A Must Read Article.
Contributed by MissyMay at RagingBull
eMarketer's Top 10 Predictions for the Internet in 1999
It's that time of year. Time to review the past, and make predictions for the future.
eMarketer, through the help of its eStats Research Team, has developed a list of changes we'll see on the internet next year.
Read it. Print it out. File it. And then pull it out next December to see how close we came.
#1: The "world wide web" will finally live up to its name.
By year-end 1999, the number of net users residing outside the U.S. will exceed the number online in America. There will be a total of 110 million "active net users"(1) in the world with a majority, or just over 56 million, emanating from non-U.S. countries.
However, the U.S. will retain its majority share of the world's eCommerce dollars at least through the year 2000. Non-U.S. countries will lag the U.S. in eCommerce development because of significantly lower internet penetration levels (EC requires a critical mass of about 20%) and limited bandwidth capacity, thereby creating a "digital divide."
#2: This is the year small business jumps online, and starts selling.
To-date, large and medium-sized corporations have dominated on the internet as they've had the financial and human resources to invest in a slow-payout medium.
But in 1999, small businesses, which number 7.2 million and represent 98% of all business enterprises in the U.S., will begin to gravitate online. And many will establish active, purposeful websites as well as eCommerce systems for conducting sales online. Currently only 1.8% of small businesses are selling products over the web.
But because of their vast numbers, quickness to respond and sheer entrepreneurial drive, small businesses will increase their share of total eCommerce revenues from 23.8% in 1998 to just under 30% in 1999.
#3 We will enter the age of hyperintermediation.
Watch out eMerchants! A growing revolution of hub sites, alternatively referred to as "intermediaries," "virtual malls," or "digital middlemen," will be out to eat your lunch (and your site traffic, revenues and margins).
These aggregators will thrive by bringing together hundreds and even thousands of buyers, sellers, distributors and transaction payment processors all within a single, online marketplace. The key dynamic here is momentum. Once the aggregator gathers a critical mass of buyers, sellers and other participants, more and more of these players will keep flocking there -- because that's where the action is.
In addition, hub sites, particularly branded ones, add value to the customer shopping experience because they meet the all important consumer need for convenience (ultimate one-stop-shop) and they can act as impartial third-parties injecting a layer of trust, security and confidence among wary buyers.
Within the retail sector alone, the percentage of total consumer eCommerce revenues captured within the confines of hub sites will increase from 15% in 1998 to 26% in 1999. The "referral" fees and commissions earned by these digital middlemen will range between 5 - 8% of sales, further eroding the margins of eMerchants.
Want proof? Look at Compare.net, Priceline.com, eBay, VerticalNet and others.
#4 Banners will take a back seat to sponsorships.
By the end of the year, the much maligned banner ad, in all its sizes, shapes and forms, will be superseded by "strategic" sponsorships which will become the primary form of advertising on the internet and account for the largest share of online advertising dollars.
The most successful online advertisers will deeply integrate themselves within the content and services offered to targeted customers through exclusive sponsorships at other websites.
Of course, this change will require a tremendous shift in thinking from traditional advertisers who are used to "placing ads."
The good news? This could put an end to the relentless debate about CPMs versus click-throughs.
#5 B2B EC will continue to rule.
The dollar value of businesses selling to other businesses over the web will reach $32 billion worldwide by December 31, 1999, more than double the figure in 1998. In contrast, consumer eCommerce revenues will rise to only $8 billion next year, up from $4.5 billion in 1998.
#6 Customer service will become the new mantra on the web.
As online retailers rushed this holiday season to set up elaborate eCommerce systems on their websites in order to capture sales from the growing hoards of online shoppers, many failed to adequately prepare for the volume of online orders with back-end, distribution, delivery and billing systems.
The result: many orders were lost, many invoices were screwed up or double-billed, many deliveries were late, and many customers were not happy campers.
But in 1999, we will fully appreciate just how customer-centric the web is.
The net is raising the bar for consumer expectations about convenience, service support, price and speedy response.
And for those that don't meet these raised expectations? The competition is only a click away.
#7 Security will no longer be a bugaboo for most consumer shoppers.
Security concerns, which have acted as a wet blanket on online sales, will gradually evaporate because of shifts in both reality and perceptions.
In reality, technology will continue to advance making web purchases safer than ever before.
At the same time, as more consumers move through the process of getting wired, shopping online and eventually making their first purchase, they will begin to realize that the internet is about as safe as any other form of buying. And they'll tell their friends.
#8 Nearly 60% of internet users will have made an online purchase.
Within the U.S., the percentage of active internet users who have made at least one purchase online will rise to 58%, or 36.1 million Americans in 1999 (versus only 31% and 16.8 million in 1998). These 36.1 million online buyers will represent nearly 17% of the total population in America aged 14+.
#9 More content sites will begin charging admission.
Just two years ago, the very idea of charging a subscription price to enter a website, or pay-for-content, was considered ludicrous. After all, the net was "Born to be FREE," they sang.
But that will change in 1999.
The internet is growing up, having evolved from its open, laid-back, cool-site-of-the-day attitude to where people are now actually willing to pay for content that is high quality and sufficiently differentiated such that they can't get it elsewhere -- faster, cheaper or more conveniently.
While we can only see a few success stories today, such as The Wall Street Journal Interactive Edition and the Street.com, more will emerge in 1999.
The successful ones will realize that the subscription model works only if your information is unique and your target audience is willing to pay for it.
#10 e-Mail, while remaining the "killer app" online, will also become a big headache.
e-mail makes it easier than ever before for people to down-load their thoughts, questions and concerns -- in almost stream-of-consciousness form. As a result, online businesses will have to struggle to keep up with an ever growing torrent of digital messages from internal employees, customers, clients, consultants, distributors, suppliers and others.
e-mails create an urgency -- they demand to be answered.
Look for the emergence of new filtering, storage and retrieval technology to help deal with this e-mail avalanche.
(1) "Active" net users get online at least once or twice a week and for a total of at least one to two hours per week.
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