Google in attempt to grab the Twitterati

It is reported by Techcrunch, that Google is in "late stage" talks to acquire microblogging service Twitter.  Twitter is the micro-blogging phenomenon that lets people known as the Twitterati, post short 140-character messages. Other users subscribe to follow the stream of these tweets from acquaintances and, increasingly, companies and celebrities. After an unpleasant rocky period when the company's servers frequently were crushed under the strain of the service, the Twitter has experienced tremendous growth.

As Google's tries to find an alternative cash cow as successful as their core technology of search they have been increasingly buying up new and exciting opportunities. Twitter would seem to be its latest attempt to break its dependence on search and search related advertising.  In common with the likes of News International and eBay, Google are keen to exploit the online activity of social networking and instant messaging/communications.  Facebook, which attempted to acquire Twitter in 2008, is the best example of just how rich a medium the Internet can become for social interactions. However, social sites have had a hard time showing they can generate revenue and profits as well and recent numbers from MySpace suggest that News International’s ownership is not seen as attractive to either users or key staff.

 

Twitter isn't just about sharing with friends, though. It's increasingly about search as well. Twitter has been working to elevate the prominence of search, which can give a near-real-time window into what's on the mind of innumerable users.  This fits in well with Google’s desire to be able to track our every thought and deliver a relevant ad to fit our stream of consciousness.

 

If Google does manage to capture Twitter will the Twitterati appreciate Google using their twittering to generate profits based on a “better matching of results with what people are actually seeking”.

 

MySpace is out there as an example of how users react when a big corporate wish to exploit their fun.  There is always an alternative and Google may find that the Twitterati just cannot be bought.

Google didn't immediately respond to a request for comment.

Additional Reporting: Techcrunch

Facebook could damage your wealth!

The growth of social networks such as Facebook, MySpace and Bebo has been extraordinary and represents the one of the defining services of the Web 2.0 user driven internet. With an estimated 500 million plus members of social networking sites and driving an estimated 8% of worldwide web traffic, the sector is clearly a major driver of web activity.

However, if you thought your MySpace or Facebook page is just a bit of fun and a great way to stay in touch with your friends, you also need to be aware of the far reaching aspects of the information that you place in your profile will have on other aspects of your life. Particularly these days, as it is possible for employers to check peoples profiles to get a better idea of the individual they might be taking on and if they see something they don’t like in your personal life it may cast a shadow over your professional life. For example, I know of a colleague who was interviewing for a nanny for her child and checked them out on Facebook. Whereas from the interview, the young lady seemed like the perfect candidate, her Facebook profile revealed a whole other side of her lifestyle that wasn’t particularly compatible with the type of person that anyone might want looking after their child. This maybe one of the more trivial examples, however, a more serious one was a recent case reported on the BBC website. A senior police officer lost out on the chance to become a Chief Inspector after he was found to have posted very personal information on the internet. The revealing information on his Facebook account was considered to have been very damaging due to his profession and resulted in him losing the opportunity to be considered for promotion.

So next time you are posting up those photos of the riotous night out, just take a minute to consider what your employer may think of the picture of you in a less than complimentary position.

Friends Reunited - is it worth just £20M?

Following on from my blog of yesterday on the potential for a sale by ITV of Friends Reunited, I note that JP Morgan is suggesting that the business is worth  just two times Friends Reunited revenues of £18.9 million, making the business worth approximately £38 million on paper.  Well valuations are calculated in many different ways, whether it is a multiple of turnover as in the case above or as a multiple of earnings or profits. When I looked at the Friends Reunited books back in 2003, the percentage profit was phenomenal, in the region of 80% plus, if my memory serves.  This was due to the fact that costs were very tightly controlled amongst the then 10 employees including the founders, and the low cost of the infrastructure.  It would be interesting to know how the cost base has changed since 2003 after Mr Murphy's involvement and since the unique user numbers are well down on three years ago when it was sold to ITV. My belief is that Friends Reunited still has a very strong web and non-web brand recognition and has the potential to make a very strong financial return whoever decides to buy it, if they are able to give the management the freedom to develop the business.  It has been suggested that Friends Reunited are in the same space as MySpace or Facebook.   Well it is worth noting that neither of these companies are profitable yet and keep generating huge losses whilst having multiple billion dollar price tags bandied about.

Friends Reunited is a very sound business and has extended well into the genealogy and dating markets.  It has the potential to make profitable business and out live some of its more flashy rivals and maybe even ITV!

As for JP Morgans, well they announced a $1.3 billion loss in January 2008.  I wonder what they will come out at the end of the credit crunch and given that they claim to have avoided the worst of the problems seen elsewhere.

Friends Reunited would probably make a very good fit for Barry Diller's IAC, which also owns Ticketmaster and Ask.com and continues to acquire assets being knocked down and sold by less able corporations.  Just as long as they let the Friends Management run the show, the business model could make an excellent return for them.  At £20 million Friends Reunited would be a steal.

Friends Disunited! Breaking up is so expensive……

It was reported in the weekend papers that ITV is to sell Friends Reunited.  ITV bought Friends Reunited back in December 2005 for an eye-watering £175 million ($280 million).  According to the story in the Sunday Telegraph, “Analysts believe that Friends Reunited is now worth significantly less because of intense competition from rivals such as MySpace and Facebook” or just maybe they overpaid in the first place.  Back in 2003, one of the major accountancy firms, BDO Stoy Hayward, was looking for a buyer on behalf of the original founders Steve and Julie Pankhurst and co-founder Jason Porter.  I was asked by a client to review the business and come up with a valuation.  The business was hugely profitable although there was obviously need for significant investment in their infrastructure.  However, the most “toppy” valuation I could come up with was in the region of £30 million which was higher than market sentiment suggesting a £25 million price tag.  In the event, Friends Reunited decided not to sell and brought in former Financial Times chief Michael Murphy as part of a global expansion plan.

This was a phenomenally successful move since Murphy increased the business’ valuation from £30 million to £175 million in just over two years.  The spirit of 1999 seemed to be in the air again!  Heady days indeed and at the time ITV said that the Friends’ team would have a leading role in developing ITV’s online and broadband strategy.

Sadly it hasn’t worked out as everyone had expected and yet another smart internet business failed to develop into a major force within the big company corporate world of ITV.  Now ITV will pay the price in what is likely to be a fire sale of the asset at a knock down price.  I wouldn’t be surprised to see Steve and Julie Pankhurst looking to use the money ITV paid them to buy back the company for a much lower figure.

I wonder whether ITV is still using the same analysts that thought £175 million was a good deal!  Well it would seem they maybe since today ITV is suggesting that the downturn in TV advertising revenues is temporary and is just down to the deepening recession.  Sadly anyone who follows new media with more than a passing interest will know that Google had their lunch last year and recession or not I just don’t see the Internet juggernaut altering course from taking a greater share of the converging TV and Internet advertising markets.

However, one potential future of TV lies not in traditional broadcast, but in the selective world of view-on-demand via the broadband Internet and content will be the key to its success.  Whilst we are all happy to catch an amusing 30 second clip of a cat flushing a toilet on YouTube, it is hardly compulsive viewing and unlikely to attract advertisers.  In reality, view-on-demand of quality content available at the user’s convenience is an attractive offering and one ITV is well placed to deliver.  ITV is content rich with access to a significant back catalogue and a continuing, although diminishing, commitment to developing new content.  Content will make Internet TV and IPTV fly.  As for the advertising model that is evolving for video content such as pre-rollers and mid rollers etc, the pricing level will be fundamental different from the millions of pounds once paid for a 30 second slot during Coronation Street and far closer to the Internet pricing model.

So as traditional broadcast advertising continues to decline, ITV must act quickly to build a content rich Internet based future.  The recent Kangaroo controversy is just a side show and quite frankly a waste of money for ITV as I believe was the development of the iPlayer a waste of licence payers money when there exists many fully developed home grown alternatives such as Vividas.  ITV should use some of the funds they get for selling Friends Reunited to look to develop content in collaboration with some of the current alternative Internet TV channels such as Joost, Blinkx or even Wii TV.  ITV could get into these areas with a much lower level of investment than the grand gestures of 2005 and they have the potential to offer a much more interesting future than managing decline!