France's Blogging Phenom Goes Global

A free blogging service started by a rap radio station, Skyblog has MySpace beat in France—and is looking to expand in Europe and the U.S.
by Dan Carlin

It started as a lark four years ago. French rap radio station Skyrock, operated by Paris-based media group Orbus, launched a free blogging service to give listeners a way to talk back and get to know each other. The response was beyond management's wildest expectations: Skyblog now attracts a remarkable 2.85 billion page views a month, putting it fourth among all Web sites in France and No. 1 in the coveted 15- to 24-year-old age range, according to researcher comScore.

Skyblog isn't just about mouthing off, either. The hip-hop flavored site has become a major moneymaker for Orbus, pulling in profit margins of 20% to 25% on $6.4 million in advertising revenues last year, the company says. This year, Orbus—which is 70% owned by AXA Private Equity (AXA)—figures online revenues will double, and by 2008, they should equal or exceed those generated by the radio station.

"The Skyblog phenomenon has been tremendous," says Delphine Gatignol, an analyst with comScore Europe who follows French media. With Skyblog, Skyrock has become a leading example of an Old Media company making a smart transition to the Internet world.

A Raft of Innovations
What's more, the success of Skyblog has thrust the company—whose radio market was limited to France—into a whole new realm. Skyblog already has 27% market reach in France, compared to just 5.5% for powerhouse social-networking site MySpace (NWS). Now, Skyblog is poised to launch sites in Spanish, German, and English, taking its business elsewhere in Europe and even to the U.S.

To be sure, MySpace is a tough rival. It has the deep pockets of News Corp. behind it, and already claims 7% reach across Europe, vs. 4.2% for Skyblog. But MySpace also hasn't found it easy to expand from its initial U.S. footprint. In Europe, it faces rivals such as Bebo, Yahoo! 360 (YHOO), and Skyblog (see BusinessWeek.com, 9/11/06, "MySpace: No Free Ride in Europe"), while in Korea powerful Cyworld still rules the roost (see BusinessWeek.com, 9/11/06, "In Asia, MySpace Clones Stalk Cyberspace").

Skyblog is holding its ground in France thanks to a raft of innovations. Though it started out with basic blogging, the site has since added free e-mail (SkyMail), instant messaging (Skyrock Messager), and cell-phone downloads (Skymobile). These enhancements have helped Skyrock Chief Executive Officer Pierre Bellanger build a genuine Web community that keeps users on the site. In turn, that increases advertising opportunities and strengthens brand loyalty.

"Keeping [users] within a site is crucial," says Benjamin Lehmann, an analyst with Jupiter Research in London. "The more time they spend there, the more ads you can send. And to challenge MySpace, a site has to let users do more."

Product-Centered Blogs
Skyblog also has established close relationships with marketers. Many of the radio station's marquee advertisers, such as McDonalds (MCD), Coca-Cola (KO), and Nike (NKE), also advertise on Skyblog. Now CEO Bellanger is pushing further, into a model he calls "conversational marketing"—essentially product-centered blogs that create incentives for users to talk about a brand, create content, and spread awareness of a product. So far, he says, Skyblog has created about 15 such sites for select advertisers.

One example: Neutrogena (JNJ) launched a Skyblog site called "Visibly Clear" on which users, competing for prizes, were invited to share their skin care and beauty secrets via blog diaries and videos. Although the content was all user-generated, the discussion revolved around Neutrogena's "Visibly Clear" beauty products, which helped generate buzz about the brand and drive traffic to the company's official site.

Analysts say this sort of interactive advertising might presage the new face of online marketing. "Advertisers want to see a model that leverages viral marketing effects," says Lehmann. That may be an area where Skyblog can excel despite its relatively limited global reach. MySpace and Facebook, both built around profiles, have experimented very little with interactive advertising, says Lehmann.

Playing for Big Stakes
Although companies such as Volkswagen and Coca-Cola have MySpace profiles, their effect on product sales is hard to quantify, he notes.

And today, the stakes for control of the European social-networking market are rising. A recent report from U.S. market research firm eMarketer predicts advertising on social networking sites will more than double from $445 million to roughly $1.1 billion worldwide next year.

"Right now there isn't any one global social networking site, they're all successful in individual markets" says Debra Williamson, the author of the eMarketer report. Skyblog hopes to break that mold.

Carlin is a reporter in BusinessWeek's Paris bureau.