The last fast few years have seen resurgence in Internet companies not seen since the bubble years of the late 90s. The growth of these advertising-supported “Web 2.0” companies has propelled online advertising sales to $21 billion from $6 billion between 2002 and 2007. But the last recession pricked the bubble in 2001. What will happen to this crop of Internet companies?
The broader economic recession has not spared the Internet sector. Online display advertising is projected to be flat to down by RBC Capital in 2009. It is hard enough for internet startups at the best of times. Which companies will come out of this recession the best?
I predict that media buyers will focus on both a flight to quality and a flight to surety. This will benefit three types of startups: companies with large audiences, companies that sell direct-response advertising, and companies that offer valuable niche content.