Vinny Lingham's Blog

Web 2.0 is merely next generation Web 1.0 (duh!). Isn’t it strange how many Web 1.0 business models are resurfacing and calling themselves Web 2.0! Many of the social networks today, are successors to websites from the Web 1.0 era. Cnet covers the Top 5 Dot Bombs of the late 90’s boom. It’s scary to see how many of these models are resurging! Cnet also has Top 10 list to go with the video.

Along with the boom of the Web 2.0 economy, guess what’s now come back into action : First Tuesday! Investors, still kicking themselves for not investing in companies such as Skype & YouTube are now waking up to the smell of fresh cash and First Tuesday provides that platform, as it did back in the last boom! I have the pleasure of being the keynote at next month’s event in Johannesburg.

Not only is First Tuesday back, but there is a new gathering, known as Open Coffee Club – basically similar to FT, and it was started by Saul Klein in London. There will be a Cape Town meeting tomorrow so check it out. Eric Edelstein (incuBeta co-founder) also has some coverage on his blog.

I wrote a post a while back on Web 1.0 vs Web 2.0 and what I didn’t add was the similarity been FuckedCompany & TechCrunch’s Deadpool (which also came as an April Fool’s hoax this year).

People often ask me whether or not I think we’re heading for a bust or not. Let me try to answer this as succinctly as possible by stating facts:

1. Online media has grown into a $20bn+ a year business
2. Advertising chases audience
3. Companies building user bases now have sustainable monetization streams
4. In any boom, there are often a large number of startups, some successful, other not. The winners usually outweigh the losers in the long term.
5. If there is a bust, it will be because of large irrational sums of money being thrown at startups. Peter Rip covers the point of “Fail Fast, Fail Often” very nicely in his blog post.

So – are we in a Boom/Bust cycle? Yes & No! Yes – we are in a boom & yes it will bust. Will the bust be as bad as before – no, as there is still a healthy amount of skepticism in the marketplace, which is good!

The million dollar question: How long will it last? I think that for the next 5-7 years, we will see a long sustained boom, (barring WW3), but after that, the pace will slow rapidly. What am I basing this on? Thumbsuck to an extent, but also, from a global perspective, countries like South Africa and Australia are just getting into this cycle (Web 2.0) right now – arguably a bit late, but there is still plenty of domestic opportunities around and I see that most countries that haven’t caught on will take 5-7 years for this cycle to peak and then drop off. Thumbsuck – yes, possible – definitely!

What will it all mean? As with any drop off (aka Bust) people who have no passion for the industry and were just in it to make a buck are going to go back to whatever profession they were in before joining the bandwagon, the industry contracts and a whole new era begins…

Google now offers a secondary method of bidding, called Preferred Bidding – this will add additional liquidity to the Google Adwords marketplace and allow merchants more control over what they would like their final CPC to be. My view is to stay with the existing bidding model, until more research is done on this new option and the implications of it on advertisers.

Google has just announced that they will acquire Doubleclick for $3.1bn. More coverage here:

TechCrunch
ReadWriteWeb
Screenwerk
SearchEngineLand

The following question was posed recently to me by a merchant:

Last month we announced we are closing our in-house Affiliate program and migrating everyone to Affiliate Network X. I was shocked at the outcry of our community who are under the impression Network X is full of parasites. This camp of unhappy people glean most of their information from AbestWeb which has a lot of posts on this issue and they are now debating the issues on our (The Merchant) forums which is stirring loads of panic. Assuming we can control the true *bad* parasites, we still want to partner with companies like Upromise and eBates – but even some of their methods of come under fire. I was wondering how you view their shopping toolbars? Do you believe they in any way hijack commissions from your company? My understanding is the number of people using this applications is very low, but who knows.

My response:

Good question! The simple answer is that we factor in any losses like this into our ROI calculations, so even if they do affect us, we maintain margin. I know that this doesn’t answer your question, but it helps explain why we don’t feel the heat. Also, I find that affiliates are often the most paranoid people around (which is what makes them so good!). We even did studies on anti-spyware cookie crunching which showed that the whole thing is blown out of proportion, once you actually run the numbers through the revenue loss calculator the effective loss of revenue is negligible at worst. That said, all networks have their pro’s & con’s and no single network, like Network X can be singled out as a problem.

I would suggest being creative and offering things like extended cookies for SEM affiliates and shorter persistent cookies for Toolbar distribution companies like Upromise – that would even things out quite a bit in the minds of the affiliates. At the end of the day, the market share that those individual companies have is not big enough to impact any one affiliate’s campaigns, unless they’re fighting over branded head terms – in which case, it’s probably not the affiliates that you want in any case!

These are my view… what are yours?

I’m very pleased to be able to be the first to announce that Yahoo! has established an Affiliate Advisory Board and has invited me to sit on this newly formed Board that will deal with issues related to affiliate marketing for Yahoo!, across the company. The Affiliate Advisory will be meeting in May, as per the invitation:

“The two days will consist of meeting the CJ/Yahoo! Affiliate Team plus top Y! Executives, product discussions from each property included in the Y! Affiliate Program, Panama roundtable session, Yahoo! Developer Network presentation and the future of the Yahoo! Affiliate Program.”

This is a hugely positive move by Yahoo! and kudos to them for driving affiliate marketing into the mainstream online marketing channel. This cements affiliate marketing as one of the key online marketing channels, and for a group the size of Yahoo! to embrace affiliate marketers so closely, it really does show both momentum in this space, as well as recognition of the value that affiliate marketers can offer to both large and small enterprises.