Sometimes when media technology companies do acquisitions they are disastrous and destructive to shareholder value. Remember when Google bought Slide for $182 million last year and then shut it down this past August? Or when AOL paid a whopping $850 million for UK-based social network Bebo only to sell it off for less than $10 million a few years later?
However, sometimes companies make good acquisitions, ones where 1 + 1 really does add up to 3. Glam Media’s acquisition of DIY social network Ning has the potential to be one of these. As an adviser to Glam I’m partial to this next generation media company. But even if I were not involved with the company I would feel the same way. Here’s why:
Owned Media. It may sound quaint in this age of ad networks, optimization and automation, but having owned properties is still important to digital media companies. Most clients want to see their ads running somewhere during a campaign. With Ning, Glam now has 100,000 owned social media sites onto which to potentially put ads and point clients.
Revenue. While media advertising will continue to be Glam’s major revenue source, Ning’s subscription model gives Glam another powerful driver for growth. Plus, it says a lot to advertisers when you can tell them that some Ning users enjoy the experience so much they actually pay to use the service. That’s unusual in an environment where most social networks are completely free and beg you to refer others to their service.
Marc Andreessen. Having this tech wunderkind and Valley personality on Glam’s board brings the company tremendous street cred. Mark is wealthy, smart and surely very busy. The fact that he is now involved with Glam speaks volumes about the current Glam business, its management and its people.
This is good news for Glam, Ning and everyone who believes in the power of online advertising and social media.