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Technology | Online Ads Come of Age, or Maybe Not
AOL's Kevin Conroy has emphasized the need for compelling ad delivery.
(By Rick Maiman -- Bloomberg News)
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Many local venture capitalists, still mindful of the dot-com bust, are skeptical. In a recent survey by the Mid-Atlantic Venture Association, 54 percent of the investors questioned said deals are "slightly to considerably overvalued."
John Burton, co-founder and managing general partner of Updata, a Reston venture capital firm, said that's especially true for companies selling wireless services.
"The ads will be delivered through some mobile network owned by the Sprints, by the AT&Ts and the Verizons of the world, and local and smaller ones," he said. "They are notoriously expensive to market to. Embedding yourself in one of those networks is a massive undertaking."
Others point out that a recession is becoming more possible in 2008, and the ripple effects could undermine the advertising model of many Internet start-ups trying to gain ground as big national advertisers scale down their budgets.
Overall, the new year ushers in a local technology industry in flux.
The Bloomberg-Washington Post technology index shows a 1.9 percent gain for the sector this year, compared with a 16.9 percent gain for the S&P Technology Sector.
Four months ago, AOL and Sprint dominated the Dulles corridor -- wounded, for sure, because of internal squabbles and customers leaving to competitors -- but still giants in their respective industries and arguably the best-known tech companies in the region.
In September, AOL announced that it would move its headquarters to New York as it transforms itself into an online advertising company.
And two weeks ago, Sprint's new chief executive, Dan Hesse, said he is considering moving Sprint to the Kansas City area. He lives there, and most of the company's workers remain there from before it merged with Reston-based Nextel in 2005.
