This blog posting is one of my favorite series, I’ve been posting a list of 10 digital marketing trends in ’11 and ’12.
So what’s expected to happen in 2013?
Brazil has the FIFA Confederations Cup in preparation for the ’14 World Cup, the US has a fiscal cliff to climb and together with the EU an imbalance on revenues and expenses to address. The NFL has some skulls to crack to fix their concussions problems, those employed in the US will hire the unemployed in foreign lands (read more outsourcing), more foreigners will purchase US land, buildings, businesses and IP, and of course, VP Biden is the newly assigned czar on gun control.
IMHO, 2013 will follow Amara’s Law: “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”
So here they are: The top 10 digital marketing trends of 2013.
10. Gamification – “All Play and no Work makes Jack a rich boy!”
9. Cloud computing enables scalability to allow for new experiences in video games
8. Digital Content across devices enables personalization that follows users across platforms
7. TV is old. It’s still king of the screens, but it’s content that folks want anytime, anywhere on all four screens.
6. The Smartphone begins its attack on plastic in mobile payments.
5. Tag Management becomes a competitive imperative
4. Users prefer mobile devices when reading magazines and shopping
3. Social Media Mainstream and Niches continue to grow, especially in Emerging Markets except China
2. Big Data will lead to consumer insights and smarter experiences at the speed of light
1. The glory goes to the man in the arena and not their bankers and consultants.
10. Gamification – “All Play and no Work makes Jack a rich boy!”
So have you seen websites that try to encourage your behavior by offering you a little badge for doing something? Foursquare gives you a badge when you check into the same place three times for example. Dashlane offers badges when you save passwords in their password and credit card maintenance software, and Fitocracy makes working out with your friends a competitive game. Users can Level Up by improving their bench press and earning a badge, post it to facebook and let the world know about their development.
As Daniel Pink will tell you in his book, Drive, human nature is best motivated by a sense of purpose, autonomy and self-mastery. These types of immediate rewards for accomplishing small tasks might seem like it’s meant for grade school kids, but the data doesn’t lie. Gamification increases engagement, helps users spend more time on site, and
that drives ad revenue and subscriptions since folks tend to develop a sense of being invested based on the recognition and the bragging they’ve done on social networks.
We’ve come a long way from that LinkedIn profile bar that showed 90%complete.
9. Cloud computing enables scalability to allow for new experiences in video games
First, I just want to put the video game industry in its proper context. The video game industry is larger than the movie and music industry in annual revenues and has been since ’05 and ’07 respectively.
The future of video games is colliding with movie technologies thanks to innovations in large scale, cloud computing. It’s financially and technically possible now for gaming companies to create 3D games that use “Academy Award” quality, visual-gaming environments and experiences.
I had a chance to meet Christian Vogt, COO of Pixomondo at the DellWorld conference in Austin’s super incubator CapitalFactory recently. Christian recently accepted the Academy Award for Pixomondo visual effects company behind Hugo Cabret, Game of Thrones, and the Hunger Games. We were talking at the cocktail reception about how gaming engines and visual effects technologies are overlapping in ways that could only happen as cloud computing makes it economically possible to pay as you go model.
Christian told a story that on a Friday, he had to place an order for 39 Dell servers so his teams could make a tight deadline. The good people at the German Dell factory assembled them over the weekend and delivered all 39 servers on Monday. How can any company keep up with that kind of demand for computing power? What happens to those servers once the scene is cut? Without cloud computing, the traditional model to scale up is prohibitive.
In 2012 we saw Skyrim, Dishonored and Assassins Creed III which had incredibly large gaming environments. There is a lot of investment going on in gaming engines and it’s an area that goes appreciated by advertisers and media folks generally.
In game advertising is something that will grow in ’13. And with cloud computing and ad serving engines, Advertisers can reduce the risks of in-game sales by avoiding large commitments prior to launch. Most big games have an online component and those ads can be changed out when users log into XBox Live or their Playstation 3 connection.
Imagine a video game that has the graphics that you saw in Hugo? I think we’ll see the first one in the end of 2013.
I remember in 1983 going to the Arcade for the very first time in my life and seeing a game that to this day I have never seen anything like it, it was called Dragon’s Lair (play it here). It was a cartoon that was put to a video game engine and looked like nothing else in the marketplace considering that I had seen at a friends house the game “Pong” from Atari.
8. Digital Content across devices enables personalization that follows users across platforms
Digital Convergence includes much more than video and traditional TV content.
I wanted to watch a movie on Netflix and I was in Brazil at a hotel that didn’t have a US 3 pronged outlet inside the room. I figured I would try to get through the movie even though I didn’t have enough power on my laptop to go the distance. I watched on my computer until the battery died, then pulled out the iPad and to my surprise, Netflix remembered exactly where I was in the movie and started playing from that point. When that died, I switched to my iPhone and finished the movie content that I got through the movie, and with absolutely no power in any of my devices.
So, if Netflix can remember where I was, they also know that I had the 3 devices with me, of course they know what I watched and they can make recommendations for future content.
What about apps like HBOGo, UVideos (from Univision), HuLuPlus and Amazon PrimeTime. You can watch these on most gaming platforms, iDevices, Android, some internet enabled TVs and of course computers. These companies stream video content to you and can measure your consumption, they know the device you’re using, and a lot about your internet speed, viewing history and purchase history. Using sophisticated recommendation engines they have the ability to personalize the ads, content and product recommendations you see on their digital properties. So this trend will have a second order effect when TV loses its throne.
Think what products Amazon will be able to recommend to you knowing what programs have watched in your home at each time of the day on each device and by whomever is logged in to Amazon.com within your household. Cool and Scary at the same time!
7. TV is old. It’s still king of the screens, but it’s content that folks want anytime, anywhere on all four screens.
Make no mistake about it, TV is still king. It commands the largest advertising budgets and folks still spend more time with the TV than they do on the other screens (5 hours of video daily or 33 hours per week and 98% of that on a TV).
“Television advertising may be doing just fine despite the slumping economy. But within the next five years, it’s going to be eclipsed by online ads, according to a new report from market watcher Forrester Research. By 2016, Forrester says, advertisers will spend almost $77 billion online, comprising 35% of overall ad spending.”
But mobile traffic is quickly catching up with TV consumption. With the introduction of 4G LTE bandwidth (it goes into Brazil in April of 2013), widespread adoption of smartphones in emerging markets and a 29% penetration rate of tablets in the US, consumers are ready to consume videos at anytime, anywhere on all of their devices.
Global mobile traffic has grown to 13% of all internet traffic. As a matter of fact, one of the media companies we work with in the US indicated that they had more internet traffic coming to them via mobile devices than via desktops. I think a lot more media companies will report similar findings in 2013
In emerging economies, the same trend is happening faster and on a national level. In India, mobile internet traffic exceeded desktop traffic in May of 2012. I expect this to happen in many other of the emerging countries.
6. The Smartphone begins its attack on plastic in mobile payments.
eMarketplaces are finally figuring out how to compete with Amazon one-click. Paypal recently allowed the ability to link your ebay and paypal accounts once you win an auction. Google checkout, Magento, & Facebook Credits are giving way to companies that are creating API’s that allow eCommerce systems to interface directly with payment gateways.
Strip, Braintree and Litle are lowering the overhead and enabling more easily programmers to more easily create customized account checkout processes than ever before. That may not sound like much, but any company that has tried to customize a shopping cart engine knows how difficult that can be. Companies like OpenSky, Stroll, GroupOn and Gemvara consider their checkout process as part of the secret sauce how to make money. They’re taking advantage of every opportunity to personalize content, up-sell and cross sell within the shopping cart.
One last piece of exciting news about payments is a firm called eBanx from Brazil which was recently added to the inspiring Endeavor.org Entrepreneurship organization. Their system allows non-Brazilian entities to accept Brazilian credit cards. Considering that most Brazilians do not have international ready credit cards, this opens an incredible market for companies wishing to increase their exports to the worlds 6th largest economy, which will soon overtake France and Germany by 2016 to become the 4th largest economy.
One last innovation that you need to look for is Near Field Communications and your smartphone. I believe that Apple will include NFC in either this or the next Gen iPhone (the 5s or 6).
The smartphone will replace the plastic card over the next few years.
5. Tag Management becomes a competitive imperative
Privacy, cost management for vendors that charge by server call, speed, and most importantly control are factors driving digital marketers to implement tag management solutions from Ensighten, TagMan, BrightTag, Tealium and recently Google Tag Manager. The long list to the right is a look at a media website’s tags which are visibile to anyone using Ghostery (a little add-in that shows you the vendors that websites use). Media companies generally use more tags than other industries, BusinessInsider.com has 56 tags on various parts of their website. Managing this volume of tags requires some software to keep things operating across the enterprise without having too many hands in the production environment.
Watch for more consolidation in the industry and a re-leveling of expectations of what the investors in these solutions will earn now that Google has entered the market with a free solution.
Having said that, digital marketers should look for qualified implementation partners that can integrate and implement these solutions (disclaimer: Lima Consulting implements and re-sells many of these vendors). There are lots of features that can enhance the capabilities of analytics tools and personalization tools. One of my favorites is the ability to run logic within the Tag Manager once the server call arrives at the server (like VISTA rules if you’re familiar with SiteCatalyst).
Tag management solutions make it a lot easier for digital marketers to switch between products. What that means is that when a digital marketer purchases a tag management solution it’s kind of like purchasing insurance. Once an analytics solutions design document (SDR as web marketers might call it) is architected; the time to implement the solution will be reduced considerably. The switching costs to move between IBM Coremetrics, WebTrends, Adobe Analytics (formerly Omniture SiteCatalyst) have been greatly reduced.
4. Users prefer mobile devices when reading magazines and shopping
When I gave my parents an iPad for the holiday, my guidance to them was that they use the iPad to consume content and the computer to create it. Now 29% of adults claim to have access to a tablet in the US up from only 2% three years ago (Source: Pew Research Center 1/12). Apple’s iPad has been a big success. iPads shipped 3 times as many iPhones during it’s first 10 quarters.
And what’s that meant to the media industry?
Well, Newsweek just printed their last paper magazine. Apps that are getting it right are using enhanced experiences such as Wired, and Sports Illustrated. However, the amazing app, the Daily, didn’t make it, so the subscription and advertising model is still very tenuous and it’s incredibly difficult for media companies to enter the market while also keeping pace with innovation. Yes, the barriers to entry are low, but growing the reader base and subscriptions to compete at the highest levels has never been more difficult.
And to e-commerce?
Black Friday shopping traffic went from 6% to 14% to 24% over the past 3 years. What this means is that analytics tools need to track what’s happening in digital shopping carts across multiple devices.
3. Social Media Mainstream and Niches continue to grow, especially in Emerging Markets except China
Privacy concerns were top of mind last year, and sure enough, Instagram lost a large part of their user base, some reports indicated as much as 25% of their user base. They went from 16MM to 12MM of their users. Put another way, if that’s $250 MM mistake when you consider the valuation Facebook paid for those users.
We will see more new niche networks such as Pinterest and Path. And we will see continued growth in LinkedIn, especially in emerging economies.
I think Twitter will IPO in ’13 and Facebook won’t return to their IPO valuation in ’13.
Take a look at the growth of LinkedIn in India and Brazil, two emerging countries with extremely talented professional pools of professionals.
Niche networks see strong affinity and super high time on site and loyalty metrics.
From religious sites (Mormon.org and Christiansingles.com) to music sites (welcome back MySpace and new introduction Sonifly) the things that will play for those interested in signing up for yet another social networking site will include having the ability to network with others in specific niches, for those who value privacy and want to own the data they post therein (Sgrouples), and active geolocation niche sites (foursquare and Loopt). Of course the competitive imperative for all these websites is a sleek new user-interface that is 3.0.
And we continue to see e-commerce and social networking converge.
Social commerce is more than f-commerce (Facebook) and the newly launched Facebook gifts. Amazon, Polyvore, Pinterest, Tumblr, and to some degree Groupon are offering apps that allow folks to share interests among friends and we’re sure to see a lot of innovations in this area in 2013.
The Great Firewall of China blocks out most Social Networking sites but state-sponsored sites offer equivalent services:
LinkedIn, Twitter, Google and Facebook have all had issues with the Great Firewall of China who as an official matter of public policy promote state-sponsored websites, social networking sites and search engines such as Baidu, RenRun, Wealink, Tianji and Kaixin001.
2. Big Data will lead to consumer insights and smarter experiences at the speed of light
How big is big data?
The amount of global digital data created and shared is 1.8 trillion gigabytes in 500 quadrillion “files” — and more than doubling every two years. That’s nearly as many bits of information in the digital universe as stars in our physical universe. And from 2005 – 2015E it’s expected to grow 9x.
For the next three years the singular story about a big date is going to be about personalization.
Marketers who understand how their customers are engaging with their brands, their products, their content and their advertising are going to be better positioned to provide improved experiences over the duration of the relationships they share with their customers. Companies that are able to easily place recommendation engines on top of several data sources that come from CRM, call center systems, Point of Sale systems, web analytics data and social sites, particularly twitter and facebook, will establish leadership positions. While the Adobe product call Adobe Target (formerly called Omniture Test and Target) has been the leader in this category we believe that Monetate, Unbounce and Optimizely will continue to make progress and begin to take away market share from Adobe Target.
One of the biggest innovations in the personalization space is the introduction of new mathematical algorithms and cloud based personalization software that allow marketers to present content, product and advertising recommendations to take place within 60 milliseconds. The largest of these vendors, Monetate, processed over $1 Billion in the Black Friday / Cyber-Monday weekend alone. It was Optimizely that helped in the Obama campaign raise $60 M in a single experiment.
Look for both Optimizely and Monetate to be acquisition targets by IBM, Adobe, Oracle, Seibel, SAP, Salesforce or other companies that have a major interest in taking action on the data stored in their databases.
These engines are working across the four major reasons why companies have website:
(1) To acquire
(2) To convert (think sell)
(3) to retain and
(4) to engage.
1. The glory goes to the man in the arena and not their bankers and consultants.
Entrepreneurship and technology start-ups are recruiting more grads from top-tier MBA programs than i-banking and management consulting. And the trend continues across many undergraduate and traditional MBA programs as well. There are so many start-ups that are revolutionizing or at least “Re-Thinking” the way that industry operates, there’s a democratization of products and services in ways that were hard to imagine even 24 months ago.
And it’s not just recent graduates that are flocking to digital marketing. A lot of the quant jockeys left Wall Street hedge funds (including me) to work in this field. The PhDs over at Efficient Frontier (now Adobe Media Optimizer) named the company after Henry Markowitz’s Nobel Price in Economics seminal work called the Efficient Frontier.
Many of these types of companies are coming from emerging economies, where creativity is incredible and access to capital is limited. While the need for VC will always be there, a limited and immature VC community in emerging economies is not slowing down aspiring entrepreneurs from getting started (GoFundMe, GoBigNetwork, Fundable).
If you haven’t heard of Endeavor, you need to spend a few minutes taking a look and what these world-class entrepreneurs are up to.
Companies don’t make money, people do. We’re getting the best and brightest in our industry.
It’s a great time to be a digital marketer and work with so many talented folks from across the globe!
I’m looking forward to a great 2013!
