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
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
30 trends that will shape European web & digital media business in 2012
Marc Ziegler
How we conducted the anaylsis

1 2 Clustering search results 3 Identification of trends
3.939 Mn US$
Tech companies funded between Jan-Dec 2011 2 investment funding sizes: 100K-10M and 10M-1000M 95% US investors, 5% European
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 accumulated new business mechanics within each digital media segment Derivation of trends
Marc Ziegler
Thesis 1: USA = Home of digital media innovation

(Nearly) all successful business models in digital media originated in the US
Marc Ziegler
Thesis 2: transfer USA => Germany (Europe)

Successful business approaches in digital media (here some examples) always migrate to Germany/Europe time lags are shrinking
Productivity apps Vertical networks Couponing Social networks Content/gaming apps Vertical search Group deals Paid search 9-12 months Online classifieds Reverse auctions Targeting UGC Daily deals LBS 3-4 months
Portals Auctions 12-18 months
Crowdsourcing AR
Real-time bidding
2002
2004
2006
2008
2010
2012
Marc Ziegler
Investment categories in digital media overlaps may occur due to combined business mechanics by startups
eCommerce/ eTransaction
websites that convert traffic into sales (leads)
Games
all types of nonconsole games & gaming middleware
Social networks
social platforms to publish, consume & engage
B2B tools
tools that increase efficiency in digital media processes
Advertising solutions
platforms & solutions that enhance the ad eco system
Productivity apps
mobile apps that enhance everyday aspects of life
Crowdsourcing
outsourcing of intelligence and workforce to web community
B2B solutions
solutions that boost companies digital media business
Content-driven platforms
all types of audio, video, picture and text content sites
6
Search
websites with a focus on vertical & local search (no e-commerce)
LBS
services & tools that increase user experiences at point-of-location
Others
all other companies with a touch point in digital media
Marc Ziegler
Overall summary Investments in digital media tech companies 2011

13,6* bn US$
investments in digital media comp. 942 no. of companies
2,6 bn US$
single investments < 10 Mn US$
690
11,0** bn US$
single investments > 10 Mn US$
252
** excluding Facebook, Groupon and Twitter
* Share of international investments: < 15%

(mostly in Chinese, Indian, Russian, Australian and Israeli startups)
* Share of deals by international investors : < 5%

Source: Crunchbase, Marc Ziegler, Media Cluster of North Rhine-Westphalia
Marc Ziegler
Overall summary Digital media investment clusters 2011

138
no. of companies
total funding per cluster (in Mn US$) 3.939

125 57 115 92
1.899
1.660
112
1.534 1.088 888

Prod. apps
111
54
696
B2B tools
571
Search
40
34 43 21
347
Social netw.
260
Crowdsourcing
236
LBS
476
Others
eCommerce
8
Advertising
Games
Content
B2B solut.
Marc Ziegler
Ranking of investment clusters according to funding vol.
Marc Ziegler
Ranking of investment clusters according to funding vol.

Investment category eCommerce/eTransaction Advertising solutions Games Content-driven platforms B2B solutions Productivity apps/tools B2B tools Search Social networks Crowdsourcing LBS
< 10 Mn 5. 1. 9. 6. 3. 4. 2. 8. 10. 7. 11.
> 10 Mn 1. 2. 3. 4. 5. 6. 8. 7. 9. 11. 10.
Overall 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Marc Ziegler
10
Categories with investment volumes above average

Many multibrowser games publisher among top-funded comp. high operating costs (e.g. internationalization), high profit potent.
56,1
62,1
63,7
Investments > 10Mn US$

Contentdriven platforms Games eCommerce/ eTransaction
43,8 Mn US$
Investments < 10Mn US$
4,6 Advertising solutions
4,9 B2B solutions
3,7 Mn US$
11
Marc Ziegler
Details on eCommerce (1)

10 biggest single investments 2011 in eCommerce/eTransaction platforms (Mn US$)
daily deals couponing group buying
576 3.939 Mn US$ 138 companies
member-only (daily) deals Chinese fashion eCommerce
305
230
200
165
150
138
123
120
112
Source: Crunchbase, Media Cluster of North Rhine-Westphalia
12
Marc Ziegler
Details on eCommerce (2)

Major trends (some of them ongoing)
Group deals/daily deals/couponing
still investors darling, but stronger verticalization 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 recommendations 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
Hottest verticals: mobility/car sharing, fashion & apparel, food delivery, home design, travel
13
Marc Ziegler
Details on advertising solutions (1)

10 biggest single investments 2011 in advertising solutions (Mn US$)
mobile ad network long-tail ad marketplace
200 200 1.899 Mn US$ 125 companies
multichannel marketing solut. In-app monetization
digital marketing services watch ad later In-video monetization
next gen. paid search
TV targeting
61
52
51
50
49
48
37
35
14
Marc Ziegler
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-sideplatforms matching supply and demand of ad inventory as well as performance adjustments 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 approaches to increase monetization within apps, games and videos in most cases via analyzing user behavior (clicks, social media communication, purchases, etc.)
15
Marc Ziegler
Details on productivity apps/tools (1)

Biggest single investments 2011 in productivity apps/tools (Mn US$)
file management personal communication
250 888 Mn US$ 112 companies
pers. traffic management

129
personal finance personal fitness personal learning

10 10
50
30
23
19
16
15
16
Marc Ziegler
Details on productivity apps/tools (2)

Major trends (beside productivity champion file management)
Personal finance
Tools helping to better organize everydays finance life, related to accounts, debts, loans, bills, receipts, fixed expenditures, bank transactions etc.
Content production & discovery

Tools that ease the (self-)production, adaptation, organization & discovery of various media assets / contents such as pictures, videos, music, articles,
Personal learning / educ.

Tools that enhance the personal learning experience by: tracking progress, exchanging with others / benchmarking, grade tracking, etc. Fields of interest: languages, college, science
Personal communication
Tools that improve cross-platform communication capabilities, such as inbox notification management, dialing without numbers, real-time radiation indication
Further hot app genres: health/wellness/fitness, kids & family, travel

17
Marc Ziegler
Details on games (1)

Biggest single investments 2011 in games (Mn US$)
(social) browser games entertainment software distribution Mobile games Multi-platform video game streaming
1.660 Mn US$ 57 companies
490
350 200
MMSGs
85
42
40
30
30
26
24
*
18
* partially secondary investment
Marc Ziegler
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 benchmarking, kids, edutainment
Gamification of real-world markets

Non-entertainment companies increasingly 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 revenue sources have been developed: Real rewards for ingame achievements Performance-based advertising tools
Cross-platform game middleware

Rapid game creation technologies Solutions for crossplatform game development
19
Marc Ziegler
Details on content (1)

live streaming/ VOD
Biggest single investments 2011 in content (Mn US$)

content sharing/ discovery legal content platform (e)Book retailer interactive out-of-home entertainment
1.534 Mn US$ 115 companies
MOD
250
music detection cognitive enhancement
content discovery
100 85 66 50 46 45 40
33
32
20
Marc Ziegler
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 personalization suites
Next level of content discovery

platforms that intelligently aggregate 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 platforms/tools & more

environments for sharing & discovering learning materials & curricula with costudents & teachers video-based learning communities, social prep-center, online course creator suites, interactive tutorials for coder, designer
Multi-chan. video sharing, casting

web video entertainment beyond youtube, such as sharing (mobile) videos in real-time social live video casting & communication, social video upload. VOD services
Further hot topics: social TV guides, textbook rental sites, eBook hubs, tech & financial content sites
21
Marc Ziegler
Details on crowdsourcing (1)

Biggest single investments 2011 in crowdsourcing (Mn US$)
UGC monetization crowdfunding crowdlending
260 Mn US$ 43 companies
35
people powered antivirus

26 25 19 17 10 10
corporate idea sourcing
social trading
10
10
8 *
* * see also under eCommerce trends
22
Marc Ziegler
Details on crowdsourcing (2)

Major trends
Crowdfunding/ -investing
enforced by tremendous kickstarter success, various other crowdfunding platforms evolved that have specialized 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 creation, 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 benchmarking mostly these sites are related to fashion, food, entertainment, travel, lifestyle,
Further hot topics: social lending, collaborative trading, enterprise innovation, social benchmarking
23
Marc Ziegler
Details on search (1)

Biggest single investments 2011 in search (Mn US$)
car search local service search/ review editorial supported search
30 27 571 Mn US$ 54 companies
200
job search
(mobile) real-estate search caregiver search

23 18 15
meta local search wedding search

12 11 10
84
24
Marc Ziegler
Details on search (2)

Major trends
Comment on major search trends
the search investment cluster does not reveal as many distinct trends as others however, as in previous years, most of new search platforms tend towards increased spezialization and include SoLoMo functionalities
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 queries, 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.
25
Marc Ziegler
Details on location-based services (1)

Biggest single investments 2011 in LBS (Mn US$)
geolocation social network geo-location service (Russias Foursquare) geo-location (shared interests)
110
gadget location (LaaS)

50
P2P payment real-time location tracking real-time urban navigation

10 5 4
LBS game
15 13
family tracking
3,5 1,0
10
Lashou.com
26
Marc Ziegler
Details on location-based services (2)

Major trends
Comments on major LBS trends
due to the small and heterogeneous field of players in this segment, few distinctive trends could be retrieved small number of pure LBS companies results from the fact that LBS features are often integrated 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 functionalities 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
27
Marc Ziegler
Details on B2B solutions (1)

Biggest single investments 2011 in B2B solutions (Mn US$) eCommerce
check-out event organizer & ticketing platform inflight communication solution online video platform onlinedegree progam kits
33 1.088 Mn US$ 92 companies
mobile app developm. solutions
155
136
social enterprise softw.
on-demand billing & subscriber managemnt.
54
50
35
24
20
19
19
28
Marc Ziegler
Details on B2B solutions (2)

Major trends
iPad POS solutions
Context-sensitive commerce platforms

In-flight entertainment & communication
(Cross-platform) app development suites

In-restaurant solutions Mobile shopping solutions
Mobile device identification/profiling

Social loyalty & rewards
Mobile payment solutions
White label app storefronts

Billing & subscriber management
Video management platforms

Social commerce solutions Real-time shopping-cart recovery
Publishing/app/video monetization services

Event organizing platforms
Augmented human intelligence
(Mobile) payment processing
Personalized customer experiences & engagement

eCommerce checkout / order fulfillment

Marc Ziegler
29
Details on B2B tools (1)

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

customer retention fb power tool for musicians social marketing SaaS
20 18 17
video rights management brand consumer engagement
100
adaptive learning
talent intelligence financial office tool

16 16
eLearning tools
33
25
25
24
30
Marc Ziegler
Details on B2B tools (2)

Major trends
Social media performance tracking
(Real-time) user behavior analytics Social recruiting tools

Instant loyalty programs
Social media monitoring/analytics

Community building tools
Social media tools
Social media engagement

Rental marketing tools Social talent engine
Social media campaign mgmnt.
Control & centralize social media
(universal) tag management
Big data analytics/visualization
Online accounting/invoicing App analytics Twitter filter Backend as a service Gesture-based interfaces
(Adaptive) eLearning tools

SEO improvement tools
Developer tools
SDK for social apps
Business productivity tools for SME

31
Marc Ziegler
Estimated digital media investment radar for Germany/ Europe what will be top on investors list in 2012?
hot 1 Group/daily deals/coup. 2 Neighborhood com.
17 21 18 17 Enhanced music exper. 18 Next level content disc. 19 eLearning platforms 20 Multichannel video 21 Crowdfunding 22 Crowdsourced work 23 Brand empowerment 25 App search 27 Job search 29 B2B solutions 30 B2B tools
high Chances to get funded in GER*

6 4
10 22 24 23 25 13 14 16
3 Social commerce 4 UGC monetizing 5 Targeting solutions 6 Real-time bidding 7 Data-driven marketing 9 Personal finance
11 Personal learning 13 Social games 14 Gamification 15 In-game monetization 16 Cross-platf. middleware
11 28 27
5 3 2 12 26 8 20
30 19 15
7 1
29
8 In-app/-video/-game adv. 24 Community opinion aid

10 Content prod.+discovery 26 Travel search 12 Personal communication 28 Geo-location services
funding chances within B2B sectors vary and could possibly be higher
low low Market biz & capitalization potential high
* assuming that team is excellent and respective product has USP

Marc Ziegler
32
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
33
Marc Ziegler
Contact details / acknowledgement / copyright

Marc Ziegler Mediencluster NRW GmbH Fon +49-151-24151900 eMail: marc.ziegler@medien.nrw.de 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.
34 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

30 Trends That Will Shape European Web & Digital Media Business in 2012

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30 Trends That Will Shape European Web & Digital Media Business in 2012

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

Why this report?

How we conducted the anaylsis

Thesis 1: USA = Home of digital media innovation

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

Thesis 2: transfer USA => Germany (Europe)

Portals Auctions 12-18 months

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

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

Overall summary Investments in digital media tech companies 2011

** excluding Facebook, Groupon and Twitter

* Share of international investments: < 15%

* Share of deals by international investors : < 5%

Overall summary Digital media investment clusters 2011

total funding per cluster (in Mn US$) 3.939

1.534 1.088 888

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

Ranking of investment clusters according to funding vol.

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

Ranking of investment clusters according to funding vol.

< 10 Mn 5. 1. 9. 6. 3. 4. 2. 8. 10. 7. 11.

> 10 Mn 1. 2. 3. 4. 5. 6. 8. 7. 9. 11. 10.

Overall 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Categories with investment volumes above average

Investments > 10Mn US$

Investments < 10Mn US$

4,6 Advertising solutions

4,9 B2B solutions

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

Details on eCommerce (1)

member-only (daily) deals Chinese fashion eCommerce

Source: Crunchbase, Media Cluster of North Rhine-Westphalia

Details on eCommerce (2)

Socially assisted commerce

UGC monetizing platforms

Details on advertising solutions (1)

multichannel marketing solut. In-app monetization

digital marketing services watch ad later In-video monetization

next gen. paid search

Source: Crunchbase, Media Cluster of North Rhine-Westphalia

Details on advertising solutions (2)

Real-time bidding solutions

In-app, in-game, in-video solutions

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

Details on productivity apps/tools (1)

pers. traffic management

personal finance personal fitness personal learning

Source: Crunchbase, Media Cluster of North Rhine-Westphalia

Details on productivity apps/tools (2)

Content production & discovery

Personal learning / educ.

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

Details on games (1)

* partially secondary investment

Source: Crunchbase, Media Cluster of North Rhine-Westphalia

Details on games (2)

Gamification of real-world markets

In-game (traffic) monetization

Cross-platform game middleware

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

Details on content (1)

Biggest single investments 2011 in content (Mn US$)