Is a new dotcom crash on the way? It’s a danger for ad holding companies too

Is another dotcom crash on the way?

Shares in recently listed Baidu and Pinterest both plummeted yesterday, China’s Baidu after it posted its first loss as ad sales slowed and Pinterest because it lost more than expected. Uber’s float was a flop by any standards and even established and highly profitable players like Facebook and Google are facing stronger than expected headwinds. Apple, which is sort of in the sector, is battling problems on lots of fronts. Chiefly its missing mojo.

The people in the know, primarily Silicon Valley investors, have made their money already. It’s the suckers who buy following IPOs who lose it, when the inconvenient business of making money suddenly bobs to the surface.

All of the which poses a big problem for the ad holding companies too. They’re busy trying to re-model themselves to become handmaidens to today’s dotcom giants. They’re not big enough to compete properly with Facebook and Google so the trick, as they see it, is to try to either provide these behemoths with services or act as an intermediary between them and advertisers.

But the question for the ad holding companies is: does anyone need a massive organisation employing (in the case of WPP anyway) hundreds and thousands of people for such a reduced role. WPP his opening another vast campus in Paris to house some of them.

Maybe seen-the-light former WPP boss Sir Martin Sorrell, with his better, faster, cheaper” S4 Capital and former Havas boss David Jones with his You & Mr Jones (which arguably got to better, faster, cheaper faster) have got it organisationally right.

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About Stephen Foster

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Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.

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