With Facebook now reaching more than 1 billion users in a single day, many people have resigned MySpace—which over a decade ago made online social networking mainstream—to the history books. And while the website is nowhere near as popular as it once was, its new owner is still managing to squeeze significant revenue from MySpace thanks to its huge database of registered users.
Internet advertising company Specific Media scooped up MySpace for $35 million in 2011. The acquisition came six years after News Corp bought MySpace for $580 million, with the company's executive chairman Rupert Murdoch admitting last year that "we just messed it up" and made "a very expensive mistake."
But for Specific Media, which now operates under parent company Viant, MySpace has turned into somewhat of a bargain. And it looks as though it has become the bedrock for a new consumer-focused online media property currently in the works that appears to be going after the teenagers who weren't old enough to join the site the first time around.
Tim Vanderhook founded Specific Media with his two older brothers in 1999 when he was 19 years old, brokering ad space for websites. It grew to become one the biggest online ad networks and raised more than $130 million in funding. Buying MySpace transformed Specific Media from a company that just brokered ads, into a media company in its own right with ad space of its own to sell.
But most importantly, the acquisition gave it access to more than 1 billion registered users. Not all may have kept the same email address from their MySpace days, but the number of people on file is still significant enough to provide value. When it comes to online advertising, first-party data is considered the holy grail. It means you can confirm you are targeting the actual consumer you aim to be targeting, rather than making probabilistic bets based on cookies and browsing behavior. It's part of the reason why Facebook and Google dominate the online advertising space: They have the all-important registration data.
Speaking to Business Insider, Vanderhook insists buying MySpace wasn't just about buying a database. "I think MySpace was an opportunity I believed in; that we could revive MySpace ... acquiring MySpace was about MySpace itself, and making it competitive in today's world," Vanderhook said.
Justin Timberlake also took an ownership stake in MySpace as part of the purchase from News Corp. As "creative director" (a role he doesn't hold today, as he is no longer involved at an operational level), the singer led MySpace's relaunch.
The site shifted its focus from user-generated content to music, heeding the knowledge that many artists had launched their careers on the platform, like indie band Arctic Monkeys. The relaunch included a sleek new design, parties, and a $20 million marketing campaign that included a star-studded TV ad.
But since then, MySpace has been quiet on the marketing front. Vanderhook says the company shifted from a traditional marketing approach to a data-driven strategy, driven by email. MySpace emails its users when an artist they might like posts new content, reminding them to go back and re-engage with the site.
"Email is the gift that keeps giving on the Internet. It was written off, but it's a phenomenal way to reach consumers. Email is the main identity for consumers online for registration. And it works across devices," Vanderhook said. And, as Vanderhook has spoken about before, the "Throwback Thursday" meme has also helped reinvigorate MySpace, as people check back on their accounts for old photos to share.
Vanderhook acknowledges that Facebook has now started sharing "memories" with its users, reminding them of content they posted on that day in previous years. But MySpace has an edge: "People get a kick out of photos from five years, eight years, 10 years ago," Vanderhook said
Facebook is indisputably the king of social networking, but MySpace remains a hugely popular site with traffic numbers many online publishers would be proud of. Vanderhook said the relaunch has "far exceeded expectations."
In March, measurement firm ComScore reported that between December 2013 and December 2014, MySpace had grown traffic in the US by 469 percent, making it a bigger property than Snapchat and Vice. ComScore said the "surprising renaissance" was thanks to MySpace's pivot to music and video content.
It's this active user base, combined with the historic registration data that has helped turn MySpace into a serious money maker for Viant. The company launched its Advertising Cloud last year, which contains an "identity management platform," allowing marketers to connect their own databases with Viant's data. It also offer a demand-side at platform and ad server and a data analytics platform.
Vanderhook says the Advertising Cloud is different from others on the market offered by companies including Adobe, Oracle, and Salesforce, because it claims to be the only platform that can link whether a person that saw an ad went on to buy an item in a physical store. Other platforms, he says, only offer information about whether ads drove ecommerce sales, but online stores make up just 10 percent of retail transactions.
The reason Viant can offer this is that all-important MySpace registration data, coupled with other sources of data such as Experian and NCS loyalty card data.
Vanderhook won't share exact numbers, but says Viant's revenue (which includes sales from MySpace, the Specific Media network, and the Viant Advertising Cloud) in the "hundreds of millions," having grown 20 percent year on year. In 2011, MySpace was on track to generate around $109 million in revenue, according to TechCrunch.
The acceleration in growth, boosted by MySpace data, is part of the reason Viant is launching its Advertising Cloud to the UK today, one year ahead of schedule. Vanderhook says the UK market is "one of the most interesting in the world," noting that the country became the first place where budgets for digital advertising are already greater than those for TV.
Aside from the UK launch, Vanderhook's other big task is trying to expand its bank of users. While the MySpace pool of data is vast, it's missing an important demographic: younger users who weren't on the site first time around.
"The set of users we don't have today is youth: 15-, 16-, 17-year-olds," Vanderhook said.
Vanderhook then hinted at how he might go about attracting them. He said he couldn't talk about it, but did reveal that Viant is "working hard" on building out new consumer products, referencing how Facebook has gone on to create and acquire other consumer-facing brands that do slightly different things: like Instagram, WhatsApp, Paper, Messenger. MySpace for teens is on its way.