Neoco

There are many factors that make up the value of a social network: users, time on site, open development are just a few, but surely one the most overlooked must be PR. Let’s look at Bebo, which is just about to be bought by AOL for £417m ($850m) in cash. A lot of money indeed, especially as most will be going in the pocket of Michael Birch, the British entrepreneur, who founded Bebo and still owns a big stake in the business – so will make a great deal from the sale.

Bebo is the third-biggest social networking site in the US, behind MySpace and Facebook. Whilst also being the second-biggest in the UK it sits at a lowly ninth on the global leader board. But is it worth £417m? Or did they sell too cheap?

Only last year, Facebook sold a 1.6% share to Microsoft for $240m. Is Facebook really worth 62.5 times the value of Bebo? Applying the same value calculation to key sales points we end up with some interesting results:

62.5 x 40m users (Bebo) = 2.5bn users!
62.5 x 78 page impressions (Bebo) = 4875 page impressions, per user, per day!

Now Facebook (despite what they may want us to believe) does not serve 2.5bn users or 4875 pages/ user. What Facebook does have is the ‘darling’ effect. It is the darling of the valley and has a brilliant PR team (and determined investors) who spin everything. Bebo meanwhile sat in the corner just getting on with things. Bebo does them really well too, but it just does not make a song and dance about everything it does. And that failure to project itself as the next big thing – or at least the thing big enough for everyone to talk about – has potentially cost it hundreds of millions of dollars.

Tags  AOL bebo Facebook michael birch social networking time warner Web 2.0