MySpace Redesign: A Home Page Built for Brand Advertisers

by Caroline Dangson, IDC

On June 18th, MySpace unveiled a redesigned home page. When the new home page appeared live on Wednesday, Warner Brothers monopolized the site with a full page ad promoting its new movie The Dark Knight. The advertisement incorporated both Flash and video and was the most noticeable change to the look of The ad on the home page links to a more elaborate landing page completely dedicated to the ad campaign with an embedded hi-def movie trailer in addition to interactive social content such as a sweepstakes, forum and widget so that users can add the content to their own pages. This inaugural ad campaign illustrates the meaning behind the MySpace home page redesign: To offer brand advertisers a compelling solution to drive interest in their products and services, which will bring in significant advertising revenue for MySpace over time.

According to MySpace, the full page splash ads will rotate with other ad arrangements in order to strike a balance between 'revenue and relevance to users.' MySpace says it used feedback from user surveys, focus groups, blog postings and email to guide this decision. The full page ad campaign is sold at a fixed price and is part of a larger package for brand advertisers. The full page ad runs for 24 hours and rotates with other ad campaigns each week, while the landing page to which it links remains live for several weeks of the promotion. MySpace informed us during a recent briefing that each advertising campaign package will generate revenue in the seven (possibly eight) figure range.

Lets play with the numbers a little to estimate, very roughly, the potential revenue this design change could bring to MySpace over time. Lets us assume that the average MySpace home page ad campaign costs brand advertisers a total of $10 million (just on the border of seven and eight digit dollar amount.) Warner Bros. ran two separate ad campaigns on the MySpace home page for its upcoming movies The Dark Knight and Get Smart on June 18th and 20th, so lets say Warner Bros. purchased the inventory for a discounted price of $15 million. McDonalds also ran a home campaign to promote its Big Mac Chant on June 19th, giving MySpace another $10 million by our estimate. This means that MySpace would have already made $25 million within the first week of the redesign launch. If MySpace sells a unique full page ad campaign to 20 brand advertisers at $10 million each over the next year, it will make $200 million; to 50 brand advertisers, $500 million; to 100 brand advertisers, $1 billion. Keep in mind that this revenue only accounts for the home page ad campaign and does not include all the advertisements (banner, Flash and video) found on other MySpace pages.

Brand advertisers desperately seek ways to promote their brands on social networking sites given the incredible amount of traffic they draw daily. However, low quality ad inventory combined with the lack of brand safety associated with user generated content have prevented brand advertisers from fully utilizing the social networking space. This is why monetizing social networking services remains the industry's biggest challenge. With its redesign, however, IDC believes MySpace now offers a solution to advertisers without having to censor user generate content on individual user pages, as this would destroy the site's popularity and therefore be counter-productive.

While MySpace cannot guarantee the brand safety of user generate content (UGC) on individual user pages, it can guarantee the brand safety of content on its home page, over which it has complete control. Furthermore, the MySpace home page has massive traffic. As many as 35 to 40 million unique users visit each day to login or search for content. MySpace seems to say: "So UGC is not brand safe? So what? Our home page traffic is so massive we can still generate a lot of revenue on our site." MySpace's redesign could set an example for other social networking sites to follow.

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