FOX going for Google in multi-year search deal

I just spotted on TechCrunch that Fox Interactive Media has chosen Google to power Internet search on MySpace and its other Internet properties. Per the official press release:

The agreement calls for Google to power web, vertical and site specific search for MySpace.com and the majority of Fox Interactive Media properties. Google will be the exclusive provider of text-based advertising and keyword targeted ads through its AdSense program, for inventory on Fox Interactive Media’s network. Google will also have a right of first refusal on display advertising sold through third parties on Fox Interactive Media’s network.

Whilst interesting details of the deal, such as the revenue share percentage, have not been disclosed - there is a 3+ year commitment for Google to contribute an aggregate revenue share of $900M. This deal is obviously significant as it is one of the last major US search deals that was not yet Google's. It seems to be a logical choice as Google is known to offer the best overall yield and MySpace's traffic is so large - not even mentionning other large properties like FoxSports, IGN or FoxNews that are already monetized - that Google's inventory will definitely be put to work here. The $900M figure, while “non trivial”, strikes me as low - relatively speaking. $900M over three plus years implies less than $25M a month in direct revenue to Fox. Views on that anyone ?

A derivative of this deal is that  MySpace and Google could develop, and deploy, social search at real scale if ever they felt this was an interesting experiment/trend.

Rafat provides a summary of key facts mentioned during the analysts conference call:

• Video not part of this deal, but we will have talks with Google on future opportunities.
• FoxSports.com is NOT part of the deal, due to its existing deal with Microsoft/MSN.
• This is a standard Google ad-revenue sharing deal where the majority of the revenues comes to the content holder.
• We have been planning on releasing a MySpace toolbar and we will think of integrating it with Google.
• It is an all cash deal.
• We are about to launch IGN properties in UK.
• We are about to cross 100 million people profile on MySpace.
• The deal covers every territory except two countries (not disclosing these two countries).
• We had conversations with Google competitors.
• On the remnant inventory– with which we work with 17 providers–Google will have the first right of refusal for this inventory.
• We find that the largest amount of people leave MySpace to Google…that was the most attractive part in the decision leading to the deal.
• We had been using Yahoo in some parts, and our own technology in others.
• Ross Levinsohn: I am not concerned about the relationship between AOL and Google.
• Early on we were looking fairly closely at video search, and the text search only became more important over late.

Tags: google, myspace

Comments

[Henrik Torstensson]

It seems like only Fox Interactive Media properties are included, not FoxSports, FoxNews etc.

Best,

[Jeff Clavier]

Henrik> Thanks, I have updated the post accordingly.

[Narendra]

Jeff,

I think that this is pure hype and I am willing to wager that:

1) because the deal is based on performance metrics (not disclosed), Google will be able to renegotiate the deal at frequent intervals

2) myspace (while enormous) is not a search destination nor is it a site where banner or text ads will ever perform well

3) the wishful thinking (press release hype) of the deal won't pan out. myspace might get a little bit of overpayment in the first 6 months but then will be relentlessly renegotiated.

4) the relationship will not generate even close to the predicted revenue for both parties.