With AOL picking up Bebo today for $850 million, I have to believe any potential deal to combine Yahoo and AOL are dead, if one was even on the table.
By buying Bebo, AOL is looking to ramp up its online ad strategy. Bebo, with its 40 million users, could be a good testing ground for the ad-serving tools that comprise Platform A.
Check that; Bebo had better provide a boost to AOL because despite what AOL President and CEO Randy Falco said on the call this morning this deal was pretty darn expensive, considering that AOL paid $1 billion for six ad-oriented properties, including Quigo, Tacoda and Third Screen Media.
With such an investment, and the impending integration, I'm not sure AOL has the bandwidth to strike a deal with Yahoo. On the other hand, AOL is backed by Time Warner, which was allegedly driving the talks to help save Yahoo from Microsoft's takeover offer.
Does TW have anything exciting up its sleeve? Could TW be planning a one-two punch versus Google and Microsoft? With Bebo, AOL is getting the No. 3 social network. If TW was to do a deal to combine AOL and Yahoo, it would have the most well-rounded Internet company in the world, providing a potentially formidable rival to Google in online advertising.
The key word there, no pun intended, is potentially. Platform A is robust and pretty complete but it's in its early days, as AOL's ad sales are flatter than a blade server.
Sure Bebo will provide quite the pipeline through which AOL could funnel ads with Platform A, but nobody, not even Google, has figured out a social network advertising market yet.
AOL execs think they can do that. "Together, we'll be creating and monetizing the social Web," AOL President and COO Ron Grant said during a conference call today. "We're going to supercharge the monetization of the Bebo audience with Platform A."
If AOL can do that with Bebo, and TW strikes some combination deal with AOL, Microsoft will be frozen out of the market and Google will have a real challenge on its hands. Such a sequence of events could save AOL.