White Paper Wednesdays: What Ails The Economy

A great deck from Morgan Stanley about the state of the economy and the factors underlying that condition.

Mary Meeker Economy & Internet Trends Dec/19/2008

View SlideShare presentation or Upload your own. (tags: internet economy)

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Here's An Idea: Distributed Development, Centralized Distribution

This Ad Age article points out what more than a few people were whispering about Web 2.0 start-ups, that there may simply be not enough ad money to go around for all of them. Here’s an excerpt:

"My concern is the really great concepts that are features, not companies," said Ross Levinsohn, former CEO of Fox Interactive and partner in Velocity Interactive Partners. "There isn't enough advertising to support all those features, and in compression times, advertisers tend to flock to safe names and sites that have real traction." One could excuse the latest crop of start-ups for their undue optimism; almost all were conceived, funded and began operating in boom times.

Online advertising rebounded from three years of negative growth in 2003 and has grown at more than 20% a year (actually, more than 30% in 2004, 2005 and 2006) in the five years since. But onetime hyper-growth is coming to an end. If trends hold, online advertising will grow in the low double digits or high single digits this year, driven largely by search. While declining growth seems unlikely, the venture-capital community is preparing its portfolio companies for coming years of lesser incremental growth.

Now surely this does not shock the people who read OLDMTA. But one thing I really do want to point out is that these 2.0 companies are truly driving the lion’s share of innovation. No shocker there.

And frankly, innovation is what they are good at. What they are NOT good at is being viable businesses.

What that means, in my view, is that we may need to think about these companies in terms of more realistic multiples and valuations. As someone who started in the regular business arena – you know the kind of company, one where 12% growth would be a fine year instead of the preamble to a run on cyanide, I don’t understand how people can continue to expect everything to be worth a billion dollars.

Why can’t the model be more focused on distributed development but centralized consumer media properties; a smaller number of major properties that buy the features developed by start ups for a reasonable price that gives innovators compensation for their risk and still lets the buyers make enough money by improving service for consumers and marketers.

Or another alternative, centralized selling for a variety of innovations under a common rubric that provides the scale and convenience brands need.

One way that our space has not caught up to itself is that media fragmentation has been viewed as a problem for marketers rather than for the start-ups. But the reality is that fragmentation also significantly reduces the odds of a billion dollar payout for a feature innovation. Billions of views doesn’t necessarily translate to billions in revenue. Ask Google about YouTube.

In sum, what’s wrong with a $30,000,000 selling price, instead of a $300,000,000 one, if you can simplify your org and reduce the payout timing? You can forego the complex sales and other organizations and do what you want to do anyway – innovate and change the world.

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Nine Reasons…Not To Panic About The Economy And Its Effect On The Ad Biz

Gloom and doom have taken over the blogosphere. Here are nine reasons not to panic.

9. The Digital Advertising CW Always Overshoots Everything

The conventional wisdom in our business is always ridiculously polarized. We don’t like things, we love them with the very fiber of our being. And then three months later we despise them like child molesters. The bipolarity of the CW is absolutely absurd in our business. People are totally overreacting.

8. Panic Doesn’t Help

To succeed in this kind of environment, you need your wits, you need to be rationale. You can’t be rational if your head is filled with metaphorical scythe blades.

7. You’re In The Right Sector

Digital advertising is going to be less negatively impacted. That’s an absolute certainty. Brands still need ways to connect, and TV/Print aren’t getting any better at that, while digital is.

6. There Will Always Be a Need For The Best And Brightest Of Our Industry

If you’re good at what you do, the industry will need you. It doesn’t mean that smooth sailing in your career is guaranteed, but if you face setbacks, you’ll get back on your feet quickly.

5. By Working Together, You and Your Team Can Win

Collaboration is the secret to success in our business. There are lots of prerequisites to success in the business, but they pale in comparison to the ability for teams to come together and create better marketing experiences together. A jittery economy makes us all need each other more. Those that take that need and put it to healthy use are going to make great things happen.

4. This Ain’t 2001

The dot bust of 2001 was much deeper for digital than any possible downturn now will be. Why? Because back in 2001 very few companies/brands with money actually understood or believed in digital. Heck, most didn’t even acknowledge the potential of digital. Now digital is recognized by all as the future of media and marketing. If the lines on the eMarketer charts only go up 12% instead of 40% a year, they’re still going up. Now, you tell me any other business that has lines going up for the foreseeable future.

3. Use This Period As An Opportunity to Reconnect

Too many people in digital (and in many other businesses) sacrifice personal lives and relationships for the work. It can be tempting, given that we’re in the most exciting and remarkably dynamic industry around. But environmental changes such as this give us an opportunity to reassess what’s important. And the people in our lives are more important than our meteoric career plans or the next social media opp.

2. A Little Media Opp Culling Isn’t Necessarily a Bad Thing

There are a lot of dumb ideas out there masquerading as media opps. 400 ad networks? I’m guessing that our industry can make it with just 300. ;-) Thousands of social media networks? I’m guessing 900 will do just fine. ;-)

1. The Digital CW Always Overshoots Everything

Did I mention this already? ;-)

Thanks for reading, and don’t forget to write.

Bubble 2.0 Video - Don't Stop Believin' Dot Commers

Bubble 2.0 needed a signature video. These fine dotcommers had a party in Cyprus with the feva of the second digibubble. The anthem of 2.0 is chosen. Or is it the deathmarch of 2.0:



Apparently, according to the Crunch, these younguns are getting a lot of shite for this video being released as the pink slips go out in several big players across the Valley. I'm afraid I don't see the problem with this. They had a party. They took a video. Good dorky fun in keeping with the ersatz cool of siliconers.

No one was killed. SO the kerfuffle seems a bit silly to me.

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