Lessons From the Dot Com Bust and The Future of Online Monetization

Lessons From the Dot Com Bust and The Future of Online Monetization

The times are changing rapidly, and the best monetization strategies for online media is changing with them. There is now a wonderful plurality of ways that an online firm can become successful rather than just a few. So we will now have a look at the various online monetization strategies available and which ones are currently the best. Or more specifically which combination is the best.

Back to Basics

During the end of last millennia, we experienced the great dot com bust. The primary cause of this was overinflated cost per thousand impression advertising rates. People were getting massive pay checks from the most ordinary websites, and this was all being funded by massive amount of venture capital from investors wowed by various buzzwords about technology and all that stuff.

When the actual value of CPM advertising was realized this lead to a massive crash in the value of web based properties and all the other businesses associated with them. The actual value of traffic was discovered, and the correction that followed also included a shift from CPM impressions to cost per click (CPC) advertising. While both are still in demand, the CPC model is well regarded.

Furthermore, there was a general shift away from web media models, where advertising space was sold, to actual online transactions taking place. It was to be a back to basics realization where money was made according to the real value delivered.

The New Media

Giants like Facebook and Google as well as some other large online publishers are the only ones making decent money off CPC and CPM advertising. One of the features of the market now, is that with the rapid flow of information occurring and developments in internet platform technology it is now easier for small firms to deliver highly scalable and intelligent web applications. The possibility for giants like Google or Facebook to be overthrown is very much there. All it takes is the right innovation to move these companies from their strong position. The current array of excellent development tools make this a near certainty.

The Future

The take home message from a lot of these things, is that placing value on development of websites and web applications that is going to be paid for by advertising alone is a questionable model for many businesses. Paywalls where users pay for what they use are an increasingly important survival strategy for publishers of quality content. On top of this, related transactions and microtransactions are proving to be a way of the future. Facebook has already created its own currency in the hope of generating microtransaction sales. Relying on advertising money alone for a business model might be good for a time, but seems to have long term problems for businesses. Certainly, a few have done well from it but many have done not so well.

This look at business is brought to you by McKinley Plowman, a group of Perth based accountants.