How Are Google and MySpace Getting Along?

Social media use has exploded in 2009 and 2010; 2011 is looking rather rosy as well. Because of the increasing and phenomenal popularity of sites like Facebook and Twitter, it was certainly seen as an ominous sign when MySpace was one of the only major networking sites to lose market share in 2010. It saw a loss of 15 percent of its users from this time last year. MySpace was given good news this week as Google extended its search and advertisement agreement with the struggling social media site.

Google has been working with MySpace since 2006; under the extended agreement, Google will continue to provide search and related advertising for the site. In addition, MySpace will become part of Google’s Display Network, which includes more than 1 million websites. They will give part of their ad space to Google to sell, and the revenue will be shared. MySpace will also participate in the DoubleClick Ad Exchange to encourage healthier advertising revenue.

This is key because advertisers have been fleeing MySpace at an impressive rate. According to eMarketer, MySpace’s ad revenue totaled $470 million a year ago. Now, it is about $347 million, and it is expected to decline again next year. In 2006, Google agreed to make up to $900 million in payments for the rights to sell ads on MySpace. Because of the declining membership rolls and revenue, however, this new deal is expected to be worth much less. Still, Nada Stirrat, chief revenue officer for MySpace, said, “We’re thrilled about renewing our partnership with Google.”

Search advertising revenue is expected to increase 15.6 percent to $12.37 billion, while display advertising is expected to leap up 17 percent to $8.88 billion. MySpace needs a piece of this to reverse their troubling downward spiral.

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