I didn’t quite believe it when one of my most trusted sources told me that AOL was seriously considering selling Bebo. But I have now confirmed the rumour with three other sources intimately acquainted with the company. AOL is indeed quietly pondering a sale after watching Bebo perform much worse than it had hoped. That, combined with an advertising market buffeted by the waves of the economic downturn, means Bebo’s days at AOL could be numbered. Selling Bebo only a year after AOL acquired it for $850 million would be an astounding about-face. How did this happen?
[UPDATES: As a result of this story, more sources are coming forward. One I trust says Bebo is being pitched at $200 million. Update 2: Sources inside AOL are denying that it is exploring a sale. Bebo also denies a sale. Update 3: We have been in contact with corp communications at AOL, they say on the record: "There is no truth to this rumor." Four of our sources, including former and current Bebo insiders and a well-placed VC, say otherwise. Last December Gigam published "Is Time Warner Having Second Thoughts About Bebo?". I'm not saying Bebo is formally on the block, but I am saying that a sale is something under consideration].
My sources paint a picture of a startup which cleverly went about wooing advertising agencies, their clients, and – in the end – a media company that was prepared to jump on the social networking bandwagon during late 2007. There is absolutely no suggestion that anyone was dishonest or misrepresented the situation. But a year on it’s clear that AOL itself projected more growth onto Bebo that the network could deliver.
Still – seems daft to actually try and sell it so soon as doesn’t give a good impression to potential buyers. Why not just knuckle down, cut costs, and run it profitability?
Having worked in and around agencies, it’s a surprisingly easy job to sell something like bebo into an agency. The majority of agencies have little to no clue how the social models work and how they can help their clients.
Agencies are in danger of being left behind, due to massive teams and a lack of decent knowledge. The digital space (as they call it) requires a completely different model to the marketing that they are used to.
Agencies are only just beginning to figure out that social networks are becoming less of a walled garden (as you point out) for advertising. It makes it much more important to work and nurture niches instead of blanket advertising. Only the really big boys can handle that!
This is not a surprise, but I do wonder what it will do to the user base. Will it disenfranchise a whole load of the bebo users, who will just jump ship somewhere else? Not sure it will, but I reckon there is a possibility of that happening.
One wonders as how can AOL, with lots of experience in web, mail, ISP ………. can make such silly decisions.
Good reporting but what is the point of having the more detailed article on techcrunch.com? – or rather what is the point of UK techcrunch?
Martin – We decided to go with TC.com because the story warranted a bigger stage than TCUK can provide right now. TCUK remains important because without it we can’t slowly build a bigger stage for UK and European startups.