While the overall tech world relaxes and watches the Microsoft/Yahoo! saga, outlandish plots unfurls. Hardly two months after first unveiling the deal — AOL said on Monday that it has closed its US$850 million acquisition of Bebo, a U.K.-based online social network with more than 40 million members.
Bebo’s exceptional user base presents another advertising revenue opportunity for AOL. The web giant plans to launch a new business unit known as People Networks, combining the newly acquired network with its other social media platforms, including AIM and ICQ instant messaging services, a site that has been focusing on advertising-sponsored, Internet-enabled “video dramas” that are very much along the same lines as TV reality shows, and is expected to cater to some 80 million users.
“We are dedicated to looking at what is the right brand for the right audience,” AOL’s president and COO Ron Grant said in a statement. “We have unified the back end (of AIM and ICQ) to make sure the technology platform is unified and open.”
Bebo, presently the third major social network in the U.S. — well behind Facebook and MySpace — will form the centerpiece of AOL’s newly created People Networks business unit, which also will include other community platforms such as instant messaging services AIM and ICQ, widget technology company Goowy Media and social search question and answer service Yedda. Bebo chief executive Joanna Shields will serve as president of the new unit and report to Ron Grant, AOL’s president and chief operating officer.
In the meantime, the Web giant’s purchase of Bebo will help the social networking site gain increased exposure in the U.S. “When you combine Bebo’s worldwide users with those who use AIM and ICQ, we reach around 80 million,” said AOL CEO Randy Falco, during a conference call held when AOL initially announced the deal in March.
“With the addition of Bebo and the creation of People Networks, AOL is uniquely positioned to capitalize on the exploding social media space by delivering a more personal experience for consumers and a better way for advertisers to engage them,” Falco, said in a statement.
The Bebo purchase offers AOL the third piece of a three-prong strategy focusing on advertising, publishing, and social networks. “Unlike other social networks, which have had a hard time monetizing their sites without endangering the user experience, Bebo created an environment that enables advertisers, brands, and media companies to engage in meaningful, relevant conversations with its users," Grant said.
The question will be how well AOL can create value for Bebo’s fast-growing user base. AOL understands that it is well-positioned to do that because of its Platform-A advertising unit and other content offerings.
“AOL is now fully focused on growing our business in three key areas — our advertising network, publishing and people networks — by delivering relevant content and advertising across the web, and we are making great progress in each area,” Falco said.
For instance, Bebo has very early differentiated itself by offering ways for users to utilize music and other media — the platform is known for a variety of original, serial video programming. With the addition of instant messaging platform and other tools, users will be able to get in touch more effectively with like-minded people across the Web, Shields said.
“Bebo’s unique approach to video programming has caught the attention of advertisers,” noted JupiterResearch analyst David Card.
Bebo’s ‘KateModern’ program is incredibly popular in the UK and has established the value of creating content that is specifically designed for the Web, not television content repurposed for the Internet, Card, said in a statement.
Among the initial responsibilities with Bebo will be to combine it with AOL’s instant messaging, chat, and e-mail platforms, the company said. AOL also plans to let Bebo users merge their profiles with AOL instant messaging, so they can use common screen names without re-registering. AIM had 30 million users worldwide, and ICQ, another AOL IM service, has 28 million, according to AOL.
Getting Bebo an elevated profile in the U.S. would possibly be a top priority for AOL, Forrester Research analyst Charlene Li, said in a statement.
“Being a stand-alone social network, Bebo had no chance of competing against the heavyweights like MySpace and Facebook,” she said. “But as an integrated part of the larger AOL content and ad network, it has amazing potential to play a role in how social networks develop.”
AOL plans to promote Bebo’s original programming, such as “KateModern,” “Sofia’s Diary” and “The Gap Year,” across several AOL channels. Bebo, on the other hand, will use AOL music and entertainment content. Display ads will be a key advertising medium on Bebo, which has been successful in integrating brand advertising in programming, according to AOL.
The move comes as Microsoft and Yahoo carry on their enduring and complex mating dance — the two reportedly are mulling a partnership that stops short of an all-out merger and could have implications for that portal. Yahoo and Bebo have had an advertising partnership in place since late 2007 through which Yahoo serves display ads to Bebo users in the UK and Ireland.
In the meantime, Facebook may perhaps become even more of a sought-after takeover target now, and even more so if the strategy of AOL proves successful, Li added. Microsoft already owns a 5 percent stake in that network and reportedly revisited an outright acquisition after Yahoo repeatedly rebuffed it.
Bebo has about 100 employees operating in offices in the U.K., San Francisco and Austin, Texas.
The companies also announced plans to introduce international versions of the site in at least six different languages over the coming months.