In the April 2 WSJ, Kevin J. Delaney wrote a great article about what happens when tech entrepreneur’s Google sized dreams don’t live up to their expectations. The point of the article was there aren’t a lot of companies that are going to turn into billion dollar businesses but there are lot that will turn into successful small businesses.

Having worked through the first .dot com crash, I can say that the Internet business environment is completely different now. There are tens of thousands (or more) small businesses such as Fruition that have become stable businesses, with employees that stick around, and clients that appreciate their services. What we are seeing in 2007 is a transformation in the economy which now allows more small businesses to operate than ever before because of the Internet (including blogs, affiliates, e-commerce). While the Wal-marts and Homedepots of the world may rule the commoditized markets effectively eliminating the mom and pop stores, the value provided by entrepreneurs providing services that are not easily reproduced in third word countries is tough to replicate or place a value on.  I believe that is what this wave of Internet growth will be remembered for. The small business that sticks around and takes the place of the corner drug store for this generation.

If you get a chance look up Mr. Delaney’s article, it’s great one.

Since 1995, the SEO business has gradually gained momentum. However, SEO is still is a small percentage of online ad spending. With few exceptions, SEO firms typically generate less than $5 million a year in revenue. Most firms bill on a monthly basis while some do stick with per project billing.

The typical SEO firm contract is fairly similar throughout the industry. It will usually include optimization of the site, keyword research, link building, and some form of content writing. Continuity of services across the SEO industry and the fragmented market make the SEO industry a prime target for consolidation. The consolidation of SEO firms will begin to happen this year. The first SEO firm that can build a solid book of business, either through a roll up or asset purchases, could become a major player in the Internet marketing services industry.