Marketing Malaysia Blog – Franz Narcis

MOL buys Friendster – Look at the bigger picture

Posted on 16. Dec, 2009 by Franz in Announcements

There’s a very fine line drawn between understanding and misunderstanding in almost everything we do. Take one wrong step and your brand could possibly fall off and shatter into pieces. That’s why sometimes brands need PR officials, brand managers and management executives. They keep a company’s brands off the hook.

Of course, not every company does that. Let’s take a look at Friendster.

Acquisition of Friendster by MOL

You may ask yourself – Why MOL would bother acquiring Friendster when you know the large majority of modern Internet goers are so into Facebook already? The press in Malaysia almost too rarely reports Friendster and associate it with modern marketing practices, even with social media.

Blogs don’t post Friendster profiles, but everything else like Facebook, Twitter and Plurk. Tony Fernandes lifted Facebook but not Friendster. Even comScore reported that Friendster is no longer the most popular social network in Malaysia – Facebook is. Recently, the Philippines just shifted much preference (at large) to Facebook, leaving Friendster only trails of their successful past.

Friendster is no longer the most famous social network in Asia

So what the hell is MOL thinking? Buying something that’s already dying? Are they dumb or what? Seriously, to a certain extent, that would be what end-users think. But if we look at a bigger picture, we may see something else.

Even Niki Cheong is not excited about this thing.

How’s Friendster performing?

Friendster.com: Unique Visits in 2009

The graph above shows 1.6 million unique visitors to Friendster.com on August 2009, with a sharp drop of traffic to 1.15 million a month later, with the difference of -28%. Conditions were worse than those of Quarter 1, 2 and 3. Worst of 2009.

According to The Star, Friendster has in approximate 115 million users WORLDWIDE, with 75 million users registered in ASIA, and 80% of its users are between 16-24 years of age. In approximate value, 65.2% of Friendster’s users are in Asia.

Friendster.com - Unique Visitors and demographics in the US

Quantcast.com reported on the other hand its demographics and estimated unique visitors. Ignore the US-based indicators there – We’re looking at the bigger picture.

What’s the bigger picture?

You may ask. Of course, this could be true, and could be untrue. I’ll let you decide for yourself.

1. Database acquisition
   If you’ve worked in the advertising industry, you’ll know that database is expensive. Not the con-man who sells you 150,000 entries for RM10,000. Real, purchasing and will purchase again database. By acquiring Friendster, database can be extracted – And the rest works like CJ.com. Good databases in the advertising industry is like valued like PEARL in real life.
2. Boosting value of Intellectual Property
   Why do you think Coca-cola would bother doing continuous advertising, spending millions of dollars every year to promote their brand, acquire companies and enrich their presence around the world? Why would Accenture put Tiger Woods in their box? It’s always the same – Value of Intellectual Property will go up when this happens. (See below for more info*)
3. Enhancing reach % to MOL
   MOL not only can introduce things like Friendster Wallet, but can also expand their percentage of reach and act as a ‘publisher’ to companies who wants to advertise. Sponsorships, collaborations and event-tagging is just three of them. Display advertising isn’t going to be their main revenue.
4. Reaching a larger market to penetrate the Asian market
   Which website in the world is able to acquire young, new, possibly untapped market in the Asian region so nonchalantly like a social network? After the dotCom bust in 2001, the trend moves this way — The Internet is the next generation thing, and Web 2.0 emerges. Friendster is the answer to MOL’s quick-acquisition of such ‘gold mine’.
5. Boost offline retail sales
   With Friendster, MOL can now reach out to more youths via different channels – Whether it’s events, other social networks, heavily advertised companies or individual brands themselves. MOL’s offline sales could be a huge booster, because trading for MOL points will increase dramatically in the social network itself, or outside; therefore boosting sales and product volatility in the market sharply.
6. Cashing out
   In every business, cashing out is always an option left in the dark – Like a button to press in an emergency. In a well-planned business, that’s a step to take when a business matures or reaches a certain level of financial success. Friendster Inc. could be looking at this option, to wipe their hands clean off their dying slate.

*On Intellectual Property

When it comes to valuing intellectual properties (also called “IP”) in the business world, it’s huge. Your balance sheet, year end reports and positive press about your brand can boost your IP up to as much as 10 or 20 times the actual value of your company, depending on how strong your future is like; how strong is the foundation of your business; its potential; its current assets and liabilities; debt figures; etc.

It’s just like how a company is valued before it goes for IPO (Initial Public Offering). The boost of intellectual property allows an entity to invest in bonds, borrow larger sum of money from financial institutions and have a larger collateral base.

For more information on how Intellectual Property is valued, please google the whole thing yourself and check it out.

Notable comments on acquisition

If you’re still wondering why MOL would do such a crazy thing, you probably have to think bigger. Here are some comments:

• Malaysia has only 9.4 million Internet users, and Friendster once prevailed. Do you think MOL would make such a big mistake to acquire Friendster for the sole benefit of selling their products/services to Malaysians ONLY? You should check out Internet users in South East Asia.
• Friendster’s ‘old’ databases: Users who have not logged in for years – Are part of what you call business risks, purchasing losses and depreciating assets. In every business you do, there are things like that.
• U.S. Internet users are no longer bothered about Friendster – Lest said, uninterested. Asia could be their next ‘big’ trendwave or lag. It’s only viable for investors to push it out to others.
• Cashing out. When investors look at potential markets and decide to not take any more business and financial risks, they want their return on investments (ROI) and total sum invested back. Sales of company is what happens after that.

You in MOL/Friendster’s shoes

Now that you’ve heard a lot of comments, what do you think?

Tags: friendster, friendster malaysia, friendster.com, mol, mol acquire friendster, mol bhd, mol buy friendster, mol buying friendster, mol malaysia