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Think Big. Move Fast.

Some observations from Bipul Sinha about the internet and media industry in 2011.

1.  Year of Social Utilities

With over half a billion users and open graph integration, Facebook is the Internet with social graph at its core. This is as much of a game-changer (due to a new distribution model based on the social graph) as going from offline to the Internet was in the 90s. A number of startup companies, I call them social utilities, are leveraging the social graph to potentially disrupt traditional online businesses such as dating, e-commerce, travel and recruitment. Yardsellr, Branchout, and Mertado are examples of such companies and we will witness a few scale companies emerging out of this space in 2011.

2.  Display Advertising Enters a Golden Era

Innovations in media transaction platforms along with a better understanding of target audience have brought an amazing level of scale and efficiency in display advertising market. The use of data and technology will disrupt the premium, guaranteed media buying segment in the coming year resulting in an open, transparent marketplace for audience-based transactions. This marketplace will help bring price equilibrium to media supply and demand thereby further increasing the marketing budget spent on this medium. Startups to watch in this space are Legolas Media, Krux Digital, and BrightTag, among others.

3.  Social Media based Discovery Traffic Breaks Out

In the traditional marketing parlance, Google directed web traffic represents bottom-of-the-funnel users who are ready to take an action now. The aggregation of such high-intent traffic is what makes Google a formidable force on the Internet. However, the emergence of social media in the past few years has created a new web where people are the nodes, connected through the social graph. The traditional advertising formats such as display lack both context and intent to be effective in the social media environments. New advertising platforms are emerging to enable advertisers to leverage engaged followings and connections on social media for brand and discovery advertising. The resulting web traffic represents top-of-the-funnel users who are interested in learning more about the products/services, but not ready to commit just yet. This discovery/intent web traffic will grow fast in the coming year to become a significant source of users/customers.

4.  TV Goes Social via Mobile Devices

Since the advent of the Internet, media has been abuzz about web-connected living room. There have been several unsuccessful attempts to bring the web to TV, but the user experience hasn’t matched the lean-back, simple remote controlled TV watching. The new-generation mobile devices such as iPhones and iPads could bridge the gap between the web and the TV, and make TV watching a truly social experience. A number of startups including Peel, Umee, and Miso are attempting to turn this vision into reality and the implications are huge since the winner would essentially influence the content promotion and consumption. I believe that TV will finally go social in the coming year and we will witness a breakout company in this space.

5.  Online-Offline Commerce Accelerates

The astronomical growth of Groupon and LivingSocial* in the past two years heralded the integration of local businesses into the efficient marketing machine of the Internet. This online-offline commerce trend will accelerate in the coming year as more startup companies figure ways to leverage location capabilities of the smart phones to drive foot traffic to the local businesses. This acceleration would largely be driven by discovery via location based social experience sharing. The explosive growth of Instagram is an early sign of the experience sharing trend and we will witness a whole lot more in the coming year.

The New Year will create tons of opportunities. Are you ready?

*A Lightspeed Portfolio company

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  • Sujay

    Good thoughts. I am very curious though on long term sustainance of these ideas.

  • Jonathan

    All brands are / will become social utilities. If facebook is not a search engine. It is a community and should / will / be the real economies of scale to become its own (new brand name) social group deals broker. Groupon & Living Social are the Emperor’s New Clothes, you sign up with hotmail only to mark in the junk folder looking intermittently out of greed in case you need teeth whitener on the cheap. Bad investment they should have sold. Google can do it through FaceBook !!
    Display advertising will be controlled by the best bid platform yet to be offered. Not a newbie.

  • Erin Andrews

    Is LivingSocial the only Lightspeed portfolio company mentioned in the post? Looking at LinkedIn, it seems like you guys are an investor in Mertado, too. Full disclosure would be appreciated.

    Other than that, I love your trends. I’m looking forward to 2011!

  • Bipul Sinha

    Mertado is not a LSVP portfolio company. I invested in the company at my previous firm.

  • Bipul Sinha

    Scale, network externalities, and technology underpinning usually drive sustainability for consumer businesses.

  • Jonathan

    Bipul Sinha@
    What is your view of Facebook entering the e-commerce social group deals broker arena, have they missed what seems to be a natural organic move.
    Would you sell out of Groupon & Living Social ASAP?

  • Bipul Sinha

    Facebook has resources and scale to enter any adjacent space it wishes to. However, it is a social platform company and local commerce is not its core competency. I would not worry about Facebook.

  • Jonathan

    Hi Bipul Sinha@
    Have to say it might just be one of those times that they missed a trick (it happens) as it was once all about finding income streams = Local commerce deals on a national / international level is stone dropped without ripples 4 advertisers. I would give Rupert a call re MySpace if I was advising Living Social !! : ) One cannot but worry about FaceBook.

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  • http://www.salesbump.com/video Etesh Mangray

    Hi Bipul,

    There is one other factor that will also drive social media based discovery – the cost of doing business using Google is going up – I am hearing stories of higher CPC rates for e-commerce sites due to new search features like Google Instant. If you can’t get found organically you have to buy ads. I like the idea of services like http://www.getcheep.com or http://www.thefancy.com, where people are driving discovery. I wonder if more focused communities around specific topics could be even more attractive to advertisers looking to drive lead gen. For example Cosmetics, or Luxury Travel, or Eco Products. Let me know what you think. thanks

  • Kirk Dover

    Thanks for sharing your observations. Display advertising may reach a golden era, however search advertising will still be king.

    Kirk Dover
    Free Classifieds

  • http://www.getzpayday.com DawnOMccullough

    Great insights Jeremy. In addition to point ‘2’ – I would also suggest that brand search money will shrink with more insight on attribution – and go towards search driven display/extension.

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  • http://www.advertiseontelevision.com Vera T

    Regarding #4: It’s true that TV may be going more social, trading the venerated remote for a phone app. Now, nearer the end of 2011, it doesn’t appear that the predicted break-out player has manifested itself, even among the biggest players in the smart phone arena. Nevertheless, the interest expressed by these companies goes to prove that TV (which has the largest viewing audience and represents the greatest number of daily hours spent with media) is still the holy grail for many internet players, who desire to position their platforms as a step to the dominant home screen. Players like http://www.cheap-tv-spots.com help SMBs and larger companies advertise on TV economically and efficiently.

  • http://www.advertiseontelevision.com Vera T

    Etesh, you make a good point about advertising on Google. It is getting more expensive. Many retailers, online or offline, are finding that television advertising continues to be a bargain, both in overall spend and in the number of eyeballs per dollar. Instead of reaching 1 or 2 local customers with web ads, the same money could reach thousands of customers with a single TV spot aired locally.