TechCrunch: Trouble Behind AOL/Bebo Deal

The revenue opportunities in social network advertising seem wonderful on paper. That’s why you see a new social networking startup pop up every three minutes with a shiny new press release. So it makes sense that a company like AOL, already on the ropes, would go after Bebo, one of the top-rated social networks.

But was Bebo the right one, and did AOL pay too much ($850 million) for it? TechCrunch analyzes a recent Silicon Alley Insider report (not Blodget’s rant, but another one) and says that there is definitely the sense that AOL was not Bebo’s first choice:

“Initially, [Bebo] was aiming for a valuation above $1 billion. But then the ground started falling out beneath it, and AOL’s $850 million offer started to look real good,” blogger Erick Schonfeld writes. “AOL was a desperate buyer. Even if it bargained Bebo down on price, it may still have paid too much. Bebo’s growth is indeed flattening relative to other global social networks like Hi5 or Friendster. And while social networks generate a lot of pages, they are not yet particularly valuable pages.”

Join Baratunde Thurston (left), The Onion’s Director of Digital and author of How to Be Black, for an entertaining look at creative social media campaigns in our Social Media Marketing Boot Camp starting February 16. Other speakers include Morin Oluwole (Facebook), Tim Devane (bitly), and SocialTimes' writer Devon Glenn.   Register now.