Why did Fox buy Strategic Data

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Fox Interactive Media, the company behind MySpace, has decided to take control of some of its ever-increasing page inventory. FIM is betting that an acquisition of the online ad company Strategic Data Corp. is going help it better monetize its inventory, a subtle admission that it is leaving money on the table and is getting very low CPMs.

This is a tactical acquisition: FIM needs to show a quick revenue boost and become a meaningful part of News Corp.’s revenue stream. You can only wow Wall Street with big page-view data for so long. It is becoming obvious 2007 is the “show me the money” year for MySpace and other FIM acquisitions.

We had first reported the scoop of a likely deal between Fox Interactive Media and the online ad company Strategic Data Corp back in January. SDC claims that it has technology that “typically achieves network wide revenue increases of 50-150%.” SDC counts Intermix, the parent company of MySpace (prior to FIM acquisition) as a client.

If done right, the total inventory that can be monetized is worth nearly half-a-billion dollars, says David Moore, chief executive officer of 24/7 Real Media, an ad-network, in an interview with The New York Times. Peter Levinsohn, the president of Fox Interactive told the Times that the purchase will “will enable us to have greater control over that data and keep it in house.” FIM still plans to keep working with other advertising networks and technology vendors.

11 Comments

Om Malik

Joe,

I think those numbers are close enough, though it be hard to say the precise number because they have not revealed how much MySpace is making for the company. I suspect this is the reason why they bought SDC. A small boost is enough to make a difference.

Anyway Google got a good deal because they get other sites as well which are better to monetize. IGN etc.

I did a post on that earlier. Of course, it kept Microsoft out of the game. Which was their primary motivation anyway.

soxiam

“…needs to show a quick revenue boost and become a meaningful part of News Corp.’s revenue stream. You can only wow Wall Street with big page-view data for so long.” Every CEO and CFO of popular social networking sites should get this tattooed on their forehead.

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