CAMPAIGN-I: Perspective - There is still life in the dotcom sector

By ROSS SLEIGHT, a founder of BMP Interact, campaignlive.co.uk, Friday, 26 May 2000 12:00AM

Look out everyone. Run for cover. The bubble has burst. Dotcoms are dead.

Look out everyone. Run for cover. The bubble has burst. Dotcoms are

dead.



The past month has seen millions of pounds wiped off dotcom share

prices, the internet sector’s confidence is lower than ever and it has

all been topped off by the news that Boo.com, one of the highest profile

and best-funded start-ups of last year, is to bring in the liquidators.

Everything points to the fact that a wave of panic is sweeping the

dotcom world and those start-ups that had such glorious ambitions will

be crushed mercilessly underfoot by an unforgiving market.



Of course, from the perspective of someone in the start-up’s shoes, it’s

nothing like this in real life. If you pick through the media’s

schadenfreude, you will find that for every Boo.com, which sadly made a

litany of strategic and operational mistakes, you have a rising star

such as thinknatural.com, the natural health e-tailer, which, on the

very same day as Boo’s fall, secured a further pounds 10 million in

funding. Just as one swallow does not a summer make, one e-tailer going

bust does not bring a sector to its knees.



What has actually happened is a market correction. Nearly every start-up

I talk to welcomes this in a strange way, because it brings a sense of

realism to their business goals.



Over the past six months there has been a movement away from

business-to-consumer investment in start-ups. Undoubtedly, this has been

due to the plethora of ’me too’ players reinventing the wheel.



Another reason for the lack of investment in this sector is the cost of

the marketing and the rising cost of customer acquisition and retention.

I can’t say this has, as the majority of dotcom advertising is pure

rubbish, devoid of proposition and smacking of agencies making a quick

buck.



The money instead has flown into business-to-business and WAP

investments, and I would imagine it will move on quickly to broadband

and interactive TV players in the next six months as the venture

capitalists look for new models to trumpet.



The problem is that if you are a B2C start-up, getting initial funding

is difficult but raising further rounds can be even harder simply

because there is a lack of appetite for the sector. With so many

opportunities in this sector to create new-business models and personal

relationships with users, it’s a crying shame that investors adopt such

a generalisation.



This combination of a lack of appetite and the poor showing of one or

two of the overpriced B2C initial public offerings will lead to a number

of mergers and acquisitions in the following months. Consolidation can

only be good for the market and the consumer. So, to reassure you, it’s

not the end of the dotcom world yet - even for B2C players.



This article was first published on campaignlive.co.uk

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