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.
jonathanmendezblog.com 
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