If you work on the published figure of 40 million Facebook accounts, we can work out that Bill Gates reckons your Facebook  account is worth a whopping $250, and if you work the same formulae through, MySpace is worth a staggering $50 billion.  So why does Bill think he can get over $250 out of your pocket?

The reason why Microsoft are willing to pay such a massive price is because they are looking to introduce the internets new advertising phenomenon Web 2.0. This is the interactive advertising program which knows where you are going before you, the program which will adapt the adverts it shows to suit your mood, the time of day and where you are in the world.  So will it actually work?

The $500 million price has surprised many people in the industry and while Bill is a man who knows what he wants, and gets it in the end, he has really gone out on a limb with this one.  There is very very little room for error on this one, and Microsoft know it.  Is Bill right? Is the market wrong?

While you would be foolish to bet against Bill Gates, there are very few in the industry who could make such a massive investment pay. 

The growth of Internet marketing is faster than other medias. Many organisations are switching over to the form of internet marketing in this e-commerce world. Their balance sheet show high profits because of the money saved on sales force. Manual sales force can only operate in a limited territory. Whereas e-commerce has no boundaries and business expands from local to national and international markets. Cost of entry of Internet marketing has is lower to other traditional media. Hence many companies have switched over from radio, television and print media to internet.

There are multiple benefits in internet online marketing. There is a greater sense of accountability and transparency for the advertisers. Unlike traditional media, web analytics facilitates tracking making it responsive and more efficient.

However there are some drawbacks. Both businessmen and Customers will have to be internet savvy. They should be exposed to new technologies unlike traditional ‘offline’ media.  Otherwise they fail to get the message. Slower internet connections damage the business. Often Websites with complicated and large content fail to entertain customers. Though internet facility is available on dial up mode or on mobile devices, they feel difficult to download the required information. Ecommerce is effective only for non-tangible products. Business on physical goods becomes difficult over internet. Customers would very much like to sense the product they wish to buy whether they buy vegetable or cloth. They may like to taste, touch, smell or try the product. Owing to this difficulty, ecommerce entrepreneurs have started offering free-trial money back offer and liberal return policies for their products so that customers can return the product on proof of dissatisfaction and get whole of their money returned to them, with no questions asked.