Who will buy Friends Reunited and for what price?

ITV bought the site for around £175 million (total including staggered payments up to the end of 2008) back in 2005, and its slow demise has been quite apparent to anyone following the social networking industrys. It tried to target the older demographic of over-30′s, pitching a social network to ‘grown-ups’. But it just hasn’t worked.

Sad really, as it had such a good head start on the competition, which includes Facebook, Bebo and MySpace. In June 2007, unique user figures were at 2.4 million, dropping to 1.4 million by March 2008. We know they will be somewhat higher (in June 2008 the figure was 3.1m), but this is because Friends dropped its subscription model. They were hoping that advertising revenue coming as a result of the higher page impressions would compensate for the estimated £22 million subscriptions revenue (2007 figures).

But significantly higher registrations didn’t eventuate. Plus, they walked into a recession with less advertising dollars at large. They sure do cover the site with ads – last time I looked, I counted 7 on a page. But ads on social networks produce pretty low level returns for most advertisers, and they consequently pay a low cpm. What are the net revenues of Friends Reunited now? Perhaps £10m, and at that level I’d be surprised if anyone were to offer much over £100m for the site unless they had a secret inside edge that eludes the rest of us.

One thing’s for sure, and that is far from reviving ITV’s flagging fortunes, the Friends Reunited investment has hit the media company where it hurts.

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Tags: friends reunited, social network

This entry was posted on Monday, February 16th, 2009 at 2:27 am and is filed under On the Market. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.