Back in the late 1990s and early 2000, VC money was funding the advertising and IT investments because the Nasdaq crossing 5,000 was a sign that the payoffs for VCs would justify the investments. When the Nasdaq popped and the dot come bubble burst, VC dried up immediately, meaning that investments in IT and ads ceased as well.
The reason was that online businesses in turn did not see a need to advertise and boost audiences anymore because there was not much in the way of online ad dollars.
After the burst, CPC ads took off and advertising began to offer some kind of ROI. Today, we might see a slowdown in CPC rates but demand is strong enough that if one advertiser stops to bid on a keyword, there are more than enough willing to step in and replace said advertiser.
Why? Because there are far more people online today than back then, broadband reaches over 50% of homes, and online ads are a $15B ad industry…