NEW YORK (AP) — AOL stepped up its bid to boost traffic and advertising opportunities worldwide as the struggling Internet company agreed Thursday to pay $850 million for the online hangout Bebo and a foothold in the growing arena of social media.
Although Bebo remains in the shadow of MySpace and Facebook, it is strong in some foreign markets, including Britain. According to comScore Inc., its audience outside the United States is engaged, spending more time on average there compared with the leading rivals.
AOL executives say they are planning to tap that engagement to drive traffic to AOL’s other free, ad-supported Web sites, especially internationally, while leveraging AOL’s instant-messaging communities, AIM and ICQ, to try to grow Bebo in the United States.
“This is going to be the cornerstone of our strategy to really go after the social media space,” Ron Grant, AOL’s president and chief operating officer, said in an interview.
In a conference call with reporters, AOL Chief Executive Randy Falco called the acquisition “game-changing for AOL,” a move that will power the company’s strategic push into advertising.
AOL has been looking for ways to increase ad revenue to offset steep declines in dial-up Internet subscriptions. After several quarters of strong growth, AOL’s advertising expansion has been slowing, putting pressure on the company’s parent, Time Warner Inc., to sell the Internet unit.
Falco said Time Warner’s willingness to spend $850 million in cash indicated its commitment to AOL’s future, though eMarketer analyst David Hallerman likened the move to renovating a home before selling it at a higher price.
Company officials declined comment on recent reports that Yahoo Inc. has stepped up talks with Time Warner about buying or forming a joint venture with AOL as Yahoo tries to fend off a $40 billion-plus takeover bid from Microsoft Corp.

Source: hosted.ap.org