Internet Industry Trends in Year 2008

The year 2007 went in a flash with not much to write about except iPod economy extending to iPhone, Facebook becoming darling of developers & speculators, sub-prime crisis and a failed summit in Bali to tackle almost irreversible climate changes. However, this should not desist me from thinking about what might happen in the New Year, and the optimist I am, here are some of the internet industry trends that I think will gain momentum in 2008.

• Ad $$ will start moving towards social networking as well

Social networking sites like www.facebook.com, www.orkut.com, www.myspace.com, etc have seen outrageous traffic jump in last couple of years but their business model has always been suspect. However, it will change this year and we will see them attracting a significant pie of online advertising dollars. Whether this will be additional money flowing in or money moving away from other destinations (traditional media, search advertising, other favorite online destinations, etc.) needs to be watched carefully.

• Ad Networks will gain momentum

Advertisers will take a harder look at the ROI from online advertising and the cost of placing these ads on various destinations and ad networks will establish themselves as a better alternative for running ad campaigns. The advertisers will continue looking for much better targeting and conversion.

• Web will become more ‘semantic’

Aren’t we all tired of just poking our friends or leaving scrapes on their wall? I think the web is a few steps away from becoming much more ‘semantic’ where it will be possible to do much more meaningful interaction than poking and it can make that leap of faith in this year. What kind of application or applications will do that and what will be the nature of that ‘meaningful’ interaction is not very clear to me yet but that inflection point seems to be in sight. And this trend is not limited to social networking only!

• Emerging markets will continue to attract attention

Footprint of internet economy will keep expanding in the emerging economies with more and more local services getting delivered or initiated on the internet. However, this growth will not be like the Internet’s growth in US as there are some inherent structural rigidities and limitations in most of the emerging economies. But a decent growth is plausible.

• Internet & traditional media convergence will gain momentum

Maybe someone will find a good and clean way to make money out of video on the Internet! The convergence of traditional media (TV, Newspapers, Radio, etc) and Internet will continue and Internet will carry more and more of traditional media content. The efforts will be on to find and define a ‘universal media’ but they may not see much result this year. But coming years will see it not only being defined but created as well – both for audience and advertisers.

• Mobile will overtake PC as choice of Internet endpoint

The small screen mobile will take over large screen PC as an endpoint of choice to access and interact with Internet. With phones becoming powerful and feature packed day by day and some of the biggest web applications like search and mail getting available easily on the mobile phone, it’s a natural phenomena waiting to happen.

However, serious business transactions will continue to be delivered from PC for some more time to go.

• New user growth rate will slow down in developed world across the board

The new user growth rate on all the popular destinations will go down across the board in the developed world as Internet penetration in those countries (esp. US) seems to have already peaked out.

• I will earn my first $ from this Blog

Well, the point is not about me really. The bigger point is that advertising $$ will start chasing focused audience that, by virtue of their online hyper activity, leaves a rich trail of data usable for behavioral targeting. And viral through referral advertising will gain momentum.

What’s in store for us in near future is not an easy question to answer and anyone else’s guess is as good as mine. I will watch these trends in the Internet Economy closely this year and may be some of my guesses will be termed as ‘predictions’ later!