Reference no: EM131804626

Problem: Suddenly, on the Internet, it's 1999. But instead of Hotmail, Yahoo! or ICQ, it's social networking site MySpace.com that is attracting Web surfers at a blistering pace. More than 180,000 visitors are registering every day at a Web site that attracted its first 60 million registered users in under 30 months. Already laying claim to about half the reach that monster players Yahoo! and Google enjoy, MySpace typically draws over 20 million unique visitors each month. And, by the time you read this, all of these statistics will probably have been surpassed, given the site's incomprehensible growth rate. As Internet success stories go, the MySpace phenomenon is nothing short of spectacular. Rupert Murdoch's News, Inc., bought the site from parent company Intermix Media in 2005 for $580 million, but many observers think that was about one-fourth of what the site could have sold for had the board and the lead investors not rushed into the deal. What reminds industry observers of 1999, though, is that MySpace is a hot property, yet it has no visible business model beyond trading eyeballs for ad dollars.

So why aren't mega advertising dollars flooding the doors at corporate headquarters? A quick tour of MySpace.com would probably answer that question for anyone with a brain and a pulse. MySpace is an anything-goes, youth-oriented, social hub at the center of music, matchmaking, and social rendezvousing. Friends keep in touch with each other by posting their profiles, photos, music preferences, social events, and more to personalized Web pages. The pages they create can host automatically loaded music videos or tracks that start to play as soon as the Web page loads. Pictures are uncensored, as are avatars and messages posted to pages by friends or any registered visitor who happens to land there. The only thing the site monitors is hate speech, but that may change in the wake of a 2005 controversy in which two sexual predators were convicted of luring minors into sex acts by trolling MySpace's public pages. Skin, lewd language, and descriptions of adult events and activities can be found whenever users care to share or search for them. Not all of the content on MySpace is mature or off-color, however.

More than 350,000 music groups or individual performers are registered there, and mainstream acts post pages there so that fans can follow their activities. The Foo Fighters even allowed their album In Your Honor to air free for a week on MySpace before its official release. The site also hosts hundreds of thousands, possibly millions, of unique video clips in 16 categories. There are blog listings, independent and user-generated film reviews, event listings, classifieds, discussion forums, and, of course, those personal pages and music samples. At least 45 percent of MySpace users are in advertisers' coveted under-25 age bracket. The minimum age requirement is 14, and therein lies the advertisers' rub. Advertising on MySpace raises ethical concerns and sparks fear of unwanted brand association, even though the user base is the most valued. Though the site claims to generate tens of millions of dollars in ad revenue each month, that pales in comparison to what it could be making. David Cohen, the senior vice president of Interpublic Group's top ad agency, Universal McCann, considers the advertising opportunities on MySpace "a double-edged sword."

He points out that user-generated content can be "risqu é , in bad taste, et cetera." His Fortune 100 clients don't like the idea of placing advertisements for their products in an environment where they have little control over what appears beside them. Still, MySpace has its supporters. As the fifth largest Web property on the Internet, it is always going to be attractive to somebody. HSBC, Cingular, Aquafina, and H&R Block have all bought ad space there; surely, many more deep-pocketed firms will follow. As Richard Doherty, research director of Envisioneering Group, asks, "If you pull away from MySpace, where do you go? Do you do due diligence on the next 10 [social networking sites]? Advertisers need this audience. This is a new double-digits-minutes eyeball magnet and advertisers have to be there."82

Questions: 1. Considering the effects of advertising on consumers, what are the risks that advertisers take in placing advertisements on MySpace?

2. What kind of people or personalities might companies try to appeal to by advertising on MySpace?

3. Do you think the MySpace environment will make it easier or more difficult for advertisers to induce ad viewers to follow the AIDA plan?

4. Compose a list of the companies, products, and services that you think would benefit from advertising on MySpace.com. Are there any in particular that you think should stay away from MySpace, regardless of its popularity?