30 trends that will shape European web & digital media business in 2012

30 Trends that will shape European web & digital media business in 2012

Current and upcoming business opportunities for European

web eco system, derived from US VC-Deal-Flow 2011

by Marc Ziegler, March 2012

30 trends that will shape European web & digital media business in 2012 2 Marc Ziegler

Why this report?

  Yes, there are hundreds of successful European, truly innovative startups out there, but the global web & digital media business is clearly dominated by players from the USA. The market dynamics and all major trends are created by US tech companies, whether we like it or not.

  Goal of this analysis is to grasp these market dynamics in digital media business at an early stage in order to derive business opportunities for European startups prior to “common sense” observations.

  This analysis suggests that US investors have a higher risk taking culture than their European, especially German counterparts and have an acute awareness for future web opportunities.

  Therefore, this analysis focuses on investments, primarily carried out by US investors, although our prime source (Crunchbase) includes some investments by non-US companies that we have not sorted out.

  The findings of our analysis do neither claim to be complete nor free of overlaps, nor to be a guide for cloning other hot startups. This report is simply a useful tool for founders and investors to challenge own market observations – not more, not less.

Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia


How we conducted the anaylsis

•  Tech companies funded between Jan-Dec 2011

•  2 investment funding sizes: 100K-10M and 10M-1000M

•  95% US investors, 5% European

3.939 Mn US$

•  Aggregating search results into 12 most relevant digital media segments

•  Sorting out tech companies with no media connection (e.g. security, energy, nano)

•  1st: quantitative analysis •  2nd: identification of accu-

mulated new business mechanics within each digital media segment

•  Derivation of trends

1 2 3 Clustering search results Identification of trends



Thesis 1: USA = „Home“ of digital media innovation

(Nearly) all successful business models in digital media originated in the US



Thesis 2: transfer USA => Germany (Europe)

2002 2004 2006 2008 2010 2012

Social networks

Portals Paid search

Couponing

LBS 12-18 months

9-12 months

3-4 months

Crowdsourcing

Vertical search

Successful business approaches in digital media (here some examples) always migrate to Germany/Europe – time lags are shrinking

Targeting

Auctions

Reverse auctions

Online classifieds

UGC

Content/gaming apps


Productivity apps

Group deals

Real-time bidding

Daily deals

AR

Vertical networks


Investment categories in digital media – overlaps may occur due to combined business mechanics by startups

eCommerce/ eTransaction websites that

convert traffic into sales (leads)

Advertising solutions

platforms & solu-tions that enhance the ad eco system

Content-driven platforms

all types of audio, video, picture and text content sites

Games

all types of non-console games &

gaming middleware

Productivity apps

mobile apps that enhance everyday

aspects of life

Search websites with a

focus on vertical & local search

(no e-commerce)

Social networks

social platforms to publish, consume

& engage

Crowdsourcing outsourcing of

intelligence and workforce to web

community

LBS services & tools

that increase user experiences at

point-of-location

B2B tools

tools that increase efficiency in digital media processes

B2B solutions

solutions that boost companies’ digital media business

Others

all other companies with a touch point

in digital media Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia


Overall summary - Investments in digital media tech companies 2011

13,6* bn US$ investments in

digital media comp.

2,6 bn US$ single investments

< 10 Mn US$

11,0** bn US$ single investments

> 10 Mn US$

942

690 252

no. of companies

* Share of international investments: < 15% (mostly in Chinese, Indian, Russian, Australian and Israeli startups)

** excluding Facebook, Groupon and Twitter

Source: Crunchbase, Marc Ziegler, Media Cluster of North Rhine-Westphalia

* Share of deals by international investors : < 5%


Overall summary - Digital media investment clusters 2011

eCom- merce

3.939

138

Adver- tising

1.899

125

Games

1.660

57

Content

1.534

115

B2B solut.

1.088

92

Prod. apps

888

112

B2B tools

696

111

Search

571

54

Social netw.

347 40

Crowd- sourcing

260 43

LBS 236 21

Others

476

34

no. of companies

total funding per cluster (in Mn US$)



Ranking of investment clusters according to funding vol.



Ranking of investment clusters according to funding vol.

Investment category < 10 Mn > 10 Mn Overall

eCommerce/eTransaction 5. 1. 1.

Advertising solutions 1. 2. 2.

Games 9. 3. 3.

Content-driven platforms 6. 4. 4.

B2B solutions 3. 5. 5.

Productivity apps/tools 4. 6. 6.

B2B tools 2. 8. 7.

Search 8. 7. 8.

Social networks 10. 9. 9.

Crowdsourcing 7. 11. 10.

LBS 11. 10. 11. Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia


Categories with investment volumes above average

Ø 3,7 Mn US$ Investments < 10Mn US$ 4,6 4,9

Advertising solutions

B2B solutions

Ø 43,8 Mn US$ Investments > 10Mn US$ 56,1

63,7

Content- driven

platforms

eCommerce/ eTransaction

62,1

Games


high operating costs (e.g. inter-nationalization),

high profit potent.

Many multi-browser games

publisher among top-funded comp.


Details on „eCommerce“ (1)

10 biggest single investments 2011 in eCommerce/eTransaction platforms (Mn US$)

576

305 230 200

165 150 138 123 120 112

3.939 Mn US$ 138 companies

daily deals

group buying

couponing member-only (daily) deals

Source: Crunchbase, Media Cluster of North Rhine-Westphalia

Chinese fashion

eCommerce


Details on „eCommerce“ (2)

Hottest verticals: mobility/car sharing, fashion & apparel, food delivery, home design, travel

Major trends (some of them ongoing)

Group deals/daily deals/couponing

•  … still investors’ darling, but …

•  stronger verticaliza-tion to be observed

•  especially fashion & apparels, grocery, home design, mums & kids

Neighborhood commerce

•  eTransaction on a local scale gain momentum

•  Mostly people from the neighborhood offer goods and services to let or to sell (topics: mobility, cooking, nanny, …)

Socially assisted commerce

•  … another ongoing serious trend is social shopping

•  These sites support social interaction, user contributions and recommenda-tions to assist in buying products & services

UGC monetizing platforms

•  platforms that convert user generated content into sales also scored on investor side

•  Most of these sites deal with design, fotos and articles from the community



10 biggest single investments 2011 in advertising solutions (Mn US$)


Details on „advertising solutions“ (1)

200 200

61 52 51 50 49 48 37 35

long-tail ad marketplace

mobile ad network

next gen. paid search

multichannel marketing solut.

In-app monetization

TV targeting

digital marketing services

In-video monetization


watch ad later


Details on „advertising solutions“ (2)

Major trends (some of them ongoing)

Targeting solutions

•  more sophistication

•  tracking targeting performance

•  targeted television advertising

•  search-Retargeting

•  overall: stronger specialization on social media/contextual behavior

Real-time bidding solutions

•  demand-side-platforms

•  matching supply and demand of ad inventory as well as performance adjust-ments in real-time

•  … similar to Google, potentials for hub role within ad eco system

Data-driven marketing

•  big data solutions that analyze…

•  … ad performance across multiple platforms

•  … demographic trends and deliver inventory accordingly

•  … local information for contextual ads

In-app, in-game, in-video solutions •  different approa-

ches to increase monetization within apps, games and videos

•  … in most cases via analyzing user behavior (clicks, social media com-munication, purchases, etc.)



Details on „productivity apps/tools“ (1)

Biggest single investments 2011 in productivity apps/tools (Mn US$)

250

129

50 30 23 19 16 15

888 Mn US$ 112 companies

10 10

file management

pers. traffic management

personal communication

personal finance

personal fitness

personal learning



Details on „productivity apps/tools“ (2)

Further hot app genres: health/wellness/fitness, kids & family, travel

Major trends (beside productivity “champion” file management)

Personal finance

•  Tools helping to better organize everyday’s finance life, related to …

•  … accounts, debts, loans, bills, receipts, fixed expenditures, bank transactions etc.

Content produc-tion & discovery

•  Tools that ease the (self-)production, adaptation, organi-zation & discovery of various media assets / contents such as …

•  … pictures, videos, music, articles, …

Personal learning / educ.

•  Tools that enhance the personal lear-ning experience by: tracking progress, exchanging with others / bench-marking, grade tracking, etc.

•  Fields of interest: languages, college, science

Personal communication

•  Tools that improve cross-platform com-munication capabili-ties, such as …

•  … inbox notification management, dialing without numbers, real-time radiation indication



Details on „games“ (1)

Biggest single investments 2011 in games (Mn US$)

490

350

200

85 42 40 30 30 26 24


Multi-platform video game streaming

(social) browser games

MMSGs

Mobile games


entertainment

software distribution

* * partially secondary investment


Details on „games“ (2)

Major trends

(differentiated) social games

•  Players in pursuit of finding USPs in the space of social games such as …

•  … cross-platform distribution approaches, mobile, AR, social bench-marking, kids, edutainment

Gamification of real-world markets •  Non-entertainment

companies increa-singly discover the power of games to address real-world challenges, as …

•  … in the fields of health, wellness, education, research, recruiting, etc.

In-game (traffic) monetization

•  Beside p-a-y-go and subscription-based gaming biz models, various in-game re-venue sources have been developed:

•  Real rewards for in-game achievements

•  Performance-based advertising tools

Cross-platform game middleware •  Rapid game

creation techno-logies

•  Solutions for cross-platform game development



Details on „content“ (1)

Biggest single investments 2011 in content (Mn US$)

250

100 85

66 50 46 45 40

1.534 Mn US$ 115 companies live

streaming/ VOD

MOD

content sharing/

discovery

legal content platform

(e)Book retailer

content discovery

interactive out-of-home

entertainment


33

cognitive enhance-

ment

32

music detection


Details on „content“ (2) Major trends

Enhanced music/ audio experience

•  platforms & tools for increased digital audio excitement, such as …

•  creating & sharing audio content in real-time, detecting music, do-it-yourself music-related sites & apps, music per-sonalization suites

Next level of content discovery •  platforms that

intelligently aggre-gate content from various sources & channels to create new (and mostly dashboard-driven) user experiences

•  focus varies: either by type of content or distribution platform

eLearning plat-forms/tools & more •  environments for

sharing & discovering learning materials & curricula with co-students & teachers

•  video-based learning communities, social prep-center, online course creator suites, interactive tutorials for coder, designer …

Multi-chan. video sharing, casting

•  web video enter-tainment beyond youtube, such as …

•  …sharing (mobile) videos in real-time

•  … social live video casting & commu-nication, social video upload.

•  … VOD services

Further hot topics: social TV guides, textbook rental sites, eBook hubs, tech & financial content sites Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia


Details on „crowdsourcing“ (1)

Biggest single investments 2011 in crowdsourcing (Mn US$)

35

26 25 19 17


10 10 10 10 8

UGC monetization crowdfunding

crowd- lending

social trading

people powered antivirus

corporate idea

sourcing

Source: Crunchbase, Media Cluster of North Rhine-Westphalia * see also under eCommerce trends

* *


Details on „crowdsourcing“ (2) Major trends

Crowdfunding/ -investing

•  enforced by tre-mendous kickstarter success, various other crowdfunding platforms evolved that have speciali-zed in …

•  … social projects, private investments, creative ventures and big ideas/trends

Crowdsourced labor/jobs/tasks

•  platforms that target companies who are outsourcing tasks to the crowd (and users who search for such tasks) in the fields of …

•  … design/graphic arts, programming, translation, text cre-ation, research, …

Enterprise / brand empowerment

•  solutions for corporations that engage and activate brand audiences, especially within social networks …

•  … to measure brand awareness

•  … for assistance to “spread the word”

Community opinion aid

•  platforms that help individuals to sort out the wheat from the chaff in terms of “taste bench-marking”

•  mostly these sites are related to fashion, food, enter-tainment, travel, lifestyle, …


Further hot topics: social lending, collaborative trading, enterprise innovation, social benchmarking


Details on „search“ (1)

Biggest single investments 2011 in search (Mn US$)

200

84

30 27 23


18 15 12 11 10

car search

local service search/ review

editorial supported

search

job search

caregiver search

(mobile) real-estate

search

wedding search

meta local

search



Details on „search“ (2)

Major trends

Comment on ma-jor search trends

•  the “search” invest-ment cluster does not reveal as many distinct trends as others

•  however, as in pre-vious years, most of new search plat-forms tend towards increased speziali-zation and include SoLoMo functiona-lities

App search / app discovery

•  platforms that help to search for apps in general (discover & experiences new apps) or business apps in specific

•  most of these include reviews from the community

•  also purpose: market research

Travel-related search

•  platforms that allow a better search experience beyond monothematic que-ries, mostly fueled with community know-how

•  multi-parameter requests, finding private homes to stay, local reviews

Job-related search

•  even the highly contested job search market generates new approaches with supporting specs:

•  internship search, job-related metrics, employer reviews, job advices, focus on job verticals etc.



Details on „location-based services“ (1)

Biggest single investments 2011 in LBS (Mn US$)

110

50

15 13 10

Lashou.com


10 5 4 3,5

family tracking

P2P payment

real-time urban

navigation

geo-location service

(Russia’s Foursquare)

geo- location social

network

LBS game

gadget location (LaaS)

real-time location tracking


1,0

geo-location (shared

interests)


Major trends

Comments on major LBS trends •  due to the small and

heterogeneous field of players in this segment, few dis-tinctive trends could be retrieved

•  small number of “pure” LBS compa-nies results from the fact that LBS fea-tures are often inte-grated into products with different core

Geo-location services

•  investors identified geo-location related services as a promising field of business. These services cover a wide range of functional-ities and focus such as …

•  real-time location tracking

•  family tracking & neighborhood safety

•  find interest-alike people nearby

•  LBS + gaming elements

Other LB-Services (but no distinct trends)

•  P2P/NFC mobile payments

•  WIFI location solutions for retailers

•  LBS-enhanced local search

•  local guides/ local discovery

•  LBS-based social networks (e.g. for mums & dads)

•  urban navigation services

•  on-demand delivery services


Details on „location-based services“ (2)


Details on „B2B solutions“ (1)

Biggest single investments 2011 in B2B solutions (Mn US$)

155 136

54 50 35


33 24 20 19 19


online- degree progam

kits

online video

platform on-demand

billing & subscriber

managemnt.

mobile app developm. solutions

inflight communication solution

event organizer & ticketing platform

social enterprise softw.

eCommerce check-out


Details on „B2B solutions“ (2)

Major trends


Mobile payment solutions

Social commerce solutions

Publishing/app/video monetization services

White label app storefronts

(Cross-platform) app development suites Mobile device identification/profiling

(Mobile) payment processing

Video management platforms

Event organizing platforms

Personalized customer experiences & engagement

eCommerce checkout / order fulfillment

Billing & subscriber management

In-restaurant solutions

Mobile shopping solutions

Real-time shopping-cart recovery

In-flight entertainment & communication

Augmented human intelligence

Social loyalty & rewards

iPad POS solutions Context-sensitive commerce platforms


Details on „B2B tools“ (1)

Biggest single investments 2011 in B2B tools (Mn US$)

100

33 25 25 24



20 18 17 16 16

financial office tool

talent intelligence

social marketing

SaaS

fb power tool for

musicians

customer retention

eLearning tools

brand consumer engage-

ment

video rights

management

adaptive learning

realtime frame- works


Details on „B2B tools“ (2)

Major trends


Social media monitoring/analytics

Social media engagement

Control & centralize social media

Social media tools

Social media performance tracking

Social media campaign mgmnt.

Developer tools

App analytics (Adaptive) eLearning tools

Business productivity tools for SME

Social recruiting tools

SDK for social apps

Twitter filter

Gesture-based interfaces

Backend as a service

Online accounting/invoicing Big data analytics/visualization

(universal) tag management

(Real-time) user behavior analytics

SEO improvement tools

Instant loyalty programs

Rental marketing tools

Community building tools

Social talent engine


Estimated digital media investment radar for Germany/Europe – what will be top on investor’s list in 2012?

Market biz & capitalization potential

Cha

nces

to g

et fu

nded

in G

ER*

low

low

high

high

1

5 6

7

9 10

1 2 3 4 5 6 7 8 9 10

11

12

13

14

15

Group/daily deals/coup.

16

Neighborhood com. Social commerce UGC monetizing Targeting solutions Real-time bidding Data-driven marketing In-app/-video/-game adv. Personal finance Content prod.+discovery Personal learning Personal communication Social games Gamification In-game monetization Cross-platf. middleware

17

18

19

20

21

22

23

24

25

26

27

28

29

30

Enhanced music exper. Next level content disc. eLearning platforms Multichannel video Crowdfunding Crowdsourced work Brand empowerment Community opinion aid App search Travel search Job search Geo-location services

B2B solutions B2B tools

11

12

13 14

15

16

17 18

19

21

22

23 24 25

26

27

28

29

30

* assuming that team is excellent and respective product has USP Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia

2 3 4

8 20

hot

funding chances within B2B sectors vary and could possibly be higher


Conclusions from VC deal flow analysis 2011

  Consumer web topics (although this is a rather fuzzy aggregated notion) remain investment segment No. 1 in digital media

  However, investments in B2B startups are unmistakably on the rise, especially in seed, angel and series A rounds. It remains to be seen, if German investors follow that line …

  The leading position of e-commerce platforms & advertising solutions in the investment ranking reflects the relevance of their corresponding business models within the global web eco system – and will dominate investment activities in the future too

  Productivity apps/tools and (slightly behind) crowdsourcing services gain momentum and are firing the imagination of investors in Europe/Germany too

  Within all “older” digital media categories (such as content, e-commerce, search, social networks) a higher degree of specialization along the following parameters can be observed: social-local-mobile, contextual, rich media, real-time, personal/on-demand, Facebook-integration …

  The hottest overall company? Impossible to tell! There were so many innovative startups with disruptive potential. Find out yourself. There are a couple mentioned within this slide deck …



Contact details / acknowledgement / copyright Marc Ziegler Mediencluster NRW GmbH Fon +49-151-24151900 eMail: [email protected] Twitter: @medienziegler web: www.medien.nrw.de

Acknowledgement A big thank you to my colleague Sebastian Lautwein, who gave me a big hand in the first phase of this analysis by identifying and clustering hundreds of funded digital media startups.

Creative Commons

„30 Trends that will shape European web & digital media business in 2012“ by Marc Ziegler is licensed under Creative Commons Attribution-ShareAlike 3.0 Unported License.

30 trends that will shape European web & digital media business in 2012

Business

digital media overlaps

media segments

digital media tech companies

marc ziegler

digital mediasource

business opportunities

us investors

new business