Lessons for dot.coms from class of 2004

Comparing today's most popular websites to those of seven years ago shows just how fickle users can be
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The Independent Online

The rise of the social networks has this year translated into valuations that have some fretting about another internet bubble. Facebook is valued at $50bn, while Twitter and Zynga are rumoured to be worth about $10bn. The online discount site Groupon is now valued at $15bn.

These sites are hugely popular in the UK. According to data compiled by Nielsen and Ukom, the industry organisation set up last year to oversee the measurement of online traffic, they are prominent in the list of 50 most popular web brands.

Yet the statistics offer a stark warning tale to internet brands and investors. In the same report seven years ago, the data shows that the biggest brands included Friends Reunited, Freeserve, Lycos and Kelkoo.

Dan Cryan, senior analyst at Screen Digest, said: "Internet audiences are simultaneously conservative and fickle. Where there's a site that translates well to the internet, and that could offer anything from groceries to email, customers will continue to use it." Yet he added: "If there is a newer and better version of an existing service, it is incredibly easy to be usurped and replaced. Especially if you're asking for money and a free service comes along."

The Nielsen/Ukon report tracks unique UK visitors to websites every January, and was launched in 2004. As well as a change in the companies on the list, the rise of hits has been staggering. In 2004, Microsoft's MSN portal topped the list with 16.6 million recorded hits, which "would barely make the top 10 today, such has been the growth in online traffic," Nielsen said. It saw less than half the traffic that Google received last month.

James Smythe, general manager of Ukom, said: "The process of getting online has never been easier and people are much more comfortable with the process."

He picked the rise of social media among the 50 most popular sites as one of the key trends since the start of the survey, saying that over the past seven years, there has been "huge growth in the use of sites built on social content, where we mostly find contributions from people we trust".

In 2004, the only social networking site to make the list was Friends Reunited. Now, social media companies make up a fifth of the top 50 sites. The most popular is Facebook, which did not exist in January 2004. It is now the third largest web brand by UK visitors. It first made the survey in 2008, when it debuted at 12th, but now has more than 26 million unique hits every month from the UK.

Other examples of the rise of social media, Nielsen said, include YouTube, Wikipedia and Tripadvisor.

Twitter was the 38th most popular site in the UK. It has been in the frame as a potential takeover target since the turn of the year, with talk that investment bankers had valued it at $10bn. Dick Costolo, the newly promoted chief executive of the company that made a $45m loss last year, remained quiet on the company's valuation at a trade show in Barcelona last week, and would only say it was "already making money".

Mr Smythe said: "The web has always made it easier for people to feed their fundamental desire to socialise, but the critical element of trust in social online environments has now become mainstream".

Another social networking phenomenon to emerge that did not exist at the initiation of the first survey is Zynga. The social gaming company behind Farmville is ranked at 48th on the list. As users have rushed to virtually plough virtual fields investors have followed, and the company is believed to be in the late stages of talks over an investment that would value the company at $10bn.

Mr Smythe said: "A greater proportion of these companies have profitable business models. We could expect in a few years that everyone in the top 50 will be profitable."

Yet Mr Cryan warned: "Internet time is as much about having a short memory as speed of evolution." He continued: "The dream is to find the next Google: a company that serves a real need and can monetise that service. But not everyone can be a Google and some will get their fingers burnt".

Despite the rise of social media, its standard bearer, Facebook, has not been able to overhaul Google as the most visited site in the UK, a position it has held since 2006. The research group Hitwise found that Facebook had more UK internet visits than Google on Christmas Day, the first time it has been the most popular website in the country. Yet in January, Google received 34 million hits to Facebook's 25.9 million. This did not include the hits to the Google-owned video sharing site YouTube of 17.8 million. Seven years ago unique visits to Google, then the third most popular, totalled 13.4 million.

Search engines feature highly in the table. While Microsoft's Bing has been lifted to second position by being bundled with MSN and WindowsLive, Yahoo! still ranks as high as 4th – the same position it held in the original report – with 21.1 million hits in January. AskJeeves, now Ask.com, has fallen from 10th to 12th.

Nielsen said that the online world was "increasingly reflecting the offline world, with the web's 50 most popular brands consisting more than ever of businesses established in the 'real world'."

Seven years ago only 18 of the top 50 sites had an established presence offline, including Argos, the BBC and Tesco. Now that has increased to 25. Yet only nine companies with an established "real world" presence away from the internet that made the inaugural table remain as popular today.

The highest sector rise was in media, up from nine sites in the top 50 in 2004 to 16, a statistic Mr Cryan called "staggering". Telecoms and internet service providers suffered the biggest casualties, down eight companies, including NTL and Blueyonder. Five technology brands dropped out, such as Real and Macromedia, along with four travel service providers, which included Lastminute.com and easyJet.