Has Bebo lost all its relevance?

News emerged this week that Bebo saw its profit fall by 143% in the 12 months to May 2009, providing perhaps the most explicit reason yet for AOL to look to offload the social media site.

Earlier this month, AOL sent out a note to employees telling them: “Bebo, unfortunately, is a business that has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space. AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking.”

If there was any doubt after that, then the figures submitted to Companies House seem to have cemented this. They show Bebo posted a post-tax profit of £2.6m in 2008 and a year later a £1.1m loss. Turnover from the social network fell 29% year on year to £6.2m and operating profits were down 32% to £541,268.

So why has Bebo failed so badly, while Facebook makes profit and Twitter dominates headlines?

My guess is it simply lacked substance. When it did well, it engaged with its young target audience in the way they wanted to interact with the site. But when its opposition really broke into the UK market, it did little to counter the boom its rivals were experiencing and in the end accounts lay dormant and advertisers looked to engage on Facebook or tweet away on Twitter.

Even Bebo’s ex-boss Joanna Shields has crossed over to Facebook, acknowledging it as a site that “is redefining marketing and transforming how businesses and consumers interact.”

I don’t think that Bebo has tried to transform itself, but instead is “another option” for young users, who like the causal, informal attitude it portrays. Its ability to offer music, games, customisable profiles and so on gives advertisers a platform to strike a good dialogue with this audience in a way that the layout of Facebook and Twitter doesn’t quiet manage.

Not forgetting News International MySpace, which runs in a strikingly similar way to Bebo and is potentially the next best thing for young “tweens” to migrate to instead (and indeed any other audiences that use sites like these)… one theory is Bebo is for entertainment and MySpace for music… but would that put kids off from migrating? I’m not sure…

The death knell began to ring for Bebo last year when it pulled out of funding any more original online video series and instead only commissioned content funded by advertisers.

Ending the product placement deals it had so effectively produced meant it was leaving advertisers with nothing more than space to fill and nowhere to amplify it.

Two years ago, I was at the IAB Engage conference where Mark Charkin, then vice-president of sales and marketing at Bebo, said: “The tools available on Bebo enable more advertising needs to be met and reach out to a younger demographic audience. We have changed the way youth communicate from traditional e-mails and text messaging to real-time banter online. “

Unfortunately this appeal was soon a distant memory, and so the Companies House figures come as no surprise. The real question now is, will any other online company find its prospects healthy enough to attempt to resurrect the site to its innovative glory?

AOL says it is committed to working quickly to determine if there are any interested parties for Bebo and the company’s current expectation is to complete its strategic evaluation by the end of May 2010. Everyone will now be eager to see how that pans out and if another social networking service is confined to the list of has-beens.


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