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With the rise of the Internet as a mass medium, worldwide online advertising is expected to exceed $81 billion in five years. That represents a compound annual growth rate of approximately 21 percent.
In describing this new advertising, "ecosystem," the Piper Jaffray Co. Internet media and marketing research team refers to, "The User Revolution," in a new report by that title. The report defines user revolution as a major trend that is happening primarily with consumers, who are taking control of content consumption and branding.
"The historically passive consumer is changing rapidly, not only becoming more informed and confident about purchase decisions, but also increasingly taking control of the consumption of information and content that used to be distributed by networks, studios, publishers and retailers," says Safa Rashtchy, senior research analyst at Piper Jaffray. "We believe this will cause a significant rise in prominence of the Internet as a major content consumption and marketing medium."
There are 12 key themes unveiled by researchers in studying, compiling and developing "The User Revolution" report:
- Global online advertising revenue too is expected to reach $81.1 billion by 2011.
- "Communitainment:" The Internet has increasingly become a principal medium for community, communication and entertainment; three areas that have collided and are impacting each other's growth, generating a new type of activity, "communitainment." Communitainment is taking time away from other, traditional types of content consumption on the Internet, which includes browsing and online buying.
- "Usites:" The increasing popular category of user generated sites, which the researchers call, "usites," are driving traffic away from other destinations and pose a challenge to the advertisers and publishers. Among the most popular of these sites are YouTube and MySpace.
- The internet is now a mainstream medium: The world wide web is the leading medium used by people at work, and the second leading medium used at home, where it falls just behind television.
- Internet usage patterns are changing. They are beginning to favor usites, communitainment sites, and search, and migrating away from traditional portals.
- User Generated Brands: The consumers are taking control of content consumption and branding.
- Media Fragmentation: Advertisers increasingly will need to buy more inventory, from nearly all types of media, especially the internet, to have the desired impact.
- "The Golden Search:" Search has become the new portal.
- Google's dominance is likely to expand, partly fueled by a wide variety of non search related products that create a cycle of brand affinity for Google.
- Video ads will be the driver of the next major growth in brand advertising, and getting additional dollars shifted from traditional media to online.
- Ad networks are experiencing increased demand due to increasing Internet fragmentation, desire for more targeted inventory, increasing usage of networks for branding, and increased site visibility.
- Ad agencies are rapidly evolving into more sophisticated, technology-savvy entities that combine best of breed offerings.
"Like many major social trends, the changes will not happen overnight, and we expect the User Revolution, which has just begun, to last several years before the new regime is fully established and the old statues have all been toppled over," Rashtchy concludes.
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