Three stories paint a pretty clear picture of the bubble we're all seeing.
Let's start with the latest in the bubble writings from the NYT. Pegged to the start of the Web 2.0 conference, it's a good look at the overall madness going on in the Valley right now. Here's the part that should make everyone stop:
Some trace the start of the new bubble to eBay’s $3.1 billion acquisition of the Internet telephone start-up Skype in 2005. EBay’s chief executive, Meg Whitman, reportedly outbid Google for the company. This month, eBay conceded it had grossly overpaid for Skype by about $1.43 billion, and announced that Niklas Zennstrom, a Skype co-founder, had left the company.
Yep, in the world of real business, "audience" or "community" still looks like "eyeballs" did in the last bubble.
The, go over and check out what is happening in the TV ad market, in this story in the WSJ. This is not a surprise, people have been pretty consistent in looking at ads as necessary evils. But remember that point: given the choice, people are NOT viewing ads. With me?
Then flip on over to another WJS story, this one looking at how to better target ads. Setting aside privacy concerns (because consumers have pretty much voted on this one already; they don't care about privacy), you start to see what is fueling the bubble -- the potential to monetize advertising in a new way.
Now look at story number two -- people don't like ads. When they can figure out how to avoid them, they will. So what you have is a wash of money coming into the Valley (mostly) aimed at serving up more ads to people who don't want to see them, in ways that are pretty sure to irritate them. Call that rational? Finally, to see the collective insanity in full display, look back at this BusinessWeek story about the mythical Google phone. Here we go:
Imagine your cellphone as a mini marketing machine. As you head into your car after dinner, a text alert pops onto the screen of your handset announcing the 9 p.m. lineup at a nearby cineplex. You choose the Jodi Foster flick The Brave One and a promo video for the next Warner Bros. (TWX ) release, a George Clooney movie, starts running. Afterward, more text appears, prompting you to launch the phone's Web browser so that you can click through to buy the movie's ringtones and wallpaper.
That kind of 24/7 advertising engagement--on a phone, no less--may sound like a nightmare. But what if you could determine the kinds of products you get pitched? Or, when your flight gets canceled in a faraway airport, text messages pop up for the best hotel deals in town? No random insurance ads or airline deals for trips to places you never visit. Best of all: Watch or read the custom ads, and your phone minutes are free.
I'll bet right now that NOBODY will see this as a good thing, other than a company trying to capitalize on the idea that "new" advertising represents a gazillion dollar pie. Will the bubble pop? Absolutely -- there is a total dislocation of reality between people trying to make money selling technology that allegedly presents new opportunities to serve up ads in new ways and the consumer who is about to be inflicted with all these ads.
Caveat: targeted ads, privacy concerns aside, fall outside the bubble. They potentially represent a way to charge more for ads that people might actually want to see, as opposed to just jam more ads into the system.