As reported here before several times, the third revision of the internet boom is about to collapse because its advertising value is based on warm bodies, not specific customers, and so it is selling ads to debt-strapped cubicle slaves instead of viable consumers.
The industry has finally begun to formally recognize the failure of dot-com 3.0 by noting that advertising is not working, which explains the declining relevance and profitability of social media and other nu-web entities:
“I think the advertising world going forward is going to be filled with fewer, better ads,” Deep Focus CEO Ian Schafer said on the latest episode of Recode Media. “The display advertising market is going to crater. By giving away stuff for free for so long, we’ve created an ad economy that is bigger than it should be,” he added. Schafer says there’s a untapped value in “nonstandard” ads, meaning branded content and other forms of advertising on platforms such as Snapchat, Musical.ly, WeHeartIt and Imgur.
As the advertising industry recognizes that selling ads by the pound through services which appeal to bored workers and other people without power, influence or abilities, it will turn instead toward the bedrock of advertising in America: the (hopefully soon again) prosperous middle class. Social media, blog and video advertising is great for capturing bored office workers but useless for selling anything bigger than mugs and tshirts.
In the bigger picture, the dot-com 3.0 crash shows us the economic pitfalls of transition from a Leftist demand-based economy to a Rightist supply-based one: the Leftist method increases demand for currency, inflating it but creating phantom value, and return to a supply-side approach then forces a recalculation of value based on production, at which point all the ephemeral wealth disappears.
Trump is managing this process by carefully introducing economy boosters for every change he makes that subtracts away false economy, including cheap immigrant labor and federal hiring, so that the transition is gradual. While most are crowing over the Dow hitting 20,000 today, what this may signal is the market re-organization in anticipation of some rocky thresholds on the way back to production-based money.