Friends Reunited was a squandered opportunity
THERE’S a recession on, stupid. That was the response Michael Grade gave yesterday when pressed on why the broadcaster flogged its social network Friends Reunited for just £25m, having bought it for £170m less than four years ago.
That the downturn has dented the value of the site, along with virtually every other media business, is not in doubt. But ITV’s stewardship of Friends Reunited was at best neglectful and at worst destructive.
Friends Reunited was nothing short of a revelation when it was launched by husband and wife team Steve and Julie Pankhurst in 1999. There were very few sites of its kind, and none that captured the imagination of consumers quite so well.
Success online is all about being in the right place at the right time, however. Friends Reunited, like Yahoo and AOL, peaked too early while Google and Facebook came along a little later, at just the right time.
The earlier clutch of sites caught the attention of middle-aged consumers, who would visit Friends Reunited to find old classmates. Once the task was completed, they could see little reason to keep coming back, especially if they had to cough up a subscription fee for the privilege.
Those sites that came along a little later managed to capture the zeitgeist of a younger generation. Facebook’s users don’t log on to complete a specific task, but build a huge part of their lives online, a level of engagement that Friends Reunited could never have hoped to get from its older audience.
ITV’s first mistake following its acquisition of the site was to keep asking users to pay a subscription. Despite Rupert Murdoch’s pledge to start charging for access to all his news sites, a paid-for social network in 2005 was a joke.
Paradoxically, its second biggest mistake was to stop charging subscribers. Pay walls are never a good long-term strategy, but tearing one down just before the worst advertising recession in a generation – as ITV did in March 2008 – is commercial suicide.
Nor did ITV do anything to develop the site. Although it aped Facebook et al by adopting an ad-funded business model, it made precious few changes to the product itself. The site it sold yesterday is little different from the one it acquired four years ago.
ITV could have made a success of Friends Reunited, especially if it had used it to shape its existing businesses, as News Corp did with MySpace. Take The Sun’s MySun social network, for example, which lets users engage with the paper’s content, helping the paper’s website attract 25m unique users last month.
ITV could have done something similar, building online audiences around smash hit TV shows like Coronation Street and Britain’s Got Talent. Instead, it squandered the opportunity. [email protected]