AOL Adopts a Bebo

We now know who won the "Bobbing for Bebo" contest. Time Warner's (NYSE: TWX  ) AOL is stepping up with an $850 million winning bid in landing the growing social networking site.

AOL may seem like a dark horse in this race. It has made acquisitive nibbles in the past, but this is a big bite for a fallen Web darling whose parent company's share price has been stuck in the teens for as long as the boy bands genre.

England's Telegraph reported last year that Yahoo! (Nasdaq: YHOO  ) was making a $1 billion play for Bebo, but nothing ever came of the springtime rumor. The paper also noted at the time that British Telecom (NYSE: BT  ) and Viacom (NYSE: VIA  ) had come up empty in 2006 in attempting to bag a Bebo.

If the list of thwarted suitors appears eclectic, then you probably need to brush up a bit on Bebo. The social networking site may not be at the level of market leader MySpace and Facebook, but it's the top dog in England. That explains the BT interest. Bebo has also been a pioneer in farming out content creation. Whether it's Kate Modern or Sony's (NYSE: SNE  ) Sophia's Diary, Bebo has added to its sticky appeal by teaming up with online serials to keep its audience coming back.

Time will tell who is getting the better end of the deal. Bebo is more popular now than when Yahoo! was supposedly sniffing around at higher price points a year ago. Bebo has 40 million free members. A year ago, it was serving up more than 5 billion monthly page views to its 31 million members.

Bigger site, cheaper price? Believe it. Social networking has been a tough nut to monetize. Even Google (Nasdaq: GOOG  ) confessed as much, in attributing part of its recent quarter's shortcoming to weakness at social networking sites like News Corp.'s (NYSE: NWS  ) MySpace. With the climate unlikely to improve in the near term, you can't blame Bebo for cashing out before valuations get even leaner. 

Bebo is like flypaper to engaged youths. The average visitor will go through a whopping 78 pages in a day. That obviously isn't the ideal sticky demographic for lucrative paid search advertising, but it's just right for the display advertising world.

Bebo struck a multiyear advertising deal with Yahoo! last year, just as rumors of an outright buyout by Yahoo! began to fade away. How AOL's purchase of Bebo will affect that arrangement is not clear, though it's safe to say that AOL will take over the marketing reins as quickly as possible.

It's a big bite for AOL. Let's hope it chews carefully.

More Foolishness:

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 597873, ~/Articles/ArticleHandler.aspx, 10/24/2016 11:55:37 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,240.67 94.96 0.52%
S&P 500 2,150.57 9.41 0.44%
NASD 5,303.81 46.40 0.88%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/24/2016 11:39 AM
TWX $87.64 Down -1.84 -2.06%
Time Warner CAPS Rating: ***
BT $23.30 Down -0.21 -0.89%
BT Group CAPS Rating: *****
FOX $25.64 Down -0.27 -1.03%
Twenty-First Centu… CAPS Rating: ***
GOOGL $836.87 Up +12.81 +1.55%
Alphabet (A shares… CAPS Rating: *****
SNE $32.13 Up +0.02 +0.06%
Sony CAPS Rating: ***
VIA $41.90 Down -0.15 -0.36%
Viacom CAPS Rating: ***
YHOO $42.50 Up +0.33 +0.78%
Yahoo CAPS Rating: **