One of the most eye opening observations I heard recently was a comment by Terry Semel, CEO of Yahoo!, where he pointed out that only 5% of page views on the Web are from search yet the account for about 40% of the revenue generated on the Web. To make this even clearer, consider this recent post on Om Malik's blog entitled Bigger Than Google, MySpace is different which states

Like all community sites that rely mostly on their users to author content, MySpace has had a very difficult time trying to secure high advertising rates. Historically, advertisers have held little trust in content that is not tightly controlled editorially and, therefore, the value they are willing to attach for ads placed next to such uncontrollable content has been very low. The result is clear… MySpace ranks higher than Google in terms of pageviews, but Google will gross $6 billion in revenues this year, while MySpace will generate about $30 million. The delta, which can be measured in orders of magnitude, is almost unbelievable. I realize the comparison is not directly apples to apples, but even so!

I bring this up because this is where Murdoch’s strategic opportunity lies… in eliminating that gap. Put another way, MySpace has a multi-billion dollar opportunity to exploit, which promises to break News Corp out of the media stock depression that it and all its fellow conglomerates have been suffering. Success on this front will demonstrate that News Corp can tap into the fastest growing segment of the advertising industry in a manner that befits Google and Yahoo!

This disparity in ad revenue is quite stunning. I agree with Terry Semel and others that this represents a significant opportunity. I wonder who'll sieze it first...


 

Monday, November 7, 2005 11:41:43 PM (GMT Standard Time, UTC+00:00)
How does one seize this opportunity though? If the difference is based on advertisers' perception of lack of control, the only way an owner like Murdoch could get the numbers up is to impose editorial controls. But this is very likely to drive some of (maybe a large majority of) the users away.
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