From Irrational Exuberance to Confident Optimism

A funny thing happened during the first half of this year.

The Internet industry started booming.

Many of us in the industry may have suspected as much due to overflowing inboxes, jammed calendars, and increasingly hectic schedules. Let me assure you… it ain’t just you. Things have picked up — a lot. It may indicate we’re beginning to see the fulfillment of a vision many of us shared in the late ’90’s.

First, a couple stats. According to VeriSign, over 4.7 million domain names were registered in the first quarter of 2004, the largest number in Internet history. Even more important, over 72 percent of these newly registered domains actually resolve to a Web site, as opposed to only 55 percent back in December 2002.

You may ask yourself, are companies actually doing more, or just registering domain names? Jupiter Research reports half the corporations surveyed had two to four big Web projects planned for this year, and 25 percent said they’re prepared to spend over a million bucks on those projects. And they’re not just throwing money into specious new endeavors. Most of that spending is earmarked for improving their existing sites to facilitate user experience, add new CMS capabilities, and improve overall usability. Companies are digging in for the long haul.

Do these facts represent a trend? I think so. I won’t predict this trend will lead to universal peace, prosperity, and good will amongst nations (as predicted in Wired Magazine’s now infamous Long Boom article published in July 1997, but I do believe we’re seeing the early Web and digital media vision beginning to come to fruition.

Probably the first place to seek evidence of this is to examine industries that are irrevocably changed by the Internet. Automotive, travel and real estate, for example, look nothing like they did 10 years ago. Consumer access to online information has shifted the locus of control from those who once possessed the information — car salespeople, travel agents, and realtors — to consumers who now enjoy unprecedented access to that information. And no, it doesn’t mean salespeople and agents are gone (though for travel agents, things don’t look so good). But their roles have shifted from gatekeepers to filters.

A recent National Association of Realtors study seems to indicate their members recognize this new role, and are spending mightily on technology to stay ahead in the information game. Realtors now spend an average of over $1,300 on tech-related items, more than ever before. They recognize consumers expect a steady flow of information via email and the Web. They have to adapt. If you’ve bought a home during the overheated real estate market of the past few years, you know how important real-time information is. Realtors are responding.

We must all respond. We have no choice. The Web is just the first stage of the flow of information. It’s become the vital artery that links us together. Convergence in all forms, especially in the entertainment industry, has long been predicted but is now happening. From digital cable to new gaming-on-demand services from companies like Phantom to closer links between TV and the Internet (like the new content downloading service from TiVo) to expanding broadband wireless services to moves to bring advertising into the rapidly expanding gaming market, the gap between the Internet and the rest of the world is rapidly closing.

Some advertisers and marketers are responding to the new reality. Recognition of the need to expand ad reach beyond the major online media networks and out to the greater (and harder to deal with) datasphere has lead to the resurgence of the online ad network. Major advertisers are finally beginning to realize the importance of online information flow in marketing. Groups such as the Viral & Buzz Marketing Association are helping to facilitate use of digital media beyond the banner.

Are there problems? Heck yeah! Spam and viruses still threaten to choke legitimate commercial email. Flaws in our most popular browsers allow unscrupulous ad- and spyware to irritate consumers. And although they have access to more information than ever, marketers are still struggling to make sense of the information flood.

But problems can be solved. We’re all still figuring out a young industry, really not more than a decade old. Plenty of mistakes have been made along the way. But if you step back and look at what’s going on, there are plenty of reasons to be optimistic about the future of “online” advertising. The future becomes a lot more complex as we begin to understand “online” is everywhere, and truly effective marketing will be whatever’s able to deliver messages across a whole range of increasingly linked media.

Things are picking up. And it’s all about to get a lot more interesting.