An impromptu party organised by Mike Arrington of Techcrunch.com fame attracted upwards of 100 people to a central London bar on Monday night this week. One of the issues on people’s minds was when is the bubble on this latest Internet boom going to burst? Chatting over a beer Arrington said “When the market falls out of US house prices. Then people will start watching what they spend and the advertising market will drop.” He thinks its the ad market which is driving a lot of new Web start-ups. And he’s right, to a large extent. Look at YouTube / MySpace etc. ALl media plays.
Meanwhile, I ran into a few new start-ups which I’ll be writing about shortly…
Arrington’s point is interest
Arrington’s point is interesting but while I’m not sure about the US, in the UK the ad market is going through a downturn.
In The Observer on 28th May 2006 in a big feature titled Mind the gap: the press must follow readers online, but where’s the cash? Morgan Stanley media analyst Edward Hill-Wood said that the true extent of the online “threat” will not become clear until advertising picks up again.
“At the moment, companies have cut ad budgets across the board. Only when they begin to redeploy the money will the problems begin.”
Hill-Wood frames it as a threat and a problem as he’s speaking from the print/offline perspective. But the upshot is that online (and hence start-ups on Arrington’s logic) in the UK is set to benefit not only from the structural changes that are seeing spend migrate to digital channels as people do, but also from any pick-up in the market.
So perhaps Arrington’s remarks don’t apply here - just yet - when he says it’s the ad market that’s driving a lot of web start-ups..?