Web 2.0 consolidation ahead?

I’m reading Hillel Cooperman. He left Microsoft (ran the Max team) to run a startup in Seattle. And has become one of my favorite bloggers already in the few months he’s been doing that.

Anyway, today he writes “It’s amazing to me how many startups I talk to plan on making money via advertising, tell me about all the big numbers they’re going to post, and haven’t done this basic math.”

This is something I’m thinking to myself more and more too as I meet more and more startups. There are a TON of startups chasing advertising dollars. I wonder to myself how many really will be successful? Sure PlentyOfFish has gone nuclear. But he’s a one-guy business who is in a highly engaged audience type (dating). He says he makes $10,000 a day or more from his Google ads. I believe him, too, cause he’s seeing millions of visitors a day.

Oh, and to those people who say I never say anything nice about Microsoft, note that I am praising Microsoft here (he runs on .NET and says his system runs on far fewer servers than his competitor, Match.com does).

Anyway, back to the point. Lots of these companies are funded by venture or rich investors. At some point the revenues will have to kick in or else the founder will be kicked out and the service sold.

I am watching TechCruch’s deadpool and I wonder if TechCrunch’s new CEO is going to do something really smart: grab these companies as they struggle for revenues like a goldfish gasping for breath in a small fishbowl. Then, aggregate them together and build a killer ad network (even the worst of the Web 2.0 sites I’ve seen have thousands of visitors and lashed together would make a killer Google ad network).

Remember who made out pretty well during the last downturn? Pud of “f’d company.” He got bigger and bigger as more and more people got laid off.

I wonder if Mike is looking to do the same in the consolidation phase?

Another aside: why was Twitter so hot at SXSW last week? There simply wasn’t much else cool to talk about. That tells me that the innovation funnel is pinched closed. What happens next? The strongest survive on their own. The weaker ones get picked up in a consolidation phase. Why? The companies with the best salespeople will be able to sell ads on networks made up of lots of smaller, weaker, players.

Anyway, what do you think. What will you do when the consolidation comes?

In the meantime, Loren Feldman is bored with all the Web 2.0 stuff. He cracks me up, here’s a fun short video (probably will get 10x the audience of my long and boring vids).

[podtech content=http://media1.podtech.net/media/2007/03/PID_010581/Podtech_bored.flv&postURL=http://www.podtech.net/home/technology/2425/im-bored&totalTime=74000&breadcrumb=3F34K2L1]

Comments

  1. Maybe I don’t understand something but if each of these sites let’s say has a couple thousand visitors so it’s not really making enough money from ads, why is stringing together a bunch of these sites going to be any better? Just like two wrongs don’t make a right…put together two sites that don’t make money and you’re still not making money…right?

    I think way too many web 2.0 startups are not thinking about the bigger picture and not focusing on real business models. It’s _hard_ to get advertising dollars if your site is not building an extremely demographically focused community because of the low cost per. There are many other ways to make money though (usually specific to whatever business you’re in) and typically web2.0 sites are ignoring it because it’s ‘so easy’ to go the adsense route…

  2. Maybe I don’t understand something but if each of these sites let’s say has a couple thousand visitors so it’s not really making enough money from ads, why is stringing together a bunch of these sites going to be any better? Just like two wrongs don’t make a right…put together two sites that don’t make money and you’re still not making money…right?

    I think way too many web 2.0 startups are not thinking about the bigger picture and not focusing on real business models. It’s _hard_ to get advertising dollars if your site is not building an extremely demographically focused community because of the low cost per. There are many other ways to make money though (usually specific to whatever business you’re in) and typically web2.0 sites are ignoring it because it’s ‘so easy’ to go the adsense route…

  3. Yan,

    If you only have 2,000 viewers can you walk into Procter and Gamble and get an advertising contract?

    No.

    But lash together 100 sites with 2,000 each, and all of a sudden you have 200,000 visitors. Not to mention that if you link all 100 together you’ll get better Google rankings, so that’ll pull in even more.

    Procter and Gamble (or GM, or Coke, or any large advertiser) might start getting interested now.

    That’s why ad networks like Google, FM Media, Weblogsinc are so valuable.

  4. Yan,

    If you only have 2,000 viewers can you walk into Procter and Gamble and get an advertising contract?

    No.

    But lash together 100 sites with 2,000 each, and all of a sudden you have 200,000 visitors. Not to mention that if you link all 100 together you’ll get better Google rankings, so that’ll pull in even more.

    Procter and Gamble (or GM, or Coke, or any large advertiser) might start getting interested now.

    That’s why ad networks like Google, FM Media, Weblogsinc are so valuable.

  5. I dont think these web 2.0 goldfishes are hoping to get ‘more water’. They are just hoping to be swallowed by the bigger fish.

    (The link “Anyway, today he writes” don’t seem to work?)

  6. I dont think these web 2.0 goldfishes are hoping to get ‘more water’. They are just hoping to be swallowed by the bigger fish.

    (The link “Anyway, today he writes” don’t seem to work?)

  7. “100 sites with 2,000 each, and all of a sudden you have 200,000 visitors”

    Assuming there is no common set that visit all web 2.0 sites…

  8. “100 sites with 2,000 each, and all of a sudden you have 200,000 visitors”

    Assuming there is no common set that visit all web 2.0 sites…

  9. P&G could change the economics of the podcast and videoblog market just like that. What makes you think they would allocate that potential ad spend on a bunch of dying websites? You’re not taking factors such as brand alignment into consideration, and all they are talking about is a lack of quality sites to place inventory.

    Hillel is great, thanks for the link.

    Shaking head at Twitter talk. That’s all people talked about at SXSW? I cannot believe you’re saying the innovation funnel is pinched closed. That’s ridiculous.

  10. P&G could change the economics of the podcast and videoblog market just like that. What makes you think they would allocate that potential ad spend on a bunch of dying websites? You’re not taking factors such as brand alignment into consideration, and all they are talking about is a lack of quality sites to place inventory.

    Hillel is great, thanks for the link.

    Shaking head at Twitter talk. That’s all people talked about at SXSW? I cannot believe you’re saying the innovation funnel is pinched closed. That’s ridiculous.

  11. Deadpool or not – it is sad to see brilliant technology die – and the goold technolgy still should be utilized in some way

    this concern was passionately posted on TechCrunch on several ocassions by Search Engines WEB. Could it be those pleas were what generated this idea to salvage all of that developer brilliance into one giant mashup

  12. Deadpool or not – it is sad to see brilliant technology die – and the goold technolgy still should be utilized in some way

    this concern was passionately posted on TechCrunch on several ocassions by Search Engines WEB. Could it be those pleas were what generated this idea to salvage all of that developer brilliance into one giant mashup

  13. “There simply wasn’t much else cool to talk about.”

    Art, Film, Documentaries, Music, Indy Scene, Big Industry deals (5 by my count)…yeah nothing whatsoever to talk about…

  14. “There simply wasn’t much else cool to talk about.”

    Art, Film, Documentaries, Music, Indy Scene, Big Industry deals (5 by my count)…yeah nothing whatsoever to talk about…

  15. Does advertising work? It just seems ironic that all of these trendy web 2.0′s sell lame ineffective advertising…”Same old Ho with a new Pimp”

  16. Does advertising work? It just seems ironic that all of these trendy web 2.0′s sell lame ineffective advertising…”Same old Ho with a new Pimp”

  17. Match.com actually runs on ASP.NET as well (so PlentyOfFish isn’t the only dating site on .NET ).

  18. We decided last night at the Houston NetSquared meeting that we are moving on past Web 2.0. We’re going to Web 7.2. Although maybe your Mobile 2.0 idea is a better one.

    I’m still kicking myself for not being brave enough to come talk to you at SXSW last week. I know, silly but true. Ah well, there is always next year…

  19. We decided last night at the Houston NetSquared meeting that we are moving on past Web 2.0. We’re going to Web 7.2. Although maybe your Mobile 2.0 idea is a better one.

    I’m still kicking myself for not being brave enough to come talk to you at SXSW last week. I know, silly but true. Ah well, there is always next year…