Here's what you can expect in the coming year, internet lovers: lots of young internet companies going broke. The ones you love! Including, but not limited to, user-generated video sites, ad networks, fringe social media sites, and companies that make all those sweet apps. Why? Because in our brave new economy, companies are slower to buy bullshit ads of questionable efficacy on every random "Web 2.0" site. How bad will it get? We'll tell you: Ad Age predicts a small amount of growth:
If trends hold, online advertising will grow in the low double digits or high single digits this year, driven largely by search.
But that may be way too optimistic. A pessimistic view would be to compare this financial crisis to the end of the tech bubble years, when internet advertising dropped by about 25%. And then to note that this crisis is actually far worse than that one was. So while search ads will probably not stop growing, it's possible that the rest of internet advertising could fall by more than a quarter, taking the ho-hum companies at the bottom of the market straight into oblivion. Recent startups will be quick to fail. Aspiring startups will fail to get funded. There will probably be a rise in sites charging subscription fees, as the ad model stops bringing in sufficient cash—which may itself fail, since people are so used to everything being free. And what about our heroes, smartass blogs?
Publishers may not be immune to a big cull after growing up in what Spark Capital principal Dennis Miller calls a "fantasy marketplace." "You will probably see a healthy movement to two or three in each category that are delivering visitors and time spent on the site," he said.