A Closer Look at the News Corp/Fox - Google Deal by Om Malik

Most people here talking about 'Google paid 900 Mio USD to sell ads in MySpace' but does not understand that 'the kids are completely uninterested to see ads'.

I don't see social network sites as ad free space, why? Two reasons (e.g.)

- the 'social network kids' might even create and share ads for products and services they like

- if offered and enabled this 'socialized kids' might even order advertising the think the might learn from (or being entertained)

But back to the deal. Om Malik (on GigaOM) had a closer look and finds:

Some quotes:

"The 900 million USD deal between News Corp. and Google might seem to be all about MySpace, but in reality its all about other Fox Interactive properties, such as IGN. It is also a tactical admission by News Corp., that when it comes to running big ad networks, it doesn’t have the in house expertise, and Google is the current master of the online advertising."

"Under the terms of the agreement, Google starts making minimum payments starting first quarter of 2007 through the second quarter of 2010. That works out to about 20 million USD a month for 45 months. In exchange Google becomes the default search provider, and also the exclusive provider of text-based and keyword ads on all Fox Interactive Media properties with the exception of Fox Sports’ website."

Ben Schacter, analyst with UBS notes, estimates that at a "likely 85-90% TAC rate, Google must generate between 1.0-1.059 billion USD in revenue to cover TAC payments."

More ...

The terms of the agreement

Not a big deal ... Google makes in 2006 about 10 billion USD ... (with TAc rate of ...)


Nachtrag:
Die Interpretationen der '900 Mio. USD Vereinbarung' reichen von Fehlinvestition, über "Torschlusspanik - der Anfang vom Ende" bis hin zu
'Google investiert 900 Millionen Dollar in Blogs' (beim Kollegen Klaus Eck, PR Blogger)