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Are We Nearing a Dotcom Bubble?

Published: April 22, 2012

Edited: [...]

In practically all economic activities can lead to bubbles: opportunities can be exploited only until we reach a certain peak, then it all crashes.

Generally the "road" upward stretches over a wider period of time, but after having reached the peak, the crash implicates a steeper decline - it all crashes much faster than it has risen.

We can see "bubbles" on the financial markets, in commodities. The best example is the oil bubble - the World's production of oil has been rising for decades until it reaches a peak (some affirm the peak has already been reached), then with the reduction of production a collapse will come. It will affect financial markets and even food prices.

Bubbles can occur in almost any activity that turns out to be unprofitable after a period of time.

The internet is also prone to create bubbles. And perhaps the online advertising industry is one of those areas in which we can expect a massive crash in the future. The question is when will it happen?

The internet sector's first bubble is put to the period between 1995 and 2000. The internet had emerged as a new "industry", facilitating the growth of so many developed economies. The boom was followed by a collapse on 2000-2001.

Could this happen again?

It is highly likely that it will! And it will have the characteristics of a recession on the internet.

The online advertising industry has been developing, attracting massive profits, draining the off-line advertising activities. Advertising and marketing has been moving towards the online environment and those of us working in this field have had a lot to gain from new opportunities.

The rise of online media, online advertising is also due to the fact that the number of internet users has been growing and it continues to grow (primarily because developing nations and countries in transition are connecting a larger part of their population to the internet).

Technical developments only fuel the rise of the internet.

For how long will this continue, we might not know, but a crash of the online market can be expected.

We can draw a parallel with the gold rush or with the car industry. Or, even with the industrial era. Eventually the web will "settle down", the upward trends will slow down. Some activities will see massive losses and businesses will go brankrupt.

The web is full of advertising, speculative activities and lots and lots of platforms (websites, blogs etc.), it will eventually bust.

With the global recession started in 2008, we should be thinking about a potential "online recession".

How long will the current opportunities last?

Are you fast enough in exploiting them?

How vulnerable is your business in front of a potential crash?

We certainly need to think about sustainable development in case of the internet-based activities as well. Re-think your business model, think about "B plans", "emergency survival plans", because the online World won't be forever the same.

The rise of the internet is an "online gold rush".



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