Mountain View, California — Google Inc. and Beverly Hills, California-based MySpace, the social-networking website owned by News Corp., over the weekend endorsed a new multi-year search and advertising relationship under a long-term deal that no longer assures the social network lucrative guaranteed payments, according to a person familiar with the matter.
Under the global agreement, Google will continue to support MySpace’s search operations and search advertising, and will also cater display-advertising services, the companies said today in a statement.
“We are thrilled about reviving our partnership with Google. Their best-in-class technology will continue to provide our consumers with a robust search experience,” said Nada Stirratt, chief revenue officer at MySpace, in a statement. “We look forward to participating in the Google Display Network and DoubleClick Ad Exchange to increase yield across our display ad inventory.”
“We are excited to extend our partnership with one of the largest social Web properties in the world, MySpace,” said Google vice president of global media and platforms Henrique de Castro.
“We are also pleased that our technology will cater MySpace’s users on its newly redesigned site, and that MySpace has chosen our display advertising solution to increase its returns.”
According to the earlier accord with Google, which expired in June and was extended leading up to MySpace’s redesign, introduced in October. The companies did not revealed the financial terms or duration of the new deal. In 2006, Google, owner of the world’s largest Web-search engine, agreed to pay $900 million over three years to place ads on MySpace.
At that time, MySpace appeared on track to continue its successful path, coming two years after News Corp acquired it for $580 million. Now, a new search deal would probably be performance-based and worth less than the previous Google deal, News Corp. Chief Operating Officer Chase Carey stated Aug. 4 at an investor conference.
Maintaining the relationship with Google is key to News Corp.’s attempts to revitalize struggling MySpace, because advertisers have been spending less on the site. Research firm EMarketer estimates ad spending on MySpace for this year will fall to $347 million, down from $470 million a year ago. Advertising revenue for MySpace is projected by EMarketer to drop again in 2011, even as the overall search advertising market expands.
MySpace will unite with the Google Display Network, a group of more than 1 million websites that earmark a part of their ad space budget for Google to sell advertising and share revenue. The social media site also will become part of Google’s DoubleClick Ad Exchange, in which online publishers sell display advertising in an auction.
A MySpace spokeswoman declined to say how much of the site’s revenue is derived from its partnership with Google, which EMarketer estimates controls nearly 72% of the total search advertising in the U.S.
MySpace is under pressure to turnaround its flagging fortunes. The site, which was recently repositioned as a social network built around entertainment, has been a drag on News Corp.’s balance sheet. The business segment in which MySpace is lumped lost $156 million in the most recent quarter — worse than a year earlier.
“We have been clear that MySpace is a problem,” News Corp. Carey said during a conference call with analysts after the media and entertainment giant released its quarterly earnings. He pointed out the company’s eagerness to have MySpace turn a profit, saying on a November call with Wall Street analysts that “this is something that we look to judge in quarters, not years.”
“The current losses are not acceptable or sustainable,” Carey said. “Our current management did not create these losses but they know we have to address them.”
News Corp., the New York-based media company controlled by Chairman and Chief Executive Officer Rupert Murdoch, rose 5 cents to $14.44 at 4 p.m. New York time in Nasdaq Stock Market trading. Mountain View, California-based Google gained $1.41 to $591.71.