Fox Interactive Buys Strategic Data Corp., Plans Ad Targeting Upgrade

In a move aimed at boosting revenues on MySpace and other online properties, Fox Interactive Media announced Thursday that it had acquired ad technology firm Strategic Data Corp., which specializes in improving online ad performance.

Terms of the deal were not disclosed.

Fox Interactive plans to use SDC's ad technology to wring more dollars from the huge volume of traffic it generates across its network spanning MySpace, IGN, Direct2Drive and

Fox Interactive properties drew 62 million unique visitors and nearly 30 billion page views in January, according to Nielsen//NetRatings.

Specifically, Fox will use SDC's ad optimization software to serve targeted, cost-per-action display ads, which make up a significant portion of the inventory on Fox Interactive sites.

Although Fox wouldn't say how much of a revenue bump it expects to get from incorporating SDC's technology, "the intention is that this will offer a significant uplift for us in our ability to monetize traffic," said Fox Interactive spokesperson Ann Burkart. She added that better targeted ads will be more effective, and will allow the company to command higher prices for display ads.



Improving monetization of MySpace's huge audience in particular has been a key goal for News Corp. since acquiring the social networking site in 2005. In News Corp.'s second-quarter conference call earlier this month, President and COO Peter Chernin said he expected MySpace to surpass $500 million in revenues during the company's current fiscal year.

But it wants to do better.

Fox Interactive is already taking steps to mine the wealth of personal information found on profile pages on MySpace and other sites to better target ads.

"With SDC, we'll be able to plug all that rich data into their ad optimization technology and be able to fine-tune our ad delivery on a much more targeted basis," explained Burkart. She said Fox is already working with brand marketers to figure out what kinds of user data are most valuable to them.

Bringing that capability in-house could also mean bigger margins for Fox and be a blow to the third-party ad networks that Fox has relied on to date.

"Fox has historically outsourced direct response performance advertising to third-party networks," said Dave Morgan, chairman and founder of behavioral targeting company Tacoda. "Buying SDC means Fox is now buying the capability to start doing quite a bit of that themselves."

Morgan called the acquisition a "smart move"--one that might allow Fox Interactive to keep more of its ad dollars as well as cultivate more direct relations with marketers.

Google last year gained the right to sell remnant advertising on MySpace and other Fox sites through its $900 million advertising deal with Fox Interactive.

Burkart said that Fox planned to maintain relationships with the 17 different third-party ad-serving companies it currently relies on, including and online ad exchange Right Media. She acknowledged that the company may rely less on third-party ad networks over time as it becomes more efficient at selling ads itself.

She also said that SDC would continue to serve its existing clients based on online ad networks and Web publishers including EuroClick and Specific Media.

SDC was founded in 2000 by Lee Cooper, a professor of marketing at UCLA's Anderson School of Management, and Giovanni Giuffrida, a doctoral candidate in computer science at the university.

The SDC deal marks the first major acquisition by Fox Interactive under Peter Levinsohn, who replaced his cousin Ross Levinsohn in that post in December. Peter Levinsohn was previously president of digital media for the Fox Entertainment Group.

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