The internet - don't you just love it!
You can find anything that you want, when you want and wherever you are - you can connect via your iPod, laptop, cell phone, tv or fridge!
If you've watched the web grow from it's humble beginnings to where it is now and just how it has become a seamless part of everyone's lives - it's been one hell of a ride.
It does have it's downsides - back in March 2000 - the technology sector saw the value peak at over 5130 (on the NASDAQ) after that it was the slippery slope all the way and the freefall began the dot-com bubble burst where silly money for silly ideas just had to stop! All the neigh-say'ers saw it coming and that this was indeed the end of the internet!
Far from it - it restructured itself - we looked deep within the industry and realised that business acumen had been replaced with greed - and a promise that we would never get ourselves back into that situation again with a more rigorous business focus on the new ideas and start-ups rather than exuberant VC's throwing even more money after bad ideas and poor business models.
Roll the clock forward onto 2007 & 2008 - and we see a significant drop in crap ideas / concepts that are valued at $100m+ and signs that current growth is in acquisition and mergers - which is great - but then there is the undercurrent of that silly money and greed coming through again!
Google's entry onto NASDAQ, although seen as crazy money for an Internet company, I would tend to agree with that evaluation with the constant rise and growth of Google and it's additional businesses and innovations - combined with the number of eyballs, clicks and ads - so interesting to see their video ads coming this week - but I'll come back onto that later...
So lets look at where the silly $$$ are right now - I think you have to look at Microsoft and their $240million for a 1.6% stake in Facebook! If that doesn't stink of the 2000 bust then just add in the $44billion that Microsoft tabled to buy Yahoo! - and the alarm bells start ringing!!
What is pushing Microsoft to do this? Not that I'm singling out Microsoft - but you have to look at the size of the $ that is being pushed around here!
Well lets look at the current web climate just now - everyone is vying for traffic - now that could be for anything from basic e-commerce transactions, to dating - but the end game is the same. If you can bring traffic then you have an audience - if you have an audience and your offer is compelling then you can convert - and if you can convert then you have just made a transaction - and if that transaction is linked to the almighty $ or £ then that traffic or traffic driver has a value - and the bigger the traffic the bigger the value... Ok so that is simple basic Internet Commerce 1.1
So you look to the sites that are driving massive traffic (apart from Google) and especially within the social network arena - Facebook and MySpace and that's where the "brains" start to think "you know if there is millions of users visiting Facebook per day then I can sell to those millions, and if I can sell to the millions then that has got to be worth billions to the advertisers and marketing people who are in the business of selling stuff" - so using some classic AxBxC=D and just that D equated to $240million meant that actually Facebook has just been valued at $15billion+
What!!!
Wait - did we not learn anything from 2000 - OK yes Facebook (again I'm not singling out Facebook there are others..) has a lot of eyeballs and traffic - and then add in Cookie-tracking technology - but then there is that assumption that if their on the web their prime for selling - users of the web are getting wiser as is the technology and for every ying there is a yang - so for every Cookie-tracking technology that advertisers place on your system there are others that will block / remove / alter that - I refer back to the days when pop-ups were everywhere and banners were at a similar peak back in the late 90's - but then along came pop-up blockers and ad-blockers which meant that I haven't seen a banner ad since 1998 and love watching the count of pop-ups still rise as advertisers think that they can still get away with pop-ups.
But here is where I think we should start to think a bit harder about where this is going - at the moment the worlds biggest Internet browser happens to be Microsoft's Internet Explorer, and when this runs on Microsoft's XP, Vista or 7 and that same company has just forked out $240m in order to sell stuff via Cookie-tracking technology (which just happened to be purchased by.... yep you got it Microsoft) then if I were Ballmer - I'd make sure that nothing can interfere between IE8 & Windows 7 and my Cookie-tracking technology - so that actually they own the OS, browser and the ads that are delivered - then that is worth Billions! So $240m is a drop in the ocean compared to that -
but your still way off Google's size and stature of web stats that dominate and the user is not on Google to poke, check status, see friends (yet...) they are there to "search" for something and that is more complelling to advertisers and marketeers - and that's why going back to their initial evaluation and continued success really shows its value - so the introduction of video ads - pre-roll, post-roll makes the switch from TV to internet all the more compelling - or does it? (my blog on Google's Video Ads talks more on this subject)
So to wrap up my ramblings then what is main morale of this blog - well I think that yes advertising still has a value and a place - as advertisers move further away from traditional radio and TV and move more onto online - they are promised (from people like Facebook, Microsoft, MySpace....) that the web has audience figures that TV and Radio can only dream of and that they can accurately track, monitor and deliver targeted ads - and because of that they have to pay a premium. So they move their spend online, cough up that premium and sit back and watch those internet users click onto your site...
That my friends, is the theory that is prevalent just now and is funding the bigger acquisitions and silly money to grab more of the advertisers $ - but maybe...just maybe the answer lies in something more compelling than that..... with the drop in traffic on Facebook & MySpace (both down 5% and a combined UK traffic of 13.5m) and Google still continuing to grow with almost double the UK web traffic than Facebook & MySpace combined - perhaps there is something in "fads" : lack of lasting stickiness, relevance and "forced" commerce that the wiser internet users will not tolerate - and when they do just how much is that $240million worth now??
...and when that happens to a company the size and importance of Microsoft you can start to see why then adding $44bn to buy Yahoo! (which of course - in turn gives you more of that traffic to sell to) - sounds like a real sign of desperation from a company that in this brave new 2008 internet world - may no longer be that relevant or important anymore...