CPM Increase May Follow MySpace Getting 'Connected' on Facebook

MySpace last week began using Facebook Connect in the latest signal that the former company no longer considers itself as a direct rival to the latter. Instead, the development marks yet another step in Fox-owned MySpace attempting to become the premiere online destination for music and video clips put out by the entertainment industry.

“They really haven’t communicated it to anybody yet, but I assume that their pillar is going to be content — music, movies, television,” said Ian Schafer, CEO of New York-based ad agency Deep Focus. “Fox is in a pretty good position to make sure that MySpace can be a destination like that. If MySpace is going to be a hub for the collection and sharing of content, the more connections its consumers have to other people, the more powerful it will be. MySpace is using Facebook as a conduit to spread content.”

Shafer, who has placed ads on MySpace for AMC’s programs “Mad Men” and “Breaking Bad” and HBO’s “Flight of the Conchords” and “Eastbound & Down,” continued: “What this also means is that there’s going to be expectations that come along with that. So when I provide MySpace with content or some kind of promotion, my expectations for how far my content is going to travel will be higher.”

Whether the extra traffic the site will likely get via Facebook Connect will affect CPM rates remains to be seen. “If MySpace can prove that the content they feature travels farther, they will be able to charge higher rates,” Schafer explained. “That is what folks are going to be looking for out of that platform on a non-display ad, such as branded entertainment.”

Meanwhile, in the broader scheme of things, it’s hard to view MySpace’s metamorphosis from social networking kingpin to entertainment portal as anything but taking a lemon of a situation and making lemonade. Just two years ago, the idea of Facebook wrestling the top spot from MySpace in such swift fashion was difficult to imagine.

But here they are. eMarketer projects that Facebook will earn $605 million in ad revenue this year (39 percent increase over 2009), far higher than MySpace’s estimated $385 million — a figure that would represent a decline of 21 percent.

Santa Monica, CA-based MySpace didn’t respond to information requests for this story.