Bleak future for Friends Reunited?

255762 — Mon, 16 Feb 2009 12:04:00 GMT

As ITV considers unloading Friends Reunited for a knockdown price the future looks uncertain to bleak for the one time darling of the UK internet scene, which has long been superseded by more nimble rivals.

One of a number of things is going to happen to Friends Reunited: it will either shrivel into insignificance; it will be bought by someone without the ideas to continue it as a niche business that quietly ticks over; or it could be bought by someone bigger who can potentially grow it.

Given AOL's recent experience with Bebo the chances of the latter happening seems slim. Bebo was a much more powerful social media brand than Friends Reunited, but that too has suffered and underperformed.

Bebo's value is thought to have fallen by as much as 75% with AOL originally paying $850m and is now reported to be worth as little as $200m.

If similar maths were applied to ITV's Friends Reunited the £175m it paid for the site at the end of 2005 (which at the time represented a multiple of more than eight times its annual turnover) it would be worth as little as £40m. A figure that some think is not far off what it will be sold for.

Even when ITV bought Friends Reunited it had passed its heyday. In 2004/05 the national press was full of Friends Reunited stories. Marriages were falling apart and couples were divorcing as old school flames got back together courtesy of Friends Reunited.

That publicity brought massive growth in the same way we have since seen with Facebook and Twitter, but it has not come again as the strategy behind Friends Reunited failed to quickly adapt to a fast changing market. The next generation of users, after that rush of bored marrieds looking for affairs, didn't log on to Friends Reunited like their older relatives. No, instead they logged on to Facebook or MySpace and bypassed Friends Reunited altogether and pretty much sealing its fate.

To be fair MySpace and Facebook had on their sides global scale and a multifarious offering, which came from fact that their arrival kickstarted the explosion in social media. Facebook and MySpace defined that space.

It was at that moment Friends Reunited should have relaunched and ridden the wave, but it didn't (doesn't hindsight rock) and it wasn't until last summer that it did finally revamp, redesign and go free. I'm pretty sure it was all too little too late and its spin-off sites like dating/genes are bit part players in their markets.

As I look at it today, of the long list of suggested school/college friends on the site I am presented with, none of whom have filled in any details on their profiles indicating that while many people visit the site (at one point) fewer spend time on the site or return quickly. I don't click on any as there is nothing to see. I leave and I move on.

Add to that the fact that no one talks about Friends Reunited. It simply never comes up in conversation. I am not a huge Facebook user either, but I get new friends and invites as well as various bits of activity related to the site and my profile regularly. I am currently organising a stag weekend and everyone is on Facebook. It is the natural space to do that kind of activity. Friends Reunited simply doesn't enter into the conversation.

The arrival of Twitter is further bad news for Friends Reunited as the more social networking sites that people are actively engaged with the less time they have to spend on rival sites. A site that you might have visited once a week/month falls off the radar. Friends Reunited is off of the radar. That blip is gone.

If you are a Twitter user, say with a MySpace, Facebook and LinkedIn account; you maybe have MSN Messenger and Flickr to boot; with a Hotmail and Gmail account to manage as well; is there really time for Friends Reunited?

It is a tough sell. There isn't the space or time in your average social media users life for Friends Reunited. That appears to be one of the things that ITV, like AOL, has realised, which means the future could well be very bleak unless someone can come up with a radical strategy to reinvigorate the business.

Personally, I don't see it happening although niche survival remains an option.

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So long Exchange & Mart

255762 — Wed, 07 Jan 2009 12:37:00 GMT

Exchange & Mart had a very small print circulation with barely 20,000 and falling, but its closure in print and move to online only publication is a story that is set to be repeated over and over this year. Quite how much is anyone's guess.

With its position as a classified title the closure of Exchange & Mart in print is perhaps less of a surprise than many similar closures. The decline of the classified ad market that hit specialist titles like Exchange & Mart, as well as regional and national newspapers alike. It has spared no one and is only going to get worse. Eighty jobs are under threat at the auto classified title which adds to the hundreds already lost and under threat in the regional press within the last few months at titles like the Northern Echo where staff are considering strike action as they are elsewhere at titles like the Yorkshire Post.

The problem with some of these closures and cuts is that some like Exchange & Mart appear to be the only option. There is very little future in the print classified market. Regional newspapers generally, however, appear in some places to be put to the sword, which is probably why one independent local newspaper group, the Wigan Courier, has called online advertising a “digital fad” that will pass and there is “still no substitute” for a colourful local newspaper ad. More likely it is just a cheeky grab for publicity.

Managing director Mark Ashley told Press Gazette: “The Courier is bucking the current trend for regional newspapers, which has seen a year of contraction, circulation losses, job cuts and cutbacks.

“We believe that readers and advertisers want a mass distribution, colourful, effective newspaper that focuses on all the good things about our local Wigan community, and that the current obsession with internet advertising and Facebook will gradually go the way of all the digital fads over the last few years."

That said the signs of change in magazine and newspaper publishing are evident in all markets. We've all seen it. At the end of last year Ziff Davis Media closed the print edition of its once flagship title, PCMag, after 26 years and will publish the magazine online only.

That followed on a larger scale the news that the Christian Science Monitor was to close down and going online only and CosmoGirl while the Sporting News and US News & World Report cut their print frequency and put more focus on the web.

In the B2B sector, there are a number of examples, but close to hand at Haymarket, which owns Brand Republic, Marketing Direct and Promotions & Incentives have gone online only. They will not be the last in the B2B sector either, which has also been hit hard by the decline of the ad market.

And the truth as we have already witnessed is that online is no safe haven. The truth that has revealed itself is that the expected hand in hand growth of revenues and traffic has not happened. Traffic for many sites big and small has soared, but the revenue is not growing at anything like the same rate.

The web posted annual growth of 29.5% in 2007 and 20% in 2008 digital ad spend in 2009 is expected just 2.1%, according to Enders Analysis forecasts.

This is why this week you have had ITV writing down the value of Friends Reunited, concluding that the site is worth less than the £175m it bought it for.

ITV like a lot of media companies look unlikely to hit online revenue targets the projections for which were based on much higher growth rates than we are now living with.

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Bleak future for Friends Reunited?

So long Exchange & Mart