There is no question that ad money is now chasing consumers who have turned to the Net over traditional media. This past year has seen a spate of acquisitions by Google, AOL, Microsoft as well as agency holding companies. WPP, for example, appears to be gobbling up interactive/digital shops at a fast pace. The independent digital shop is fast going the way of the dinosaur.

Add to this mini-frenzy the desperation of old-line media companies worried that their businesses are losing traction, moving quickly forward to absorb high traffic content sites …. blogs, social networks, wireless and niche initiatives, often without a roadmap, and you have the ingredients for runaway valuations in these subcategory companies.

Some of the valuations are running away with themselves. Facebook valued at $16 Billion having yet to find a business model that works!? Google with a “conservative” market cap ($224 Billion) almost seven times that of Yahoo!

It appears many of these subcategory valuations have been ramping up to the late 90’s levels. Underperformance by companies like Facebook or MySpace will likely happen. When it does, history will repeat with a significant correction.

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