In addition to resolutions, the New Year always brings countless predictions about the year ahead.  I enjoyed reading eMarketer's 10 Key Predictions for 2007 earlier this week and wanted to share a few of my thoughts.

Starting from the top (eMarketer's headlines with my commentary) . . .

1. Online ad spending will hit $20 billion 

The shift in advertising spending from offline to online will continue apace, with online spending growing at 13-14X the rate of offline spending in 2007.  This massive shift of dollars will drive advertising innovation as advertisers and publishers alike search for more creative ways to connect with and influence consumers.  With advertising efficacy on the decline due to fragmentation, overexposure, and consumer distrust, expect a huge chunk of these dollars to go to user-generated content sites, social networks (see #3), and other more authentic and relevant advertising mediums.  

2. Some money and lots of hype for online video advertising 

The top dollar acquisitions of YouTube and Grouper in 2006 were watershed events for online video, but it isn't yet clear to me how impactful online video will be as an advertising medium.  Consumers are short on time and attention and marketers are increasingly focused on ROI.  Online video advertising must offer consumers something more than just another product pitch and a few chuckles.  Video review communities like ExpoTV may appeal to advertisers and their sponsorship dollars because of the educational value of the content but finding telegenic amateur "talking heads" worthy of sponsorship should be a challenge.  Nevertheless, as eMarketer predicts, we should expect a ton of buzz.  

3. Social networks are set for a $1 billion windfall

See #1 above.  Advertising spending on social networks has increased steadily over the past several years and 2007 could be its breakthrough year.  "Social network" has become a catchall term for community-oriented sites, so it will be interesting to see a breakdown of social network spending by site at the end of 2007.  In any event, this trend is great news for Bazaarvoice, as we are investing in services like syndication and enhancements to our SearchVoice landing pages solution to provide our clients with new "social advertising" opportunities that leverage their customer-generated content assets.    

4. Downloadable games will get hotter  

While I'm not qualified to make any predictions for the gaming industry, online or otherwise, the growth in popularity of downloadable games and other on-demand gaming services underscores my earlier comments on consumer time and attention.  The need for instant gratification will drive new applications and business opportunities in both online commerce and digital content, and this same need is one of the key factors behind the decline of advertising efficacy, which itself is a factor behind #1, #2, and #3 above.  Confusing, isn't it?  

5. Thirty-seven million strong: a 'minority' bigger than Canada 

The number of Hispanic and African-American Internet users in the US will top 37 million in 2007.  The mainstreaming of the Internet continues, with the online population looking demographically more similar to the total population each year that passes.  This isn't a trend, it's simply the natural evolution of the medium.  And among other things, it means that online marketing will become even more fragmented as marketers work to develop campaigns that speak effectively and authentically to minority Internet users.  

6. Mobile TV arrives

Mobile TV, wow.  Same as #4.  I'm not qualified to say much more, other than I can't wait to watch my Alabama Crimson Tide on my phone!  

7. US B2C e-commerce will cruise past $200 billion 

This is great news for clients of Bazaarvoice.  The 2006 holiday season delivered as expected, with almost $700 million in online retail spending coming on a single day – December 12.  As more consumers move online and others continue to increase their online spending, e-commerce sites will face increased competition for consumer trust and attention.  To deal with this, retailers must differentiate. Offering great – not just good – products is just a starting point for building trust.  Read #8 . . . 

8.  The retail power of word-of-mouth

2006 was the year of user generated content and 2007 will be the year that retailers begin to aggressively leverage what UGC and WOM can do for their business, from infusing the "voice of the customer" into online marketing programs (as several of our clients have successfully done) to leveraging social media sites for SEO benefit, now termed "social media optimization."  For ideas in this area, check out Patty Seybold's excellent post, Are You Leveraging Customer-Generated Content?

9. Broadband services will matter as much as speed

Bundled voice, video, and data packages are finally on the broadband menu and eMarketer predicts that by 2010 40% of broadband households will subscribe to VoIP.  In addition to offering enhanced performance, broadband providers are on the hook to deliver integrated services that could eventually include robust content, commerce, and community offerings.  

10. DVRs pump up TV viewing 

This is certainly the case for my household.  eMarketer predicts that DVRs and video-on-demand services are leading us to watch MORE television not less.  We're just watching TV in different ways than in the past.    

In summary, if even half of these predictions play out as expected we're in for an exciting year.  In particular, I was thrilled to see #8 on the eMarketer list, as Bazaarvoice's mission is to help our clients leverage the power of customer word-of-mouth.  In early 2008, I hope to see a long list of examples, case studies, and other retail WOM success stories from 2007.  

6 Responses to “Big Predictions for 2007”

  1. The prediction of shift of online spends to user generated content sites seems accurate. We have seen significant interest from CPG companies to leverage user forums to get feedback on their products as well as to test product ideas with such user groups.

    Leveraging social content and providing a more interactive shopping experience has also become a prerogative for leading retailers as online retailing takes on a much larger role in terms of sales contribution, customer acquisition and marketing. Usage of web 2.0 technologies is also gaining momentum as explained in this article http://www.infosys.com/industries/retail-distribution/multi-channel-commerce.asp

  2. The prediction of shift of online spends to user generated content sites seems accurate. We have seen significant interest from CPG companies to leverage user forums to get feedback on their products as well as to test product ideas with such user groups.

    Leveraging social content and providing a more interactive shopping experience has also become a prerogative for leading retailers as online retailing takes on a much larger role in terms of sales contribution, customer acquisition and marketing. Usage of web 2.0 technologies is also gaining momentum as explained in this article http://www.infosys.com/industries/retail-distribution/multi-channel-commerce.asp

  3. The prediction of shift of online spends to user generated content sites seems accurate. We have seen significant interest from CPG companies to leverage user forums to get feedback on their products as well as to test product ideas with such user groups.

    Leveraging social content and providing a more interactive shopping experience has also become a prerogative for leading retailers as online retailing takes on a much larger role in terms of sales contribution, customer acquisition and marketing. Usage of web 2.0 technologies is also gaining momentum as explained in this article http://www.infosys.com/industries/retail-distribution/multi-channel-commerce.asp

  4. With respect to downloadable games, I completely agree. Being a bit more of a gamer than Brant I’m familiar with the downloadable content on the new platorms and have used the XBOX360 Live service for the past year. Downloadable content gives gamers the chance to experience their childhood (Super Mario Brothers) try out new games (demos are available on XBOX360 and PS3) and to get instant gratification with minimum costs (ranging from free to $15 per game). Now with all three of the major console games allowing downloads (and PCs have had this for a while) I agree that you’ll see significant growth here. Couple that with the high margin that digitally distributed content has and both consumer and producer will be happy.

  5. With respect to downloadable games, I completely agree. Being a bit more of a gamer than Brant I’m familiar with the downloadable content on the new platorms and have used the XBOX360 Live service for the past year. Downloadable content gives gamers the chance to experience their childhood (Super Mario Brothers) try out new games (demos are available on XBOX360 and PS3) and to get instant gratification with minimum costs (ranging from free to $15 per game). Now with all three of the major console games allowing downloads (and PCs have had this for a while) I agree that you’ll see significant growth here. Couple that with the high margin that digitally distributed content has and both consumer and producer will be happy.

  6. With respect to downloadable games, I completely agree. Being a bit more of a gamer than Brant I’m familiar with the downloadable content on the new platorms and have used the XBOX360 Live service for the past year. Downloadable content gives gamers the chance to experience their childhood (Super Mario Brothers) try out new games (demos are available on XBOX360 and PS3) and to get instant gratification with minimum costs (ranging from free to $15 per game). Now with all three of the major console games allowing downloads (and PCs have had this for a while) I agree that you’ll see significant growth here. Couple that with the high margin that digitally distributed content has and both consumer and producer will be happy.

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