AOL's troubled administration of social networking site Bebo has taken another turn, with the company extending its advertising contract with search engine Yahoo! despite lacklustre revenues and massive restructuring of its operations.Yahoo!, which provides the networking site's display and video advertising, will have its contract extending for six months from this past December, Brand Republic reports. This extension has been interpreted as a "short-term measure, with AOL planning to further integrate its UK operation."
AOL acquired Bebo for $850 million (£525 million) cash in 2007, but use of the site has been overshadowed by competitor Facebook. The latter recently announced its legions now total over 150 million users, while the former has been folded into a newly created division called "AOL Ventures", which a Cnet article referred to as trying "to sweep its embarrassingly pricey $850 million acquisition ... under the rug."
The move comes after AOL's recent cutbacks of the social networking site's staff, including 70 per cent of its UK workforce being made redundant at the end of last year, according to Brand Republic, with plans to further integrate Bebo's sales staff into the parent's existent force.
Overall, Bebo has lost nearly a third of its staff worldwide.
The acquisition of the site in 2007 was announced as an attempt to unify a social networking presence with AOL's existing communications network. "Bebo is the perfect complement to AOL's personal communications network and puts us in a leading position in social media," Randy Falco, then AOL chairman, said at the time. "What drew us to Bebo was its substantial and fast-growing worldwide user-base, its vision of a truly social web, and the monetization opportunities."
But with the rapid growth and eventual dominance of sites like Facebook and Twitter, this optimism has seemingly been abandoned.
