It seems the beginnings of a revival may be under way in the Internet and new media sector.
Google is going for an online share auction, which is expected to value the company at more than $15-billion. Amazon has reported its first quarterly profit outside the Christmas season, driven by lower prices for electronic goods such as DVD players, while Internet bellwether Yahoo! has said that online advertising is booming along with its profits.
Countless reports are predicting double-digit growth for online advertising. And now Red Herring, one of the bibles of the industry during the dotcom boom, is being reborn under the direction of Alex Vieux, a Frenchman who runs a technology conference business.
In its heyday Red Herring employed more than 300 people, boasted a circulation of 400 000 and weighed just less than a kilogram. Its dimensions shrank in tandem with the investor community’s interest in the Internet, and advertising fell into a black hole.
By 2002 the magazine had become flimsy, and in February Red Herring was closed after its owner, Broadview Associates, failed to find a buyer.
But only a few months later the magazine is being resurrected. Vieux is spending ”millions of dollars” on reinvigorating the title along with Tim Koogle, former chairperson and CEO of Yahoo!, and several venture capitalists.
He has hired James Daly, former editor of Business 2.0, to be the magazine’s new editor and plans to expand the focus of the title to cover not just start-ups in Silicon Valley, but large companies across the world.
The first print version of the magazine won’t hit the streets until September next year because Time Warner bought the subscriber list, with an agreement that no print incarnation of the magazine could be published for 18 months. So, as seems fitting for the title that grew out of the zeitgeist of the Silicon Valley boom, it will be published only online for the next year.
Vieux believes we are on the cusp of a new age of humility for the Internet sector, one that harnesses enthusiasm with careful husbandry of cash.
Clearly, he is counting on a comeback in technology advertising, but he is also building a media group around Red Herring, with events, research and newsletters.
”We believe we can slowly climb back to the 400 000 level,” he says, and he is not the only one feeling chipper about the industry’s prospects.
Fru Hazlitt, head of Yahoo!’s United Kingdom operation, says the market is ”ready to stop punishing Internet companies” for the huge losses made during the dotcom frenzy and, of course, for the huge sums of money picked up by a few individuals.
As evidence, she points to Yahoo!’s 48% rise in third-quarter advertising.
Hazlitt believes the Internet is now joining the ranks of established one-to-one media like direct marketing, which are attractive to advertisers because they are able to track the number of people who see them. That doesn’t stop online ads being extremely irritating and nor does it prove that anyone takes them in.
But Hazlitt, a former head of sales at London’s Capital Radio, believes advertisers’ attitude towards the medium is changing, which is in part owing to firms like Yahoo! employing sales staff from traditional media. She claims they are helping to change media planners’ perception of the Net as a different way of reaching people rather than something to tack on to campaigns driven by the marketing department.
”It took 10 years for people to stop trying to use TV as a print medium and 20 years for people to understand how to use radio,” says Hazlitt. ”The Internet needs to be used differently to those media.”
Given the economic pickup across all sectors (not forgetting that the sustainability of growth in the United States economy is still unclear), the Internet may well be set to take a bigger portion of the advertising pie, if only because its share is so small at the moment — less than 2%.
If the results of a recent NOP poll are correct in saying that Internet users now spend more of their leisure time doing things online than on watching TV, online advertising surely stands to grow, particularly if people migrate to broadband connections.
So are we seeing a new, more humble Internet era emerging? Diehards have long been predicting that the Internet business would thrive again and for the best of the sector, like Google, the market looks eager. But if Red Herring’s revival symbolises a lift in the industry’s fortunes, few believe it will regain its portly dimensions of the late 1990s any time soon. — Â