Sunday, October 21, 2007

Bubble 2.0

FrankShaw has a very interesting post here on the reasons why the current internet bubble will pop. The example he points to, eBay's acquisition of Skype for $3.1 Billion in 2005, is very relevant to the argument that the current trend of buying over perceived value of a company might lead to the creation of a bubble. Armed with the right tools, one can find a lot of such examples in today's markets.

Advertising Logos

If you look at the current 'online contextual advertising' market, you can see signs of a bubble forming. Almost every service depends on advertising as a monetization method. If you remember those obstructive ads of yesterday, the contrast between then and now is very noticeable. Problem is, there might be a race for the two types of advertising models to meet midway. If you've noticed, webpages keep getting more and more cluttered with advertising and other 'link propagating' methods. And visitors keep evolving too, most people today have learnt to avoid even the most contextually relevant ads. Of course, the system works when I'm searching for airline tickets to the Bahamas, but not when I am searching for information on Labor Day. And most searches are probably related for information and may not be focused on products per se. Effectively, people get trained to ignore the advertisements altogether.

So what might the future of advertising hold? I'm tempted to say "that's for Google to decide", but I guess "Time will tell" isn't a bad cliche after all. BTW, lemme know if you find this blog too cluttered :)

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