Digital Spaces That Excite Me for 2010

Last year I was very fortunate to meet some incredible people involved in shaping the future of digital media. I enjoyed learning about what interests them, hearing their points of view and discovering what problems they were working on solving. Needless to say, digital media evolves at an astounding velocity so I thought this was a good moment to take a personal snapshot and share it with you. In no particular order, the areas of digital media & advertising that I’m most excited and interested in right now.

NWA – Numbers with Answers: There was incredible amount of M&A consolidation in the world of web analytics from 2003-2006. The result over the past few years has been a dark period with little innovation. The basic data retrieval systems, log-files, .js and packet sniffing have been in place a very long time yet the reporting output of these systems has not progressed much. Making matters worse many C-level execs, creative agencies and digital verticals do not trust analytics (newspaper sites reported not believing Omniture/Google Analytics data in the 9/09 ITZ Publishing survey). The bottom line is this: insights and actions are just too hard to cull. Presenting the data in more interesting ways has become vogue but this is not the answer. Legacy analytics solutions are asking (in the best case) old questions and (in the worst case) wrong questions. I sense that not only the questions but more importantly the answers will begin to change in 2010.

China - The Supernova Market: The Search and Display advertising opportunity in China has never been better. It will continue to gain velocity over the entire decade. There are 350 million Chinese on the Internet (vs. 200mm US).  Half of them are under the age of 25. Almost all of them (94%) are on broadband. That colossal user number...it is only a 25% penetration rate (vs. 72% US). Commercial web transactions are now starting to shoot through the roof.  There are some incredibly exciting web companies emerging from China and some really interesting US start-ups that are co-located in China. In 2010 I plan on being much more active in understanding this market and looking for opportunities in it. In fact, I’ve started already. It is simply shortsighted strategy not to.

Testing Reaches Critical Mass:  In the two years since I left Offermatica/Omniture I’ve been approached by about twenty start-ups in the testing and targeting space. Some of those companies have launched already and a good number more will emerge over the next year. This makes sense because two things have happened in the market. 1) Similar to Analytics, almost all the major players have been acquired leaving a void of innovation; 2) More marketers (especially mid-sized) understand the need to focus on post-click optimization. It seems pretty clear that this space will undergo a renaissance beginning in 2010 with a focus on lighter, faster and more simple solutions. I’m excited to continue having a role in the evolution of the testing & optimization space both on this blog and in my advisory capacity with a couple of emergent players including Performable.

Local Zooms In: This could just as easily been a blurb about the Facebook-Google war that has been going on now for over a year. Clearly Google has stepped up its game – its local pages have never been better and the UGC continues to increase in volume and curatical efficiency. I see this battle as critical to Facebook’s future. Yes I know how big they are and their growth rate, but their RPV (revenue-per-visitor) is incredibly low. They can’t sustain their business as a voyeuristic photo site for many more years. The key to their success is tied in developing local business pages attached to social graphs with the requisite search advertising capability. One of these two companies will crack this nut to the tune of $20B of incremental revenue over the next few years and $100B by the end of the decade. We’ve always known local is the Holy Grail. My bet is on Google because at the core all this local stuff is search, but it will be fascinating to watch this play out over the year.

New Display Formats: Without a doubt display advertising performance suffers from standardized sizes. The IAB has eighteen standard sizes for display ads yet 90% of ads are created in three of those sizes. The effect of this compounded with standardized placements of those sizes creates an insurmountable challenge for the attention of users. Part of the onus of solving this problem is on publishers. As masters of their domain they have the ability to innovate. Two start-ups I’m involved with are working in this area and seeing incredible results matching a data layer with breakthrough creative formats. The challenge of course is getting this to scale but the performance (we’re talking CTR of 10-20% in some verticals) warrants tremendous excitement as these companies go from bootstrap to chinstrap in 2010.

POS Closes the Loop: Two of the most mind-blowing conversations for me this past year were speaking with companies actively involved in using offline POS (Point-of-Sale) data in the digital marketing loop. This is “first-party” data at its finest. After learning about how they are working I have no doubt that the future of targeting, re-targeting, eCRM and increasing LCV (Lifetime Customer Value) rests in this area. The verticals where this data can be effective are limitless. The platforms where it can be used are ubiquitous. That is one giant market that can’t be ignored. This is but one space where I think we’ll see dollars shift from soft metrics to hard metrics around retention and increased customer value. The über competitive nature of 2010 and beyond demands it.