2008 Trends, no bubble

In 2006, I was convinced that a bubble was about to take place. It’s no longer the bubble that is to be talked about today, but the absence of a business model because there is a fundamental piece missing from the social and Web 2.0 foundation: MONETIZATION.

In 2006, I had predicated that Netvibes would have been the target of a full out M & A operation like that of Skype or Youtube. I was wrong, it wasn’t the case, perhaps in 2008, but there still isn’t a viable business model, not only for Netvibes, but for the large majority of social and Web 2.0 services.

The evaluation of users as one of the means of fixing the acquisition price of an Internet company is on the decline. The reasons? A business model that is false or inexistent at its origin even the creation of projects financed by the $millions, video sites, micro conversation, digg like, social sites, etc.

So there remains the opportunity to make a favorable exit, in the absence of a solid positive balance sheet. This represents a narrow angle that a few rare companies have taken advantage of, such as Hotmail and Geocities for the Web 1.0, Skype and Youtube for the Web 2.0.

I had noted that Loic le Meur had made 10 recommendations for creating a startup but I didn’t find any advice on the following theme : How to manage revenues??? quite essential!

This subject is of course rarely addressed by the Web 2.0 gurus who prefer to take refuge in the form of circumstantial autism like this amusing and naive sentence from Jason Calacanis: "Running a startup is NOT about revenue anymore–it's about critical mass. It's about scale. When you're playing in the big leagues with unlimited access to capital you shouldn't worry about revenue BEFORE you have critical mass".

Btw, if you create a start up and if by chance it reaches a critical mass, you will sooner or later have to resolve the same problems that "Beacon" of Facebook are faced with.

So here are a few basic guidelines to follow before launching a Web 2.0 or community service that could have a substantial chance of generating revenues.

1. You will not have reoccurring revenues from C2C/B2B subscriptions or your service is free ? You are therefore a “MEDIA”, so you must base your Business model on digital advertising.
2. Don’t monetize this type of service with Adsense or another Self service solution in CPC or CPA, it’s a decoy, an aberration because you don’t have control, or durable revenues.
3. From the beginning, prepare your site to receive advertising with the maximum number of formats offered on the market and full data mining even before making the architecture, even before the idea.
4. The sooner these parameters will be fixed, the sooner the advertising spaces will be integrated and non intrusive.
5. Work in priority on the type of business model (CPC, CPM, CPA), targets and formats that you will offer your advertisers, these parameters are essential to attract them to your media.
6. Take partner contacts early on with advertising agencies, media agencies or technical and business solutions that offer you the possibility to create your own advertising network  (Ads-click, Adify, Quigo).   
7. Go with the incontrovertible assessment that you must develop two activities; that of a technical company and a media company via an externalised or internalised advertising agency. In the case of an internalisation, you must put a sales team together from scratch.
8. It’s about two activities that are opposites but indispensable today to succeed in generating the financial streams necessary to assure the future of your project outside of raising funds.

As soon as enterprises will have understood that putting in place a commercial digital advertising agency is a question of survival, the market could then consolidate favorably around sure values. ads

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