Attendees at the McGraw Hill Media Summit were still gathering details here and there about AOL's (NYSE: TWX) $850 million purchase of social net Bebo for $850 million. Some initial reactions:
-- Tim Hanlon, EVP, Ventures, Publicis' Denuo: Buying Bebo certainly expands the dimension of AOL offerings and audience. "But towards what objective - to become another Yahoo? Separately, on the issue of advertising and social networking: as MySpace and Facebook have proven, trying to deftly mix 'advertising' and social dialog is like trying to combine oil and vinegar - everybody's expecting tasty vinaigrette, but so far, they're not naturally blending together very well."
-- Santo Politi, co-founder/general partner, Spark Capital: The acquisition of Bebo enhances AOL's position as a go-between for media companies and a large online community, as well as instantly raising the Time Warner unit's European presence. "Bebo is big in Europe and they have pursued a number of business development deals. This is simply a bigger outlet that will let AOL fully use all the behavioral targeting, contextual targeting services they have added. Plus, if you look at the big portals, they have a lot of traffic coming from overseas. You need to have the sales force to be able to connect advertisers to those users. I wouldn't be surprised if AOL bought international ad networks to complement the Bebo purchase."
-- Mollie Spilman, CEO, TidalTV: The former chief sales and marketing officer of AOL's Advertising.com says that in the past, the company tried to create news businesses from scratch. But it found that the home-grown approach was too cumbersome and difficult and latched on to a strategy of complementary acquisitions. Bebo fills a void among the panoply of services AOL has bought over the past year. "I left AOL about a year ago when the company was just realizing that it needed to change the direction of how to expand into different areas." She especially praised the European move, saying that ad networks haven't advanced as far as in the U.S. "The European market needs more inventory and it's a little bit behind in behavioral targeting and search. They need scale to generate ad dollars from their ad services, and the aligning with Bebo is a good start in doing that."
-- Herb Granath, CEO/chairman, MEHI: "I've suspected that Jeff Bewkes' vision for AOL would be towards supporting their acquisitions, as opposed to a disposing of assets. The acquisition of Bebo is the first salvo of that approach to the business."
By David Kaplan