Stock markets are often irrational, but having said that it is nevertheless interesting to note the recent fall in share prices among the few UK publicly listed marketing businesses engaged in the digital sector. And it is particularly so when we learn that JP Morgan Chase is launching a $500m fund to invest in social media, fuelled by investor interest in Facebook and Twitter.
Over the last few months the prices of shares in Digital Marketing Group, Fuse8, Hasgrove and Progressive Digital Media have either slipped backwards or stagnated, while most mainstream marketing agencies have enjoyed something of a recovery.
Of course it does not necessarily follow that a growing thirst for shares in digital media is incompatible with a historic decline in the valuation of publicly listed digital marketing businesses. It may simply reflect the start of another investment bubble in dotcom media.
And the drop in share price of a handful of digital marketing companies may be entirely temporary (the FTSE All-Share Index hasnâ€™t been doing too well lately either). Alternatively, it may indicate that some challenging questions are arising about the future for stand-alone digital marketing enterprises.
Have investors in the marcoms sector â€“ and, more importantly, the clients of marketing agencies â€“ decided that the long term future of digital technology as a marketing tool must be as an embedded component of broader based marketing agencies? Even if that is the case, surely there will continue to be a need for separate technology consultancies like Sapient to develop and maintain the technical infrastructure of digital communications?
Bob Willott is editor of â€śMarketing Services Financial Intelligenceâ€ť at www.fintellect.com.