The New Bubble ... Internet?

[andviv]

Let me start opening here by saying that I do believe that we will continue going from bubble to bubble, that is human nature and that is a discussion for another thread (we already discussed that a couple of times before)

So, my point: I think I've identified with certainty what the next bubble is (not big news here, many here already know it).

Internet based businesses.

Not only having your online store, but also affiliate marketing.

How do I know for sure this is the case?

Because the same people that were selling $5,000 to $50,000 seminars and training courses about how to make money in real estate 3 years ago, or investing in the dot com and the market 10 years ago, are now teaching people how to put up dropshipping sites and coming up with online marketing and other techniques, and just following the same scheme to sell and upsell their training.

First you get a free material (not too many PDFs these days, mostly a youtube video, between 5 and 20 minutes) with the explanation of how much money you make and how easy it is. Then you subscribe to their program (probably anything between $99 and $499) where they give you something else to chew on... but wait, there's more... if you want the real money-making techniques, the one that brings $50,000 a month of passive income, invest in their $35,000 to $50,000 program (of course, you will make that money back in one or two months if you follow their program).

What's gonna happen is, in my opinion, the same as usual... thousands of people will go out and will start opening stores and affiliate campaigns. bidding up adwords and destroying markets by rendering them unprofitable.

The market for websites wil heat up more.

So, two-fold question for the group here:

Do you think this is actually happening already and there is still time to profit from it; and, how do you plan to profit from it?

 

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[MJ DeMarco]

I agree, yet disagree. I think your analysis is partly the reason why blogging is dying. To many people getting in for the wrong reasons as they were foretold by some proclaimed internet guru that "blog your way to millions" was likely.

As with any bubble, you want to be on the RIGHT SIDE of the bubble.

Don't join these affiliate programs, OFFER THEM. Get the masses selling your shit.

Don't be in the herd -- serve the herd.

I think this is part reason why I haven't embraced the whole "social network" thing -- it puts me in the herd. I strive to be someone who rises above it.

With respect to MLM's, why people invest their heart-and-soul into someone else's brand is beyond me.

 

[andviv]

I agree, yet disagree. I think your analysis is partly the reason why blogging is dying. To many people getting in for the wrong reasons as they were foretold by some proclaimed internet guru that "blog your way to millions" was likely.

Good point. Rep++

As with any bubble, you want to be on the RIGHT SIDE of the bubble.

Don't join these affiliate programs, OFFER THEM. Get the masses selling your shit.

Don't be in the herd -- serve the herd.

Correct, we agree 100% here.
I was also thinking on the businesses that handle the fulfillment of dropshippers. Also, the companies that will provide all the tools for these businesses. They will commoditize (is that even a word?) the tools. Don't go digging for gold, sell them the shovels.

With respect to MLM's, why people invest their heart-and-soul into someone else's brand is beyond me.

They don't invest in someone else's brand... they are investing in their dream. That is the key, how to sell them the vehicle that could lead them to their dream.

 

[mtnman]

Plenty of time... people are always looking for leaders.

The opportunity to stand up in one area of those defined market spaces is far from over IMO.

The time to get in? Absolutely.

 

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[hakrjak]

Dude, this already started years ago. I have a successful Ebay store that was selling close to $10k a month of product, and then as soon as the articles started coming out in Entrepreneur magazine about how to start an Ebay store, started dropping immediately. My site now sells like $250 a month. The herd killed my business, basically.

Cheers,

- Hakrjak

 

[Russ H]

As a guy who made some decent cash teaching "how to" things to others, it seems to me like that's a good place to cash in.

Thing is, ya gotta get to your audience (people who want to learn, and have $$ to pay you), and you have to establish yourself as an expert (so you need referrals/reco's from other highly respected experts).

I actually don't think the "how to" thing is a bubble-- it's something RK has made money on time and time again. Learn how to do something, then teach others how to do it.

You just need to keep learning new things-- things that will "bubble"-- and be established to teach those things when they hit critical mass ("bubble") and everyone and their brother wants in!

5 Steps:

1. Learn new hot thing
2. Make pile of $$
3. Teach others how
4. Make BIGGER pile of cash by teaching
5. Repeat (go back to step 1)

-Russ H.

 

[hakrjak]

I think this is part reason why I haven't embraced the whole "social network" thing -- it puts me in the herd. I strive to be someone who rises above it.

You mean trying to do business on the social network sites right? Because you're on Facebook as much as anybody I know! ROFL

- Hakrjak

 

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[andviv]

Dude, this already started years ago. I have a successful Ebay store that was selling close to $10k a month of product, and then as soon as the articles started coming out in Entrepreneur magazine about how to start an Ebay store, started dropping immediately. My site now sells like $250 a month. The herd killed my business, basically.

Yes, agreed. Like I mentioned in the original post, it is not big news. So, what are you doing about it?

I actually don't think the "how to" thing is a bubble-- it's something RK has made money on time and time again. Learn how to do something, then teach others how to do it.

Agreed, and that is not what I am saying... training others, the how-to, is a proven process. The bubble I am referring to is the internet business.
The reason I am mentioning it is that one of my main indicators has been going up more than usual lately... the number of "training programs" out there is just huge, and coming from some questionable sources.

The guru that was selling training in RE two years ago is now talking big time about e-commerce stores and affiliate marketing. His process is the same, the topic is different.

Next? taxi drivers talking about their online business that is making them rich.

Other than providing training to the masses, what else can we sell them?

 

[Andrew]

Bubble, maybe.

Internet advertising rates (and advertising in general) have really been decimated in the past 12 months. This has opened a lot of room for affiliate marketers to buy traffic that was otherwise too expensive. To some degree this has opened room for new guys to come in.

That said, online marketing is not linear. If you have something that is working you can gobble up a big chunk of ad inventory for that market. No extra effort is involved as long as you can cashflow it. That doesn't necessarily leave much of anything for newcomers.

Take paid search (like Adwords), for example. On Google you have 11 ad positions tops. Lets say you have 20 ad buyers. Only a handful will get any significant amount traffic. 3 or 4 of them will get 90% of the traffic. Add in another 1,000 ad buyers, and you will drive the traffic costs up a bit. That can choke the margins of the guys on top for a bit but there are other cards that can be played. The existing players have an edge up on newcomers in terms of knowledge (what works, what doesn't) and they probably have the money to bankroll it.

On a place like eBay you can just keep listing more items. You have a fee but its linear. The same is true with real estate. It is expensive, but you can just keep adding inventory by building new homes (who knows how much oversupply of housing and commercial real estate there is now.)

I think a big part of the reason "work from home/your computer" is big now is because of the unemployment rate. The stuff is being pushed hard because people are buying it. That doesn't mean even 1% of buyers are doing anything. 99.99% of these buyers won't stomach losing $100 on advertising costs much less $20,000.

It is the very same people that these newcomers would compete with who are pushing the work from home products. That should say something. This shit is worth billions of dollars of sales a year and has been for many year (before the web it was stuff like Amway; exact same market demographics.)

Real estate was different. The inventory = a house. Home ownership was essentially mass marketed through dirt cheap easy loans. "Just sign here for this $500k loan, it doesn't if you make $2k a month." In the online world the inventory = advertising. The market dynamics are very different. Your leverage is whatever your credit card company is giving you. Once you've spent the money there is no asset left behind.

That said there is more competition coming in. I've seen it myself over the last few years. Very bright players have moved in to the space and it has pushed out the guys who were there just because they happened to be in the right place at the right time.

If you ever read the book, "The Black Swan", you'll know what I mean when I say this is extremistan.

 

[Redshft]

I agree with a lot that has been said here. This is why I will refuse to run any affiliate ads on my site (probably a small section for Google ads though). What is the point of saturating your viewers with the same ads they see on every other site they visit? They will/are loosing their value. I will make it a point to only run ads that are "personable" to the users (private ads), even if I have to cold call potential advertisers, I want it to be win/win for both parties; the advertisers get eyes seeing their banners, and the viewers are actually interested in the fresh ads.

 

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[TC2]

Personally I don't care if there is bubble or not. It's never too late to start something totally new or something already done thousand times.

It's like marathon race to me. There are two kinds of people who will win the race even there are thousands people to compete.

1. Start first and stay first. Apple's iPhone and Twitter are the best example. They start something no one did. They changed people's life and continue stay at front of the race.

2. Start last, catch up and stay at front. Facebook, Vizio, Zappos and Google are the best example. There are MySpace in the social network industry, Sony in HDTV industry, Shoes.com in the online shoe store and Yahoo in the search engine industry.

My point is this. It's never too late to start in a crowded race. The key to be at the front is to forget the people behind you and find the next target in front of you to catch up.

I agree 100% with MJ. The biggest winner is the one who control the race. That's something I am learning. It's hard though!

 

[Jonleehacker]

I don't think that it is technically a bubble. A bubble is like tech stocks or the housing price run up, and the only advantage to identifying a bubble is to: get out, short it, or move on to start looking for the next one.

With "make money online" what you have is the beginning of a long term trend, and yes, Andres, the money is in selling the "pick axes" to the gold miners.

The huge opportunity that I see is to teach real business principles (like MJ's do you have a successful entrepreneurial premise) based on solving problems, helping or entertaining people and get people out of the "get rich quick" mindset that most of the gurus are milking.

I think there is a spot up there at the top of the heap for someone preaching integrity rather than fleecing people's greed and that opportunity will persist whether it is a bubble or not.

 

[andviv]

The reason I see this as a bubble is because the market desperately needs a new place where to invest their money. I am thinking that providing free training, charging for a seminar and then selling a turn-key solution (for example, create 50 online stores, enough SEO as so they rank decently and then sell them to the trainees) where people only need to run the store, that will be very profitable. Buy 10 domains (less than $100/yrs) plus an online store (say, $1,000 each --or better, pay for one that you can replicate for each new site using OSCommerce or similar templates) and put in place the dropshipping contracts/agreements. Work on backlinking, article marketing, some adwords campaign (go cheap, $500 per store) and, after 6 months you should have a decent-ranked site for a micro-niche. Turn around and sell these stores for $10K each. See the numbers? now figure out a way to outsource the same tasks and do it for 50 sites. Heck, maybe 100.

The free training/education will bring you the customers. The paid course will weed out those that are not interested. Sell the turn-key solution so the lazy get something going.

I see that as a very interesting opportunity.

Any other "pick axes" ideas out there?

 

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[kurtyordy]

Any other "pick axes" ideas out there?

I am not sure if I can articulate this well enough to convey what I mean, but here goes.

I imagine what the gurus will be selling will be fairly boiler plate. Meaning that by and large, you will get pretty much the same info from them all with some variation.

So if their process is a+b+c+d=$$, then create a c.

For example, if a large number of them are using the strategies employed in the thread How to get High PR backlinks, then I would form a forum that targets what niche most will be targeting. (my money is on electronics)


In other words, create a tool they will all want to use to achieve their goals. If the tool is good, it will outlast the bubble.

 

[mtnman]

My thinking on this is kind of complex, but I can give an example of one thing below.

I think there are truly many areas within your "bubble" currently.

A question I have been asking myself for months now...(finally coming up with the right answers)

Currently I do many things, but one is providing a localized service to businesses. This includes web design, branding, and marketing. All focused online for the most part, and I do not perform all areas of service myself.

Point being, my success rate was instant. I had the knowledge and I was willing to give first. My rapport and reputation was very highly valued at the start, and VERY much appreciated.

So much so, that I didn't get it at first.

So I started riding the wave. I reached a plateau personally, as the excitement wore off, and I was wondering "what's next"?! Though I still had, and do have, a customer base to service.

So, I began looking at "how can I" take this value and position that these local people are going nuts for, and offer it to the masses.

Dangit I've gotta go! arggg. I'll come back to this later.

 

[andviv]

yes Matt, you MUST come back to this later... what a tease!

 

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[John]

Note: I'm in the content website publishing business. My comments below apply to content sites and don't necessarily apply to other areas such as e-commerce, affiliate marketing, etc.

In my main niche alone I've seen 1000's of new sites opening up in the last year, a good portion of which are backed by large corporations or venture capital funding. While some of these companies are doing things right, the majority are just throwing tons of money at a poorly run business hoping to take market share from the already entrenched sites (such as my own).

I think there's a lot to be learned from the previous Internet bubble (around 1995-2001). Many companies had such high overhead and low profit margins that they went bankrupt when the market declined. The few companies in each niche that had low overhead and were able to continue operating suddenly had almost no serious competition. These are the sites that are still around and are the powerhouses of the web today.

I think the trick to riding out this bubble is to keep your overhead as low as possible, continue to keep your brand in front of people, and continue to pick up traffic and market share from your overextended competitors as they drop like flies. Once things pick up again you'll be in a great position.

 

[andviv]

John, thanks for your perspective.

Come to think of it... I don't think I want to build it and own it for the long run. I rather target an exit strategy where others want to buy my sites. What do you think of that approach?

The way I see it is, we will have a short period of time that will be a 1999-part II, but the buyers won't be the big corporations through crazy IPOs, I think it will be the work-from-home crowd. People are looking for a plan-B that helps them bring more income. That is the market I thin can be quickly targeted.

 

[John]

In my opinion, the best strategy right now is to build sites, grow their traffic levels as much as possible, and hold them until the ad rates go back up. Since this type of business is usually valued at a multiple of annual profit, when the rates go up the value of the site will jump dramatically.

The other side of this is that right now you can pick up existing sites with high traffic but low revenue for great prices. Hold them and operate at break-even or even at a slight loss until the market turns back around and then sell or hold them and keep the passive income.

Selling cheaper sites to work from home types could work out great, but in my opinion it's not really related to taking advantage of the Internet bubble as much as taking advantage of the bad economy.

If I'm understandig your demographic correctly then you'd probably need to sell a large volume of sites at low prices to make it work.

 

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[ITA]

It's an interesting perspective, but doesn't this stuff also works? I mean, people DO get rich in real estate, and on the net...the people who don't are the people who aren't working hard or smart enough. No?

 

[andviv]

Today anybody is an internet guru... just like years ago everybody was a real estate guru... hmmm coincidence? me thinks no.

 

[BryanC]

Are you trying to say that me claiming I'm an internet trillionaire destroys my credibility in some fashion?

 

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[Knowledge Kick]

Are you trying to say that me claiming I'm an internet trillionaire destroys my credibility in some fashion?

ahahaha

 

[BryanC]

I agree that the Internet may experience various booms and busts here and there but, I personally do not believe that will kill the whole ecommerce scene.

Like everything else, once the fools realize who they are, they'll lose interest and go on to something else.

Riding the bubble up and creating a business based around the excessive demand MAY make you rich, though, if you're timing is right and you truly believe that the bubble is coming. MJ said it best, you need to be on the right side of the demand bubble supplying the insanity. LoL.

 

[CashFlowDepot]

This is an interesting thread.

There has been a huge shift in income for many business types - including internet marketers. One BIG name guy I know said his sales are down 30% from last year.

But those who are constantly coming up with new ideas, offer fresh products, new content and working on building relationships are doing just fine.

It's those who are trying to sell the same old rehashed stuff that are dropping like flies.

Copy cat marketers are coming out of the wood work.

But just like MJ said, if they zig, I zag and that keeps me ahead of the herd.
Also, because I work with Jack Miller and Peter Fortunato who each have more than 40 years of experience there's no way this new bread of real estate marketers can even come close to quality and quantity of knowledge.

I also participate in a real estate investors joint venture group. (I don't think most of them are really investors, they are just marketers in disguised as real estate investors) They are all complaining that they can't fill a seminar room anymore - yet ours sell out. I guess they aren't making any money with real estate anymore because all they do is work on the next product launch - most of which fizzle no matter how much sizzle they add.

The reality is there is opportunity ALL AROUND you. But you need to know your customers wants and needs, and can provide the solutions, you will always be in business. You may need to give more bonuses than before, offer more quantity and better quality than ever before - strive to always be the BEST and the bubble can't catch you.

Jackie

 

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[MJ DeMarco]

You'll find bubbles within the industry but I don't think the industry as a whole will experience a bubble event. The example I used is blogging. If you follow the strategies that have ease of entry, this is where you will find vulnerability. When 1/2 the books are related to "blog your way to millions", this exposes the herd mentality -- a place where I really don't want to invest much of my time. Rewind even further, and it was Ebay.

The early adopters made all the money and when the herd followed, it saturated that particular niche and created "bubble-like" circumstances. Lower margins, lower profits, more competition.

I like to spy ideas that aren't on the "masses" radar.