Brands abandon MySpace

29 March 2011

NEW YORK: Major brand owners such as Pepsi, Ford and Hilton Hotels have stopped using MySpace to connect with consumers, reflecting long-term uncertainty about the site's future.

According to research firm comScore, MySpace's number of unique visitors fell by 44% in February year on year, reaching 37.7m people overall, the worst figure since the same month in 2006.

The typical dwell time also declined by 59% on an annual basis, suggesting lower levels of engagement among remaining users.

News Corp – which acquired Intermix Media, parent of the Web 2.0 platform, for $580m (€413m; £363m) in 2005 – is now considering selling off at least a share in the struggling internet property.

This follows efforts to refocus the service on areas like music and gaming, in a bid to offer users different features to Facebook.

"The new MySpace experience has been very well received by the market and we have some encouraging traffic metrics in the last several weeks," Chase Carey, News Corp's chief operating officer, said on a conference call.

"However, we recognise that the plan to allow MySpace to reach its full potential maybe best developed under a new ownership structure, and we are evaluating those strategic alternatives."

Ian Schafer, chief executive of digital shop Deep Focus, boasting clients including Hearst, Microsoft and Nike, argued this ambiguity means the agency's customers are largely avoiding the social media site.

"Nobody is going to commit to an upfront because they wouldn't know who they are going to be writing checks out to in six months," Schafer told the Wall Street Journal.

Shiv Singh, PepsiCo Beverages America's head of digital, revealed the last time his unit had purchased inventory on MySpace was in 2009.

"We're not seeing our audiences on MySpace, and not seeing them play the big influencer role they once did," he said. "We don't know who will own them or what they will look like in June or July."

The latest news contrasts starkly with 2008, when MySpace secured partners such as McDonald's, Sony Pictures, State Farm Insurance and Toyota.

But automaker Ford was working on a deal regarding its Mustang marque in 2009 when MySpace's Detroit office closed.

"They literally left town and left the campaign on the table. We haven't done a campaign with them since," said Scott Kelly, Ford's digital marketing manager.

"They have gone dormant over the past two years with advertisers."

Hilton Worldwide, the hotel group, last used MySpace over two years ago.

"Their fall from relevance has been so significant that advertising on MySpace just doesn't make sense to us," Chuck Sullivan, Hilton's senior vice president, global online services, said.

Kelly Twohig, executive vice president at media specialist Starcom USA, warned current shifts were only likely to gather speed.

"This is not a place you are going to go for a franchise opportunity, something multiyear or multiquarter," she said.

"You are not going to invest resources and talent in something big that may not be there for the long term."

Joe Mele, a managing director at Razorfish, a digital agency, was more positive, although he added marketers often wanted a justification before using MySpace.

"MySpace still has a strong teen audience, and is good for gaming and content sharing," he said. "Depending on the campaign, MySpace is definitely still in the mix."

Data sourced from Wall Street Journal/Seeking Alpha; additional content by Warc staff