This year was another exciting year in digital the space, with many of the predictions on my list of 2012 trends getting good traction. Pinterest grew to become the #3 social networking site. We saw the IPOs of many big digital companies, like Groupon, LinkedIn, Zynga, and Facebook – along with very mixed outcomes. We saw mobile computing continue to take share with the mass proliferation of smart phones and tablets, which included Google acquiring Motorola. We saw Apple continue their meteoric success in the first year post Steve Jobs. And, Congress passed the Jobs Act, laying the groundwork for crowdfunding for startups in years to come.
But, enough about 2012. Let’s talk about the key trends I am seeing for 2013:
Consumers taking control from brands/Brand shouting evolves to consumer listening via personalized omni-channel techniques. Brands no longer have control of a one-directional conversation with their customers, where they shoutout mass-marketing messages and force feed consumers “one-size-fits-all” products they may or may not want. Enter the era of omni-channel marketing, that puts the customer at the center of all business decisions leading to highly personalized products and user experiences based on brands listening to the desires of their consumers. This evolution will material benefit both the consumer, through personalization, and the brand, through a direct communication line into their customers. This shift will ultimately hurt and disintermediate retailers, who have historically controlled all communications with customers as the intermediary for the brands. Look for brands to evolve social media marketing efforts from buying display ads and pushing products, to buying social listening research to help discover what consumers want.
Advertising is shifting from demographics to behaviors. Demographics-driven advertising based on a target customer’s age, income, gender, education, etc. is quickly evolving into behavior-driven targeting, based on the psychographics, lifestyle behaviors, and passions of like-minded customers, regardless of demographics. As an example, a frisbee seller is no longer looking for 10-20 year olds who they are guessing would like to buy a frisbee based on historical company purchase data; they are better targeting people passionate about playing frisbee regardless of age. This is going to trigger a massive evolution in the way media sellers are going to track and serve their advertising to brand buyers, who are going to demand different types of targeting.
Big data evolves to smart data. We all know big data is exploding and creating tons of learning opportunities for companies. But, its creating lots of growing pains in the process, given the lack of sophisticated tools to funnel such data into actionable insights. As an example, brands no longer track overall sales each month; instead, they know sales by minute, by SKU, by customer, by location, by retailer, etc. So, look for companies with expertise in funneling big data into usable intelligence — with sophicated analytics packages or machine learning techniques — to do quite well.
CMOs becoming CTO & CIOs. Given the three major trends above, the successful CMO of the future is getting a crash course in information systems and technology development, to help them better design omni-channel platforms, better track customer data and drive insights from the firehose of big data coming in. And, more than ever, CEO’s are going to demand higher accountability and ROI from the activities within the marketing organization. It will be less important a CMO has a background in advertising or brand management, and more important they understand sophisticated information systems design. Technologies that can assist in creating these cross-channel CMO dashboards will be in heavy demand.
Second Screens/TV and Web Merging. Consumers are consuming content in materially different ways than they have in the past. No longer are they just watching TV at night, or working on their PCs during the day; they are streaming video onto whatever devices they want, and simultaneously engaging in social media or checking email on their smart phones at the same time, for example. So, the lines are quickly blurring between the TV experience vs. web experience vs. mobile tablet experience, and consumers are looking for ways to concurrently multitask on whatever devices they happen to be using (how they want, where they want, and when they want). We are not too far away from you being able to click on the video of Kramer while watching Seinfeld, which would take you to an e-commerce link to buy the shirt he is wearing in that scene. Or, seeing your Facebook friends’ reactions streaming real-time on the screen while watching the same football game. A very exciting time for consumers, but a very disruptive time for the big players in the media world.
Mobile dominates; desktop PC on life support. The king is dead, long live the king. But, this time, instead of the king (Apple) selling iMac PCs for your desktop, they are selling iPhone smart phones and iPad tablets for our busy lives on the go — lives that were never intended to be tied to a desk or tethered to a cord. The growth of mobile devices is fast taking share away from desktops, and thousands of apps are tapping into a user’s mobility and locality. If you are one of these app developers, just make sure you are building a real business model where you can quickly scale revenues in order to attract capital, as VC’s are certainly at the point of saying “if the word app is your business,” don’t bother calling.
Hyperlocal Marketing/In The Aisle. No longer will we be getting mass-marketing coupons in Sunday newspapers, or paper coupons after checking out at the store register, post-shopping. Now you will be using your grocery store smart phone app to scan barcodes of products as you are shopping through the store in real time, partly to enable one-click check out and avoid lines at the register, and partly to push you real time coupons as you are shopping. As an example, if you just scanned peanut butter, you’ll get a coupon for jelly. Or, say you bought Skippy brand for $4; you may be prompted to exchange it for Jif, so you can save $2 right now. Location-based technologies are moving beyond the street level to the store shelf level, which opens up a whole world of real-time marketing opportunities, disintermediating old school marketing techniques in the process.
E-Commerce evolving to discovery engines. People love to browse during their offline shopping experiences. To date, e-commerce is been less about browsing, and more about keyword searching for specific items in a very “solution driven” user experience. That is starting to change. The newest generation of e-commerce sites are now being designed to help you browse categories of products, helping you learn about new items that you may or may not know you even want. The startup StyleSeek in Chicago is a good example of that, helping to build your “Style DNA,” and recommending interesting fashion items based on your profile and the purchase behaviors of like-minded individuals.
Offline Retail Dying a Slow Death. Gone is Borders (thanks to Amazon), gone is Tower Records (thanks to iTunes), gone is Blockbuster (thanks to Netflix), and the rest of the other big box verticals are not far behind. Consumers do not want to get in their cars, head to a store, and hope you have what they want in stock. They want to know it is in stock and order it online with the convenience of shopping in their pajamas 24/7. I think the office supply guys like Office Max and Office Depot will be next to close or downsize stores, but still be in business with healthy e-commerce sites. And, Best Buy is teetering at the edge, given how many of their departments have been cannibalized by online alternatives, and how consumers are simply using their stores as showrooms to get educated on products that they will ultimately pull out their smart phones and buy cheaper online. I sure wouldn’t want to be a strip mall developer.
HR sites experiencing a major overhaul. I think we can all agree that the job search process is completely broken for both the hiring companies (sucking the firehose of inbound resumes, especially in a down economy) and for the job candidates (applying to tons of positions without any response). This inefficiency will hurt the major job listing sites, like Monster.com, and help next-generation job search sites that are creating more of an “eHarmony-like” matchmaking experience. Paper job postings and resumes will be replaced by videos, which tell a better story and are much more engaging. And, backend HR software packages will do a much better job of automating formerly manual steps in the hiring process (e.g., resume screening, candidate tracking, onboarding, training). I really see a lot of low hanging fruit in the realm of HR.
Niche Social & Business Networks. Yes, we are all still going to be using Twitter, Facebook, and LinkedIn for years to come, but they each perform a certain role in our lives. Niche social and business networks will begin to develop that will help us dig deeper on specific needs. For example, maybe you are a die-hard cook looking to engage with other cooks on the hottest new recipes. Another example: look at what Built in Chicago has done in terms of creating a very powerful business network of like-minded individuals in the digital startup scene in Chicago (at a much deeper level than LinkedIn is doing for all general business people). And, long term, it is exactly these niche networks, that will dominate marketers’ mind share, as they evolve from demographics-based to passion-based decision making.
Crowds and Clouds. How can you argue with the cost efficiencies and ease of tapping into crowds for human services and clouds for technology services? For example, why buy hardware and software licenses and hire expensive people to maintain such technology, when you can simply store your information in the cloud for a fraction of the price? We have already seen the success of sites like CrowdSPRING for crowdsourcing graphic designers. We are going to see niche crowds develop for every single human process within a business organization. Heck, my old company MediaRecall was crowdsourcing metadata writers for videos, as a needle in the haystack solution. That said, this does not bode well for long-term job creation in the U.S., as expensive jobs get replaced by cheaper, crowd-based solutions.
Crowdfunding kicks off. No longer are startups going to be required to hunt down accredited angel investors or venture capitalists to fund their startups. Many will go to crowd donation sites, like Kickstarter, or crowdfunding sites, like RocketHub, and raise their required cash from hundreds of mom-and-pop investors. Literally hundreds of these crowdfunding sites are in development, in every imaginable niche industry, to take advantage of the JOBS Act, which successfully passed in 2012. This will be good for startups that otherwise could not raise capital elsewhere, but I think there is a high risk that uneducated mom-and-pop investors will use their limited life savings on what they think is the next hot new startup, only to discover that 9 out of 10 startups funded on these crowdfunding sites may end up going out of business, and they’ll lose their entire investment. This could result in an unforeseen negative economic impact a few years from now, unless the proper startup screening and investor education controls are put in place, right from the start.
Privacy evolving into publicity. Every year, it feels like “Big Brother” (e.g., Google and others) is loosening up on their privacy policies to learn more about their users’ behaviors and interest, to give advertisers ways to better target their messages. Senior citizens hate it, and kids could care less. My take is this: as long as you are telling me you are doing it, and I have a chance to opt out if I don’t like it, I think opening up my user behavior will ultimately improve my user experience as I start to get targeted offers that really matter to me. But, look for “privacy policies” to evolve to “publicity policies” over time.
Let me know if you are seeing any other trends in the comments below. But, focusing your startup efforts in any of the categories above should help position you for long term success.
|About the author||George Deeb||@georgedeeb|
|George is a Managing Partner at Red Rocket Ventures, a Chicago-based startup consulting and fundraising firm with expertise in advising digital businesses, and an investor in the FireStarter Fund. George is the founder and former CEO at iExplore, and the former CEO at MediaRecall, both venture-backed startups sold to billion-dollar companies. George is the author of “101 Startup Lessons—An Entrepreneurs Handbook”, which you can read for free online. George was recently named to the Crains Tech 50 in Chicago, and was a finalist for “2012 Mentor of the Year” by the Moxie Awards. You can follow George on Twitter at @georgedeeb.|
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