AOL Buys Bebo To Grow Global Online Ad Audience


grouphug1.jpgADOTAS — AOL has a new friend. The company announced today that they bought social network Bebo for $850 million in cash as part of a wider strategy to boost its online advertising network, Platform-A.

Bebo is all the rage on the Continent – with a base of more than 40 million European members. The Silicon Alley Insider snagged a company-wide missive from AOL’s chairman and CEO, Randy Falco. It reads in part:

“I’ve said many times that my vision for AOL is that we become a global, market-leading ad-supported digital media company. Today, we’re taking a major step toward realizing this ambition. … And by bringing Bebo into the AOL family, under the continued leadership of its President Joanna Shields, we’ll be able to accelerate its growth in the U.S., serving consumers here who are looking for the kind of superior social media experience Bebo provides. At the same time, the acquisition will provide us new opportunities to monetize a wider, more global, more deeply engaged audience through Platform-A.”

Shields, Bebo’s current leader, will continue in her position and report to AOL president Ron Grant. Bebo founders Michael and Xochi Birch will reportedly leave the company.

Investment bank Allen & Co. has been trying to sell Bebo for quite a while – and the Bebo and AOL have been in negotiations since September of last year.

AOL may be snapped up soon too, according to Time Warner’s chief executive Jeff Bewkes, who is pursuing merging AOL with another company.

Bewkes tried to merge AOL with Microsoft Corp.’s online business and is now in talks with Yahoo Inc. AOL’s ad revenue was still going strong last year, bringing in $2.2 billion in 2007, up 18% over the previous year. This year may not be so rosy, and AOL may fall short of its goals for the year, executives told the New York Times yesterday.


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