Dismal earning reports and layoff announcements have again stunned online companies. The latest victims of the online bust are Chinadotcom's rebranded e-marketing arm, Mezzo Marketing, interactive advertising and marketing companies Modem Media and Spike, and online advertising network DoubleClick's media division.
Yet, the closures and cutbacks have come at a time when many internet firms argue they are finally beginning to reel in clients, blaming short-sighted business plans for recent cuts. In fact, Mezzo Marketing and Modem Media had both signed new clients, while Spike had been awarded a number of contracts in recent months. If anything, the spurt of new work did bode well, showing that many brand marketers were finally coming to grips with the internet's potential as an advertising medium.
Indeed, while the economic downturn has caused companies to cut their ad spending, many have turned to alternative marketing tactics such as email, online and mobile. This growing confidence is evident as clients such as Procter & Gamble, HSBC and Coca-Cola discover new ways to brand their products and services online. At the same time, research houses such as the International Data Corp (IDC) have also projected growth in the sector. IDC announced that the online ad market in Asia-Pacific would grow 46 per cent a year to US$702 million in 2004 from $225 million in 2001. Even online portal Yahoo bucked the trend when it finally broke a long streak of losses in the second quarter of this year to post net profits of US$21.4 million.
But, until more companies are able to offer a long-term commitment to the internet, more closures and consolidation will be the fate hanging over other players the rest of the year.