora, Last.fm, I Heart Radio, Spotify and others have begun been battling for music streaming listeners and meager audio ad dollars.
Again, Myspace is not without advantages here. Myspace’s music library remains huge in terms of sheer catalog depth, with 42 million songs and roughly 100,000 videos. Of course, the licensing deals to maintain and build that library is expensive.
MySpace needs to work hard to prove itself. Nothing is a bigger turnoff for marketers than downward momentum. Reach helps, but that alone means little when it’s clear that the property is hurting. Granted, with tens of millions of visitors, that can mean that brands miss out on reaching that audience, but brands have no shortage of options.
Second acts can happen, and many publishers and tech companies pivot all the time to stay relevant, 360i’s Berkowitz said, echoing comments from other ad shops.
“[Myspace] is hardly dead,” Berkowitz said. “One especially trying hurdle for MySpace is that it’s not just a destination – it’s meant to be a social property. That means that to thrive, its content needs to be shared. If a 22-year-old wants to tell all her friends about her favorite band’s new single, is she going to want to tell them to listen to it on Myspace, or Spotify, Rdio, or anywhere with some cultural cachet? Social media is all about projecting an image, and MySpace’s image looks weathered and rusty. It’s going to need more than a new coat of paint to restore its cachet.”
Myspace needs to find a way to fit into the niche left by Facebook and Twitter and out-compete other music sites. Can Myspace try to capture its past as a communications tool, which is what Facebook and Twitter have perfected in very clear ways, even if they too appear to be struggling with building a solid revenue model? Probably not; that ship has sailed and it would be prohibitively expensive for Myspace to even try to wrest some of that ground back. Besides, didn’t News Corp., with its deep pockets, conclude that that was impossible?
The only option is to build itself up as a content site – again, something News Corp. tried and failed at. Myspace had some cache with users when it allowed members to use their pages as individual expressions. However, major advertisers were put off by the often garish displays that populated Myspace sites. As Myspace insiders note, it has a great deal of content available. But content these days is easily available all over the web.
The only thing that separates content sites is being able to offer something unique and exclusive. With cloud-based media sites continuing to expand, allowing users to customize extensive music and entertainment libraries with simplicity, Myspace will certainly have to go to great lengths to be something special to a scalable audience. There is still power in having a recognizable brand, so it shouldn’t be counted out, even at this late date. But if Specific Media can’t impress users – and importantly, advertisers – by the end of the year, Myspace may find itself out of second chances.
By David Kaplan
