[Web 1.0: Old Habits Die Hard is part two in a series of blogs that will summarize a presentation I delivered at the Northwest Arkansas Marketing Summit on September 20th concerning using technology to grow your business.  Part one can be read here.]

I graduated from college in 1995 with degrees in Communications and Political Science.  I typed my papers on typewriter and did my research in a library.  After graduation I moved to Dallas.  It was during this move while listening to the radio in the U-Haul that I heard a story on the news that peaked my interest in the Internet.  Not long after I joined the 16 million other people who were online in 1995. 

Early innovators like Jeff Bezos recognized the value of the Internet as a platform for buying a selling merchandise.  Ebay came along and helped us get rid of the junk we were buying online and didn’t really need.  AOL helped us get online in a safe and easy manner, and Jerry Yang started Yahoo to help us find stuff online.  These companies were having IPO’s and serious money was being made.  Investment bankers and VC’s were throwing money at any idea that ended in .com.  The world was good with the Internet and by 2000 more than 361 million people were online!

So, what went wrong that led to the .com crash in the early part of this new millennium?

Web 1.0 was characterized by an extreme rush to simply have a website.  Most sites were focused on content or commerce.  The revenue model for content sites was selling advertisement and the model for ecommerce sites was about owning the customer which would eventually, or so it was thought, lead to profits.   Sites that sold stuff paid the sites that put content online to send people to their sites so they could sell them stuff – many times below cost and without charging for shipping.

In other words, the television model of advertising was carried over to the Internet where content was paid for by advertisement.  The low barrier to entry in getting a website online and the rapid growth of the Internet escalated a problem that we are now seeing played out in television.  The collapse of Web 1.0 could be summarized by the following problems that now plague television:
 

1. The number of sites and people online increased dramatically lowering the value of an ad impression (If you advertised online during this period you’ll recall that pricing was based on the number of times your ad was viewed).
2. People are extremely un-loyal to a site.  It was very easy to find lower priced sites for the same item by doing an online search.  In other words, there was no such thing as “owning” the customer.
3. When we have too many choices and limited time we ignore stuff – especially advertisement.  (How many of you record your favorite TV show and watch it later so you can skip the commercials?)

The Internet business model that assume people would pay attention to their advertisements and remain their loyal customers forever crashed miserably.  But, even before the Internet crashed, some companies had already seen the light and were laying the foundations for what we now refer to as Web 2.0 – the topic of my next post.