Lessons of 2009 -- Trends in 2010

Jan. 6, 2010
If you finish 2010 and simply have a new Twitter account, but haven't researched how to connect with the new systems for bidding or RFPs you may end up tweeting alone.

The economy sputtered along this year, challenging every organization. However, there were some genuine pockets of growth online, both in terms of users and revenue. Now that 2009 is over, 2010 will start the hype anew... Is this the year for social networking? How about mobile commerce? Will the government finally move towards full online RFP systems? Where should you be focusing?

Before you start spending your hard fought budget, let's take a look back at the true growth areas in 2009. Not only does this help confirm last year's actions, it will help solidify any plans for next year. We'll start with the core elements of the Internet -- speed, cost, and users -- and build from there. The changes here can be summed up in three words... faster, cheaper, and smarter.

Faster -- U.S. average internet speeds actually increased in 2009 according to hosting giant Akamai. In fact, over 24% of all connections in the U.S. are now over 5MB in speed. Combine this with the fact that less than 5% of all connections are less than 256kbs and you've got a faster platform to build on.

Cheaper -- It's no surprise that almost every part of the Internet felt price pressure in 2009. What was surprising was the fact that it was so widespread. Base connection costs dropped, hosting costs dropped, and even development costs dropped (based on a review of IT spending and per man-hour charges) Some of this can be attributed to the competitive market, but some can also be credited to the economies of scale that are coming about as more advanced cloud services (applications, storage, and raw computing) come online.

Smarter -- An interesting fact was revealed by Google researchers this summer; people are getting better at search. There's a marked increase in the use of complex search terms and basic query tricks, such as placing words in quotes to find exact matches. In addition, 2009 saw a 13% increase in the use of referral and shopping engines by consumers, willing to do the extra legwork to leverage comparison shopping engines.

These three factors help set the platform for rapid internet growth in 2009. Internet traffic jumped a surprising 21% in 2009 (according to Online Publishers Association's unique visitor statistics), with the biggest % increase in growth coming from social networking (Facebook, Twitter, etc). Many people have read the press and assumed social networking is the only real growth online. Quite the contrary.

Organizations definitely need to understand this social growth. However, it's critical for them to understand that this is the smallest group of users online (17%). Content users -- people that are online to find information (including product and technical information) make up 22% of users online. Commerce users -- those actually buying make up 20%. The rest are using email, instant messaging, and search engines.

You can be certain that Internet activity will continue to grow in 2010. The combination of better speed, lower cost, and a user population more open to new applications is a great combination. Some specific trends we see:

Direct Sites
Look to a see a more rapid adoption of 'instant' help and chat on main web site. A recent British study shows 2/3 of those who use online help/chat prefer it to email or phone. Plus the overall cost of these systems is low, ranging from 250 - 500 per user.

Search Engine Turmoil
The aforementioned growth of social networking has caused Google and Bing to rethink their search engine algorithms. Google is planning to unveil a new ranking system after the holidays. Did you use to have a great ranking? Check again....

Explosion of Bad Product Information
This problem is going to be tied to the search engine changes. Many manufacturers were aware their product specs or prices were available online, but they were generally deep in the web, usually on a social style site. These sites are now going to have greater influence in the overall rankings, pushing them closer to your customers.

Major E-Commerce Changes
Amazon's continued growth and approach to the market is going to have a dramatic influence on the market. They grew a whopping 27% in Q3 this year! They make no secret that one of the keys to their success is their willingness and ability to bring in third party manufacturers and publishers at very low cost. Expect others to continue to try and mirror this approach.

Gov/Ed Growth in Supply Chain Systems
Government and education customers have begun using system like Ariba, GovBid, and others to offload their cumbersome public bid process. Every one of the 50 states now has some type of notification system and 17 have migrated towards full online RFP management systems.

More Government Regulations Online
Of course now that the government is more online, you can expect more rules. There will continue to be a battle over Internet Sales Tax, as well as continued hearings on the rules for 'targeted' ads. One rule everyone should remember; in 2009 the FTC setup rules for sponsored blogs and paid bloggers requiring sponsorship disclosure on any site that positions itself as an objective system.

More Mistakes
Now that social networking has reached a critical mass, organizations may feel they need to 'jump in' or miss the boat. Don't leap yet. Like all Internet channels, there are multiple players and different customers within each site. A business that needs a Facebook presence may be better served with LinkedIn. Or better yet, if they have a limited budget, they may be better off linking into the 50+ referral engines online.

The Internet continues to evolve for different uses, everything from direct web sites and supply chain systems to social networks and auction sites. Each has their own competitors, search patterns and set of users.

Manufacturers need to take a broader look at their overall Internet strategy. Simply relegating the task to marketing leaves your operations, support, and sales teams without the critical voice needed to ensure you're adapting to the changing sales and supply chains that have evolved online. If you finish 2010 and simply have a new Twitter account, but haven't researched how to connect with the new systems for bidding or RFPs you may end up tweeting alone.

Mike Healey is the president of Yeoman Technology Group, an engineering and research firm focused on maximizing technology investments for organizations. http://www.yeomantechnologies.com/

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