Oodle announced today that it will take over the running of Facebook Classifieds, adding to its roster of deals which includes MySpace as well.
This is a great move for Oodle, founded by some of my ex-Excite colleagues including CEO Craig Donato.
It's also an acknowledgement by Facebook that it cannot do everything and expect to do it well. Rather than run its own classifieds service, it outsources to a specialist. What they give up in revenue sharing they should make up in increased activity.
This is especially true for classifieds which depends for success on having a critical mass of listings. A neutral player, aggregating listings across multiple networks, will have a more robust database than individual networks would have if they took the silo approach and built it themselves.
But even in general it always seems to take forever for the big network players to come around to realize they'd often be better off outsourcing than owning. Again and again their impulse is to own and control it all.
So suddenly you have telco executives who fancy themselves to be content programmers or advertising salespeople. Or you have social networking sites who think they can do classifieds. Or mobile operators who think they can run a "walled garden" portal that will somehow satisfy their surfers.
We already own the customer relationship, the logic goes. We already own the billing relationship. So let's extend it by giving them great programming. And why share revenues -- let's just do it ourselves.
Often years and millions of dollars later, they finally realize that outsourcing to specialists is not a bad idea. Of course, at many of these companies there is no collective memory to learn from as executives get moved from one position to the next, never able to apply learnings. So someone else comes along and makes the same mistakes again.
At least Facebook has a bit of Silicon Valley culture, which typically means a willingness and ability to learn lessons more readily and adapt more quickly. Probably this has not been a costly lesson for them to learn. The Oodle deal now provides some upside opportunity.
The challenge now for Oodle is to generate enough activity to make its classifieds database broad and robust enough in an increasingly fragmented classifieds marketplace. But certainly, landing some of the prime beachfront real estate, on Facebook and MySpace, is going to help.
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