News Corp. buys Web ad company to boost online profit

News Corp. aims to increase ad revenue from its online division by completing the acquisition Thursday of Internet ad placement company Strategic Data Corp.

SDC, based in Santa Monica, California, and founded in 2000, will become part of Fox Interactive Media, the News Corp. division that oversees the company's online properties, including the popular social-networking Web site MySpace.com. All 14 SDC employees will join FIM's Beverly Hills, California, office, said an FIM spokesperson. The deal's financial terms were not disclosed.

Advertising remains the core focus of generating revenue at FIM and SDC will optimize ad delivery, said the spokesperson.

While News Corp. does not break out FIM's financial results on earnings reports, the division made US$125 million in 2007's second quarter, said the spokesperson. News Corp. counts FIM revenue in the "other" category on financial reports because of the division's "newness," said the spokesperson.

News Corp.'s sites, buoyed by MySpace.com, rank among the most visited on the Internet. In November 2006 FIM's stable of sites ranked first in page views for the U.S., according to comScore Networks Inc. MySpace.com captured the bulk of hits, garnering 38.7 billion views compared to FIM's 39.5 billion views. MySpace.com also earned the title as the most visited site in the U.S. for January, according to Hitwise Pty. Ltd.

Some analysts have claimed that MySpace.com has not produced the returns expected from a site with a base of more than 73 million users.

News Corp.'s buy is being driven by Google Inc.'s success in generating sizeable profits from online ads, said Rob Enderle, president and principal analyst of the Enderle Group.

"Google has everyone convinced that they're not making enough money," he said. "It has everyone saying that they can do better. I think a lot of people in the space have come to the same conclusion [about their own companies] ... It's the nature of the game right now and Google is driving it."

The acquisition of SDC is not News Corp.'s first effort at generating more profit from its Web sites. An August 2006 deal made Google the exclusive search provider on MySpace.com and all other Fox sites.

The acquisition "does not overlap or intersect" with the Google deal, said the FIM spokesperson. The Google arrangement handles search and text-based ads while purchasing SDC is targeted at performance-based advertising, the spokesperson said. Performance-based ads pay advertisers after a user clicks on their ad.

News. Corp. bought MySpace.com for US$580 million in 2005. The site is a driving force in the user-generated content movement, also called social networking, allowing users to create and populate personal profiles with text, pictures, videos and music.

Peter Chernin, News Corp.'s president and chief operating officer, presented a sanguine view of MySpace.com's fiscal outlook in June, saying that the site's revenue was growing quickly and that they were just developing ways to make it more profitable.

The IDG News Service is a Network World affiliate.