10 Predictions From The First Internet Bust And What They Tell Us About Digital Marketing Now

One of the original digital marketing execs, GM O’Connell, made some predictions in 2002 about how the Internet would impact people and brands. Here, he looks back and assesses his accuracy, and, along the way, reveals some timeless truths about marketing in the digital age.

What was the world like 10 years ago? It was the year the euro went into circulation, Mark Zuckerberg was a senior in high school, and J-Lo topped the list of the hottest Google searches. “You’ve got mail” was still heard on millions of computers across the country.

It was also the year I gave the keynote speech at AdTech. The dotcom bust hung like a cloud over the audience as bankrupt companies like Webvan, Pointcast, Excite@home, Pets.com, and many, many others hit the skids. The Nasdaq had hit bottom at 1,400 from over 6,000. You could have bought a share of Yahoo! for less than $5 (compared to $100 in 2000 and $15 today), or even a share of Apple for $6 (just in case you want to kill yourself).

The point is that in 2002 the Internet was poison. Traditional marketers breathed a sigh of relief and stopped Internet spending in its tracks. Still, people went online more than ever. This is nothing new considering that consumers are usually ahead of the curve. During my speech, 10 years ago, I made some predictions about the future of online marketing. At the time, they may have seemed a little out there…

Here a look at those predictions and how they hold up 10 years later.

1. Internet penetration will reach 96% by 2008.
We came a long way from Nokia bricks, WAP, and the original BlackBerry Bold. The fact that wireless connectivity was going to increase dramatically was pretty obvious. But the power and popularity of wireless broadband via 3G networks and Wi-Fi combined with iOS and Android smartphones was even more dramatic than I thought. We are always on, everywhere. Amazing--if you don’t take it for granted.

2. Spam will be a capital offense by 2009. Just like pop-ups the year before. You simply cannot annoy people into liking you. Or fool them into it.
Well, sort of right, but mainly wrong. First the law hasn’t been passed--yet. Second, companies continue to spam (although the smart ones do a decent job with enabling the customer to set permissions). We do seem to see fewer pop-ups, but I suspect that’s more a function of pop-up suppressing browsers. What’s really happened is this: Everybody spams. Not just marketers, but half my Facebook friends and Twitter blowhards. And so my conclusion seems to escape the egregious offenders out there: companies and “friends” that continue to blast away with re-targeted, misleading, self-aggrandizing ads, posts, and tweets that seem dedicated to the fatuous belief that indeed we can be annoyed into a requited relationship.

3. New Networks will emerge after 2010, driven largely by email and instant messaging. These will not be created by marketers but in spite of marketers.
The only thing I didn’t know is that they would be called social networks. And they incorporated and even supplanted both email and instant messaging. Over the last 10 years, it’s been the rise of social networks combined with mobile access that has changed what we do when we are connected, which for many of us starts when we wake up and ends when we sleep. It hasn’t been marketers that gave consumers content, tools, and a framework either. It was Facebook. It was LinkedIn. It was YouTube. Marketers have tried to insert themselves with some success. But I now predict that the phrase “join the conversation” will be outlawed from the conference circuit, just as “new paradigm” was back in the '90s.

4. With the growth of personal video recorders, people will their own broadcasters, Tivo-ing content through their own New Networks to friends.
YouTube launched in May 2005.  Skype with video conferencing in 2007. Video has not been the same since.  Can there be any doubt that people under 25 would rather give up cable TV versus IP based video if they had to make a choice? And of course marketers and business managers have screwed that up as well: The pre-roll and music stripping DRM algorithms once again compete with the user/amateur creator. If advertisers and/or agencies and/or the video platforms could be as innovative when it comes to monetization as they were with the invention of the platforms themselves, we’d all be happier campers. Why is YouTube spending 100 million on “professionals” for new channels, but not a dime on new monetization innovation (i.e. a decent ad format)?

5. After 2010, you will no longer be able to manage your own reputation. It’s going to be in the hands of customers, and if you don’t make them happy, watch out.
At first a cottage business within the context of the Internet Industry, online reputation management is now a nearly billion-dollar business. At the same time, thankfully, most businesses seem to understand that the key to online reputation management is not merely monitoring and “joining the conversation” (sorry) but in concentrating on providing better up-front quality and stellar customer service.

6. In 2010, there will be holographic kiosks, wrist-PDAs, cell-unit implants. A telepathic mind modem will be in development at MIT. You are never going to be out of reach, unless you want to be.
2010 was a typo.  I meant 2020.  Let’s jack into each other’s mind modems then.

7. Customers won’t want ad messages from the Internet. They’ll be going to the Internet to extract value. And in that fact will lie the secret of interactive marketing.
Not exactly a prediction, but still the biggest semi-learned lesson of all. Now that we have the Internet, now that we have social networks, now that we have mobile ubiquity, now that we live in a world where no one is separated from friends or businesses that we depend upon, one thing should be clear: Connecting with customers  is not about good online advertising. In fact, I’d argue that message-based advertising is irrelevant. It is about providing great services that can only be provided economically via digital means. The key is to go beyond messaging and email and banners and fans and friends. It’s about value provisioning itself, and that’s where online “marketing” dollars should be spent.

8. After 2007, no one’s going to drop off a roll of film. Even motion pictures will be shot and shown digitally.
RIP, Kodak.

9. In 2010 advertisers can be omnipresent in their customers’ lives. Always on for them. Good interactive marketers will figure out that the Internet lets customers manage their relationship with brands. It is done with utilities and services that become part of a brand offering and gives customers the comfort that you’ll stick around.
This hasn’t really happened. But it will. And when these services are distributed in tight bundles/apps, we’ll realize that the main job of  “advertising” online is less about messaging and more about distributing tight little bundles--even thimbles--of usefulness and value.

10. Back in the beginning of the decade, we came up with the theory of the value exchange which, in a nutshell, means the value you get is proportional to the value you give. It will earn me a nomination for the 2009 Nobel Prize for economics--which will ultimately go to Jeff Bezos for his theory of inevitable profitability.
Jeff Bezos has done better than me. He did, however, ultimately achieve profitability in part by providing more value than all the other retailers and cloud service providers from whom he’s stolen market share. See you in Oslo!

This piece is part of a Collaborative Fund-curated series on creativity and values written by thought leaders in the for-profit, for-good business space.


GM O’Connell is cofounder of Tango Modem. In 1987 O’Connell cofounded Modem Media, the first online marketing agency. In 2004, he left the company, moved to Argentina with his partner and four kids and fly-fished his cola off. He returned to Connecticut 8 years later and is well rested.
In 2009, O’Connell cofounded Tango Modem, a new breed of mobile and marketing production outsource provider.

[Images: Nejron Photo, Obak, and Robyn Mackenzie via Shutterstock]

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10 Comments

  • Ablaze100

    Nice piece GM. I've already retweeted etc.....with my own annoying pre-roll of course.

  • J.G. Sandom

    Sorry, GM, but Modem was NOT the first . . . as you well know.  Not by a long shot.  And what about your other prediction:  If you are over thirty, "you just don't get it."  LOL

  • scott doniger

    gerry, having met you and worked briefly with you from the start in '93, i'm not surprised you came close on most and hit a few spot on. i went through the bust in SF in 2001 and have seen predictions come and go. curious to learn what your next peek around the bend reveals. 

  • scott doniger

     interesting point, gerry. but it's a tree falling with no one around -- nearly a billion members and most outside the US, even if 20% kill themselves it's still a healthy community. and, most important, it continues to evolve less as a social network than a marketing platform. there's much more to come in the platform play...

  • Gm Oconnell

    he scott, great to see you here.  more to come.  but i'm wondering if we will see a near term spike in 'virtual suicides' = self inflicted facebook membership shutdowns.  a few interesting implications there

  • Chris Mortimer

    GM,
    Really nice post - the Internet certainly was poison in 2002, no doubt about it. 

    Agree with most of your points. Point 7 I think a key take-away is not just that users go to the Internet to extract value but they also go there, often expressly, to create value. And it's certainly so that enabling users to capitalise on the value they create collectively and individually online is far from a done game - there are exciting times ahead there. 

    Rep management is also going to continue growing hugely and happily, at least I think, will force providers towards providing value. Basically because on a real-time web with customers who may be better networked to each other than to you, the voice of a "friend" will often trump your marketing message. You mention "joining the conversation" here as an approach to be replaced with something else - for me, I've often wondered about what comes after the mantra of "value". Working this out is a favourite pasttime :)

    And love the "thimbles" of value approach. 
    Cheers!

  • Gm Oconnell

    Thanks Chris!  I think value creation and exchange is the keystone to the whole enchilada, and you are dead on in terms of value creation on the part of "users".  Thanks for the nice words...

  • Thiago Valenti

    Well, regarding number 8, I could only say to you: Lomography.Long tail, yes, but you did say "no one", which is kind of boastful, sorry.

  • Gm Oconnell

    Hi  Thiago,

    Sorry.  It was a prediction and supposed to be extreme.  Sorry if you took it the wrong way.  no boasting intended, although that tail of yours is getting longer and narrower by the day!