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02.13.09 2009 Internet Investment Guide  By Jeremy Welch J.P. Morgan recently released the Nothing But Net Internet Investment Guide for 2009. The purpose of the guide is to provide Internet industry investment advice for clients for the coming year. The information and advice inside, a mix of statistics and trend outlooks, is also valuable for those investing in social media. The guide is broken down into several sections, including outlooks by geographic region and industry, and comes in at a whopping 340 pages. In this post, I've extracted important quotes, data, and trend predictions related to social media marketing. Newspaper Market Share Loss Acceleration and Blog Growth First, we believe consumer news consumption behavior is changing. Magazines and newspapers usually have a significant lag time between the news occurrence and its publication, as the process of writing, printing, and distribution is complex. Therefore, instead of reading newspapers, consumers are becoming more dependent on the Internet for breaking news. Between real-time update services like Twitter and information syndication by RSS, consumption patterns are definitely changing. Marketing dollars are following the eyeballs, but are not all going straight to display advertising. Users of social media services want to be engaged, and as these services continue to grow, spending on social media marketing should also grow. Secondly, we think newspapers have failed to manage their cost structure. In our view, they try to be the source for all news, and we think this model is unsustainable.
Newspapers can't compete with the long-tail of information from niche blogs and websites available on the Internet. The ease of information distribution facilitated by the Internet enables bloggers to focus on niche topics. A business model that provides an umbrella for many niche sites to operate under, used by blog networks such as Federated Media and Gawker, works with the long-tail instead of against it. Finally, blogs have existed long enough that they are becoming mainstream, with some bloggers making their living off the blogs. As a result, we think some bloggers and publications have become as trusted a news source and opinion provider as traditional media. Blogs such as Huffington Post for political news or Techcrunch for technology and start-up news are key examples of trusted blogs. Techcrunch now has over 1 million readers, measured by RSS subscriptions alone, and has spun out other related blogs, services and products such as a gadget blog, a database of technology companies, and an annual conference. New Approaches to Monetizing Social Networks - Virtual Goods and Social Ads Social networking sites, as a group, have not been able to command very high advertising rates for their page view inventory; the supply of "bulk" page-view inventory from social networks was a contributing factor to the stagnating CPMs for graphical ads over the last two years, and we do not believe demand has yet caught up with this supply. The report identifies a variety of monetization approaches for social networks, including performance-based advertising, virtual goods, linking to classifieds or eCommerce markets, and paid premium memberships or a la carte features. Facebook recently unveiled several new products under the umbrella term "social ads." The ads take a basic image/text combination, video, or virtual gift and add a comment box below. When a user sees one of the ads, that user also sees all of their friends' comments on the ad. Continue reading this article. About the Author: Jeremy Welch is a contributing writer for IgniteSocialMedia.com. |
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