AOL has announced an $850 million deal to buy the social networking site Bebo, which dominates the UK social networking market. AOL has been struggling to find a way to grow its business, and to move away from its traditional model of selling internet access. Its AOL Instant Messenger (AIM) has remained a dominant player in the instant messaging market, but AOL has failed to monetize it.
With the acquisition of Bebo, AOL can potentially leapfrog its way into the rapidly expanding social media space, leveraging Bebo's current (and growing) membership of 40 million users. By combining Bebo with AIM's dominant position in messaging and AOL's recent acquisitions of online advertising companies, AOL looks to be trying to create a serious rival to Facebook and MySpace, with a healthy monetization potential built in.
"Bebo is the perfect complement to AOL's personal communications network and puts us in a leading position in social media," said Randy Falco, Chairman and CEO, AOL. "What drew us to Bebo was its substantial and fast-growing worldwide user-base, its vision of a truly social web, and the monetization opportunities that leverage Platform-A across our combined global audience. This positions us to offer advertisers even greater reach and marketers significant insights into the desires and needs of consumers."