The Revenue Streams of 2005


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As is my habit and pleasure in this year-end column, I accompany the EContent 100 list with a look forward to the more promising new revenue streams (and trickles) of the coming year. As I insisted months ago, this year represented a financial comeback for the Web of which many dared not speak its name. But now that online ad revenues are officially exceeding the pre-bust highs of the 2000 bubble—and doing so based on much more solid business fundamentals—it is time to start waxing optimistic again. In no particular order of importance, these are the nascent money trails I anticipate following in the columns of 2005.

Mobile Data: Once they get beyond ring tones and wallpaper, mobile phone users demonstrate an appetite for data, from stock and sports tickers to news alerts and soap opera updates. The comfort level with receiving content by phone is rising; just in the games category, downloads increased 75% in one quarter of 2004, according to enPocket. Revenue opportunities here are less significant than branding value for most content providers, however.

Streaming Video Ads: Repurposing TV ads for streaming on Web pages wasn't easy before bandwidth got cheap, broadband proliferated, and technologies made these ads more seamless and less intrusive. Now, watching a familiar TV ad alongside content seems to reiterate and reinforce the advertising message. JupiterResearch predicts that the $121 million in ad budgets devoted to online video ads will go to $657 by 2009, and that seems realistic. Fed up with over-priced TV rates, advertisers are now fairly convinced they can buy these same eyeballs more efficiently online.

Curious Content Combos: B2B and consumer content will blend in new ways. In 2004, the Firehouse.com professional site for firefighters partnered with Touchstone Pictures to promote the film Ladder 49. Recently, a top fee-based consumer site, ConsumerReports.org, cross-pollinated with a top fee-based financial site, Wall Street Journal Online, swapping consumer and business information to be placed in relevant areas of one another's sites. Highly evolved Web sites get to know their audiences and their ancillary interests to leverage these eyeballs in creative ways.

Blog Bucks: The wild and wooly blogosphere itself will not make money for many, including blog networks like Gawker Media and Weblogs Inc. Nevertheless, blogs are already proving to be powerful audience retention devices for known media brands. Some B2B sites report that up to 10% of daily traffic now goes to columnist blogs. Blogging is less a business model than a thoroughly compelling communications model that keeps users coming back two and three times a day more effectively than standard content refreshes. Accept it and get sponsors for it.

Digital Distribution: The tipping point is approaching, accelerated by the remarkable success of iTunes. Consumers and businesses are becoming more comfortable buying content without tangibles like discs or software boxes to make data feel real. Entire categories of popular software (PC security, casual games, etc.) have moved from brick and mortar to online, and much of the business research market already relies on emailing PDFs rather than mailing one-ton paper reports. Far-sighted vendors for consumer media like music and games are including tools that help customers make their own tangible backups. Ultimately, CD and DVD burners will be redefined as personal archive devices for material we buy and download to home media servers. The paradigm shift is occurring faster for consumers than for many content providers.

Vertical Search (or Google gets down to business): Enterprising content providers will start applying the search paradigm to drilling more efficiently and deeper into silos of vertical content. The model for this is GlobalSpec.com, an engineering information company that has build an impressive vertical portal. Engineers put in a search term and they get links to relevant Web information indexed for engineering terms as well as libraries of aggregated need-to-know data like regulatory information, patents, etc. By putting in a search term, engineers can call up a product diagram or vendor parts list that is directly relevant to the job on their desktop. Google cannot do this, but content experts managing the right search engine and partnerships with other providers can.

Behavioral Targeting: JupiterResearch says 16% of online advertisers used behavioral targeting from companies like Revenue Science and Tacoda in 2004, up from 10% last year. Using click history within a site to target relevant ads to specific users is compelling, and clients are asking for it. Now that it is popular, the next step is getting standards for defining behavioral segments. Expect that one to be in committee for a while.

These looming models do not represent new windfalls so much as nodes of intense activity where we will see a lot of experimentation and a new willingness among content providers to invest time and money. As we have seen in the past decade online, and certainly in this column, following the money doesn't always lead to the pot of gold. But these nuggets have value all their own.