MSN search has given Facebook a firm 'thanks for the add' after the Social Media giant allows MS to provide "web search services and associated advertisements by the end of the year on the American portion of the popular social network"
Full article - http://www.nytimes.com/2008/07/25/business/media/25adco.html?_r=1&ref=media&oref=slogin
Financial terms haven't been disclosed - probably a good move on both sides given the discussion around the $850m Google/Myspace and Google CEO Eric Schmidt's comments that "MySpace did not monetize as well as we thought."
From Valleywag in May: Eric Schmidt: "We have a lot of traffic, a lot of page views, but it is harder than we thought to get our ad network to work with social networks. When you are in social network, it is not likely that you'll buy a washing machine. It is not a long term problem but it is taking us longer than we thought."
For the search providers these two deals are very different. Google was looking for revenue first and foremost - direct revenue - from the tens of millions of myspace users that were glued to the site and the tens of millions who were joining every month. Google wasn't looking for visibility - it already had a monster portion of the search market.
Also, remember it was 2006. Facebook was only a blip and myspace was a mystery as was most of the Social Networking space. I think a lot of this deal was a 'suck it and see' type play ... an expensive experiment. The funny thing about the Google/Myspace deal is that despite the fact both parties admit that it's not really executing as expected - nothing has really been done to fix it.
Now it's 2008 and personally I think the core motivation behind MSN doing this deal with Facebook is visibility. Search is something MSN seem determined to compete in (hence their attempted courting of Yahoo! in its entirety then Yahoo! Search division) and an issue they face is that the market knowledge of their search offering is minimal or non-existant.
Facebook gives them a huge increase in distribution - and will expose them to a market who are probably not aware of the MSN search offering. For Facebook it's win/win - they have a robust search offering on their site (whereas previously people would need to leave Facebook to search) and they would have negotiated a strong deal financially. I can't imagine it propelling MSN into the search stratosphere ... but in a game as big as the search game any incremental benefit is incredibly valuable.
The deal is limited to the US right now but one would assume (like the FB display deal MSN have) that it will roll out globally. Locally Facebook's 3.2m users would be something ninemsn would love to have access to search wise. Only 33% of Facebook users used ninemsn search in May 2008. Locally, this deal could really help ninemsn at least enhance their distribution and 'opportunity to search' presence by supplying some fresh eyeballs.
It would also create a pretty significant gap between ninemsn search and Yahoo! search in this market ... a gap that is already pretty large (ninemsn at 2.8m search users, Yahoo! at 1.6m)