Monday, May 01, 2006

AdTech Flashback

AdTech came to SF last week, which was great. I'm currently on baby-watch (we're expecting our second child any minute now). So, no travel for me, thank you. I even passed on a trip to Berkeley because I didn't want to be across any bridges.

The story is the same this year as last: it's getting...bigger. The thing that struck me this time out is that, in the past, if you had a friend who worked at a company, you could visit his or her booth and be pretty confident that you'd find them there. Not the case any longer. The booths have gotten big and complex, with full-scale marketing and sales staff. This is turning back into a business.

Back? Yes: the keyword is "back". Forrester hints that its Bubble 2.0, as opposed to Web 2.0. I think there's some credibility to this, but (honestly) not a lot. They point to the fact that there are a lot of companies out there with similar business models, but not much differentiation. The only thing they have in common is that they all seem to be getting funded! Red Herring is also pointing to the exhuberance on the floor.

Well, that's certainly an issue. A "bubble", roughly defined is an economic condition where a) there is easy access to capital; and b) there's a belief that there are parties willing to spend more on something than you would.

Do we have that? Well, capital is certainly freer than it was 24 months ago. But I have heard through the grapevine that no "ideas" are getting funded. You want money? You better have an actual application and (more importantly) a bunch of users. Before you waste time getting appointments out on Sand Hill Road, get your beta out!

The second part is a bit interesting. A lot of companies are eyeing Google and Yahoo! as potential purchasers, but Google's buying cycle is a bit of a conundrum. Yahoo! seems to have a clearer acquisition strategy: they are pursuing Terry Semel's concept of a social Web. Google? It seems like they may buy anything next. Hard to plot out a course under those conditions.

So, I am starting to believe that this isn't a bubble, so much as it is simply an energized marketplace where the means of production are highly accessible. Certainly most of these businesses will fail, but so will most restaurants, dry cleaners and (in my neighborhood) high-end children's clothing shops.
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