AOL’s buying Bebo might just pay off

AOL’s cash purchase of Bebo may just work out for Time Warner. But ironically it may be Time Warner content rather than AOL’s online assets that will make the deal work.

Bebo has crafted a monetisation strategy based on wrapping advertising around third party content. Founder Michael Birch explained:

“What we’re trying to do here is simplify the whole relationship between media companies and distribution platforms. There’s value for Bebo and our users by having great quality, legal content on Bebo. And there is clear value to the content owner in both controlling the content and advertising, and in keeping the subsequent revenue.”

In other words, good for Bebo as it gets more content on its site, good for content providers as its gives them distribution for both content and adverts to Bebo’s 40 million members. Just last week ITV announced that it will make programming from ITV 2 available on Bebo – the first time ITV has made full length content available on a third party network.

So it strikes me that if Time Warner uses this acquisition to distribute engaging content to the Bebo community and then make this content its platform for online advertising it will be in a strong position to turn a Shilling from the deal.

But if AOL just looks at Bebo’s enormous user base and then thinks it can pump ads into the community without a relevant context or engagement it will be sorely disappointed with the results as shown by Google.

The big question then is whether Time Warner’s content house can work with AOL to make the deal work – that’s likely to be the bigger challenge to this deal succeeding.

Posted by Ivan Croxford on March 16, 2008

Tags: AOL, Bebo, Time Warner