14/12/2004 - 21:00

BRIEFCASE Tim Treadgold - Internet bubble puffs up again

14/12/2004 - 21:00


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TIME, it seems, really does heal all wounds, with signs emerging that the investment world is gearing up for a second dose of dot.com mania. This time, we are told, it will be different (isn’t it always?) because broadband has turned the Internet into a viable delivery tool – but even with that promised improvement there is no guarantee that we are not in for a re-run of the Internet bubble that sucked billions of dollars out of innocent wallets and made fools of us all.

There is no sign, yet, of a repeat of the 1999 stampede where company spruikers were offering everything from home-delivered lettuce, avocado and carrots, to Internet-based road maps for truckies to plan their delivery routes.

But there are unmistakable signs that the net is back, and this time it is poised to (a) actually deliver on some of its promises (b) cause a spot of damage to a few so-called old-economy businesses and (c) trigger a knee-jerk reaction from that same hardy band of promoters who made a killing last time and are getting ready now with their new investment offerings – once the current fad of flogging moose pasture, dressed up as a mineral exploration company, passes.

Proof that the wheel is turning full-circle came from two sources which caught the eye of Briefcase last week. First was the routine ANZ Bank monthly job survey. Second, a measure of annual advertising revenue in the US. Both showed that business on the net was growing faster than on traditional outlets.

The ANZ’s monthly survey of job advertisements showed an overall rise of 2.8 per cent in November compared with October – while the monthly comparison year-on-year was up a spectacular 36 per cent. But the real message lay in where the advertisements were placed, and that breakdown showed that newspaper advertisements were down 1.8 per cent, and Internet advertisements were up 3.7 per cent month-on-month, and a whopping 44.5 per cent year-on-year.

In absolute numbers, Internet job numbers hit a record 117,581 in November.

The message from the ANZ report which, unsurprisingly, did not receive a lot of coverage in newspapers, is that employers (and employees) are developing a great level of comfort in using the net for their purposes. Jobs are a natural for the search-power of the Internet.

The worry for traditional businesses is that other critical advertising categories will follow. Real estate appears to be another natural, along with cars and big ticket electrical and home furnishings. All that needs to happen is for the market to develop the same level of comfort as seen in the jobs category – and then watch out.

The second point confirming that the net is back came in a survey of advertising revenue in (of all places) China. British-based magazine, The Economist, looked at where dollars were flowing in the Chinese advertising market but as a reference used the latest US advertising revenue figures.

Market leaders in the US remain newspapers ($US45.5 billion of advertisements annually), followed by television ($US43.3 billion), radio ($US19.5 billion), magazines ($US12.4 billion) and the Internet ($US7.3 billion).

Two comments can be made about the Internet’s share of revenue. First, it is smallest. Second, it barely existed as a category five years ago but already commands 5.7 per cent of the annual market – an astonishing penetration rate that shows consumers are responding, and advertisers are learning how to master the technology.

Which all points to investors being given the chance (again) to join the Internet game. This time around there will be the usual bunch of dodgy floats, but there will also be a handful of genuine Internet-based businesses - backed by proven business models, some of which are even starting to generate profits (shock, horror).

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CHRISTMAS is upon us so Briefcase went hunting for gift ideas and bagged two. First recommendation, you cannot go past chocolate, simply because whatever you buy today will be more expensive tomorrow.

Continuing trouble in the Ivory Coast, which accounts for 40 per cent of the world’s annual production of cocoa, has sent prices soaring for this essential food (don’t dare call it an indulgence).

Last week, the price of cocoa on the New York Board of Trade hit $US1,710 a tonne, double what it was a few months ago thanks to political violence in that rather sad west African country. Over time, the price of raw cocoa flows into everything made of chocolate, except white chocolate – which is a monstrous fraud anyway.

Second gift suggestion, but in a completely different category as chocolate, is to do with what the good folk of the US do for their festive season – buy a new gun (or two), stock up on discount ammunition, and kit out the kiddies in camouflage gear, just like dad when he’s off killing things.

Briefcase, which checked to see that it was not a joke, discovered that at the Texas-based Academy Sports shop you can get terrific seasonal bargains such as a 500-round brick of Remington Thunderbolt .22 ammo for $US7.30 (better get two, you might need 1,000 rounds to pacify the neighbours over the festive season) or a Rossi rimfire rifle and shotgun combo for $US118.86 – easy to switch barrels and kill a variety of animals, and other family members.

But, the best for last. This really is the ultimate in US taste and says more than anything else about why “they” are different, and frightening. At Academy Sports you can buy camouflage gear for dad on his deer (and neighbour) hunting expeditions, and camo gear for toddlers.

Yes, dear reader, for $US7.63 you can kit your two-year old daughter in a “Lil’Hunter Girls’ Camo Dress” (pictured above) or put your baby in a camo romper suit.

Why? Perhaps so they can look like dad, but perhaps so they can get an early exposure to US culture – and learn early to kill things.

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"Every man serves a useful purpose. A miser, for example, makes a wonderful ancestor." Laurence J Peter (1919-1988)


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