Too Little Value

If you have ever attended a business plan seminar, an elevator pitch class or  a forum on how to pitch your company to investors you will realize a common theme exists – your ideas is providing a solution to what problem? Another way to describe this concept is what value do you provide to your target audience? Generally this concept is held in high regard – except in the world of the Internet business.

Almost on a daily basis there appears an entrepreneur with a new widget or concept that has little market value. One of the most recent examples is Cuil, a search engine launched last month by a few x-Google employees claiming a better search engine. Even if technically it is true, to the average user it offers no visible advantage. And because the search results return in a manner that is unfamiliar on the site it appears different but offers no real advantage. Might be some brilliant technology folks, but did they ever ask what problem they are solving for their respective target market?

The Internet is in its second major phase of evolution driven by the Web 2.0 platform that is enabling a radical change in how content is developed, distributed and received. One result of this shift to digital, is a massive shift in online advertising spending driving a great number of new “media” companies and concepts. From what I can tell most of these are touted by the early “techadapters” but never cross the consumer divide to reach the mainstream. At a macro level that means lots of supply, little demand. I am surprised there is not a widget that is tracking how many new widgets are created every day.

There are some compelling new media models like Huffington Post that focus on providing all media that would appeal to a certain demographic. The value proposition to Huffington is that it not only generates some new content – but it aggregates content from hundreds of sources making it easier for the user to keep up to speed. Another is MovingOffCampus.com that focuses on helping college students better manage life off campus – pretty straight forward value proposition and full of advertising opportunity.

With advertising still climbing online we can expect to see a great deal of innovation (good and bad) in the next two years and regardless it will be an interesting experience.

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