Search Engine Marketing Articles

"The revival of the dot com bubble - is Google responsible?"
14 June 2006

After reading a really good article lately, regarding the dot com crash in the late 90's, and the great fight back it has had less than 7-8 years later, I have started to look into the reasons of why this happened in the first place and how it has come to revive so quickly.

Millions were lost when the dot com bubble burst; it was an interesting time in the evolution of media. The miracle medium had arrived for reaching millions of consumers around the world. New business models instantly became available and far-fetched ideas became reality.

The problem with this was that the old methods of marketing were thrown out and young inexperienced managers became the norm. In the meantime, venture capitalists threw caution to the wind in the rush to not be left behind.

With this, there was no precedent to follow with the relatively new e-commerce internet model; no one really knew how the profits would work out. Companies used public offerings of their stock to raise large amounts of working capital, with only the promise of profits once a suitable client base was built.

Stocks began to rise and inflate, so venture capitalists tossed in more funding to new startups on the hope of hedging their bets. In the end, expectations were too large for how e-commerce would take off and things turned for the worse. Companies could not cover their exorbitant expenses and the market collapsed.

In the meantime, a few dot com companies, a little slow off the mark, pulled through this collapse and surged forward. I'm talking about Amazon, EBay, Google and Yahoo. Amazon and EBay in the forms of e-commerce and Yahoo and Google in the form of Search.

With search, Yahoo and Google managed to find a way for consumers to accurately target advertising, instead of the shotgun approach.

Google pioneered the Search revolution when it started including sponsored links in their results. Their approach confirmed that online advertising made commercial sense. Since then, Google shares have soared and the company has grown from strength to strength. In fact, it is mainly due to Google and Yahoo that the internet advertising has become a $ 10 Billion a year medium.

The global market has finally come to grips with digital media. Dot com business models are once again succeeding and venture capitalists are taking a more of a sober approach. I think there is a general realization that the internet is not a massive "cash cow" it was once believed to be, instead, the mistakes of the past are being carefully avoided and a stronger healthier boom is arising.

Daniel Aufrichtig. Managing Director, Bluesouth.com

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