Come with me back to the mid to late 90s. Remember those years?
Remember trying to find office space in and around the Bay area? First Tuesday meetings with three thousand green badged ‘entrepreneurs’ chasing three red-badged ‘VCs’ around the room? Remember pets.com, WebVan, boo.com and the million other startups hoping to make it into this brave new online world? The mass of money pouring into crazy no-hope projects for the slim chance of picking the right one? The multitude of companies who added an ‘e’ or an ‘i’ to the front of their names? Or a ‘.com’ at the end?
Remember all those companies whose sole method of ever making money was via advertising …?
Fast forward back to today and you may wonder whether anything has changed. Are we going through the same cycle again, you might ask?
I’d suggest the answer is probably ‘yes’ … and ‘no’.
Let’s look at the similarities to last time: there are certainly far too many ‘me too’ products, most of which will fail or be picked up in a fire sale. How many social networks or video sharing sites do we really need? Especially when there’s little to no differentiation between them. There are plenty of social news sites, but no’ones quite struck the right formula just yet (Digg may be close, but has its own issues to deal with). And we’ve got widget, wiki, blogging and portal offerings coming out of our ears. There’s a lot of investment money still to be had, even with the current squeeze on the US market, and a lot of online businesses offer free services in the hope of ad revenue.
Secondly, whilst there are still plenty of ‘green-horns’ running web businesses, a lot of the companies this time around are run by those people who went through the first-round: for better or for worse. It doesn’t yet mean they necessarily know how to run a successful company, but you have to believe it helps.
I also think that in terms of advertising as a business model, whilst not perfect and whilst still very risky for most ventures, it is more viable than before. Platforms such as Google adsense and ad-words, Facebooks flyers and Beacon, the work that News Limited are doing on the MySpace and syndicated advertising platform mean there’s a lot more serious and targeted effort being put in now than the simple sale of banner-ads or annoying pop-ups. Acquisitions by the big players of companies like eQuantive and the like ensure major investment in this field. That coupled with the drop-off in traditional advertising means that there’s a potential gap to fill (although, for now, the drop off in offlline advertising isn’t being reflected 1:1 online – by a long way).
There will still be large challenges to this model, not least of which a number of privacy issues yet to be fully resolved, but you have to believe that whilst the gold rush dreams should well and truly be put-aside, there’s still some pretty decent money to be made in them thar hills!
If there’s a common thread, it’s that whilst plenty of silly businesses have and will perish in both rounds, the basic tenets of business online have survived and there are plenty doing it well (see the acquisition of Homestead recently as a prime example of survival!)
Predictors of another bubble burst and predictors of nothing but flowers and glory will, in my humble opinion, both be wrong!
(oh, the story about Boo. Nothing too exciting, but I saw Ernst Malmsten and Kajsa Leander presenting at a First Tuesday event in London in the late 90s, and I have to say that if you can predict a companies future by the terrible performance of its leaders – especially Ernst – you would have been pulling your money out as fast as you could!)
PS: looks like boo.com is now a travel company of sorts
The pre-cursor to getting people to stick around on your site is obviously to get them there in the first place. As we all know, most of us are a mere blip in a giant universe of electronic noise. I note with interest, therefore, a bit of a ding-dong happening at Techcrunch over a post by Dan Ackerman Greenberg following his outlining of the methods his marketing company takes to ‘help’ a video become viral.
What I find interesting about this is that, apart from the fact you never normally hear such honesty, the techniques he describes for garnering interest are nothing new. Sure, we’d all like to think that the ‘net was somehow much more pure back in the day, but the reality is is that offline marketing techniques have simply switched online and have done so for a long time. Ever seen a print advertorial? How about news items that are clearly just press releases? Ever received a free-sample of something or trial products to use at your club or society? Remember the ‘Gabbo’ advertising from the Simpsons (which a number of books and films had used in real-life). Or let’s go back further still: ever think that the first audience member at a sale or market isn’t just the brother of the seller? Ever been to a nightclub and wondered why there were three or four people always first out on the floor (paid by the club to seed the dancefloor).
Personally I’d love more of a ‘fair-go’ for those of us with limited resources and budget. A happy chance of random encounters with whatever media we choose to produce. Fact is there probably isn’t a lot of interaction you can have with any product on or offline without your actions having been ‘influenced’ to a degree. The classic and best examples would be supermarkets and big-box retailers.
The noise over at TC will fade away, and the cynic in me thinks that Mr Greenberg may have pulled off one of the best promotional coups of his career. For the rest of us, we have to deal with living in the self-promotion society we find ourselves and deal with it accordingly.
So, enjoy your Soulja Boys and your Teen-15s over at YouTube, but remember .. there’s a pretty good chance you will have been helped along the way to find them!
Blimey .. it’s been something of a crazy 24 hours. I had a few spare moments yesterday and so decided to pull together some numbers from the Facebook advertising platform (which I’ve subsequently had to correct – that’s what happens when you spend about 5 minutes on an exercise!).
Knowing that they love all things Facebook I emailed Michael Arrington of TechCrunch with the data, and after a blur of emails the story made it to the TechCrunch homepage!
Here’s what that did to my blog stats (click the picture to see it full-size):
As you can see, just a small jump from my normal traffic!
I don’t include those stats here to brag, but rather to illustrate the amazing effect of word-of-internet when a story gets to one of the popular sites like TechCrunch, Digg, Reddit and so on. As it turned out, my data was somewhat erroneous (although there are still more females than males on Facebook according to the updated figures .. just perhaps not in such a large ratio), but that hasn’t stopped the story spreading through all the various sites that syndicate, borrow or steal TechCrunch content. There’s an amazing ‘halo’ effect of other sites – particularly blogs of course – mirroring popular stories in a hope that traffic will gravitate via topical searching and linkbacks.
This isn’t new, and the network effect of word-of-mouth or guerilla marketing has been around forever, but it is interesting to see it play out around your own site. You can see why so much effort is put into gaming stories onto Digg for example.
Anyway, I’m sure this will calm down as quickly as it came up. Shame I can’t carry Google adsense on WordPress – I could have made at least 50c out of this 😉
[update: speaking of viral marketing, there’s an interesting article on – surprise – Techcrunch today about marketing on YouTube]