Bright Future, No Sunglasses Required

This will be my last column for ClickZ, and though it’s tempting to look back and reflect, it’s a lot more fun to look ahead and prognosticate. So that’s what I’ll do.

The future is looking bright, but lose the dark shades. If you’re in advertising, media, retail, technology, or a number of other fields, you’re in for a continued wild ride. Hiding behind dark glasses and a cool image will almost certainly lead to stagnation and troubles. A careful, strategic, studied approach to the next half-decade can bring enormous gains and opportunities. So dust off those nerdy reading glasses and study up, because this ride has just begun.

I’ve been writing this column for 3 1/2 years, so let me be so bold as to offer a few thoughts for the next three and a half. As we enter the year 2010, these are my top five predictions for what the Internet will have done to life as we know it:

Everyone Hates Google… Except the Consumer

Retailers don’t like it any more. A friend who runs a medium-sized online retail business was telling me the other day how much he hates Google. It eats up 60 percent of his advertising budget yet drives only 20 percent of his revenue. The rising price of keyword advertising is causes him real heartburn.

Retailers will like Google less and less as the cost of keyword advertising continues to rise. It’s become like real estate in New York. The first search page you hit when you type in a keyword is like Manhattan: prime real estate, limited inventory, and hefty price tags. Sure, you can go to the second page — move to the suburbs — and get cheaper clicks. But with less than 5 percent of searches hitting page 2, that’s not where the action and return are.

Traditional media hates it. I was having dinner the other night with another friend who’s a reporter for a national newspaper. He was shaking his head, saying how the paper’s in trouble. Traditional ad revenue is shrinking faster than they can find halfway decent substitutes. Online advertising isn’t just competing with traditional ad-based models, it’s desecrating them.

It’s as if someone woke up recently and said, “Looks like the old advertising emperor has no clothes.” The suspicion that most traditional advertising is overpriced is turning out to be well founded. Now that we have an evermore efficient market with tracking and accountability, that emperor will be arrested for walking around nude.

I also recently met with the CEO of a large travel guide company. We discussed what it would take to move the entire business from paper (atoms) to the Web (bits). She said the handwriting is on the wall for traditional publishing. Make big, bold bets now, or be relegated to a curious artifact of a foregone era. So they’re committing huge resources to change their business. But into what? That’s the billion-dollar question because there’s no clear definition of what success looks like yet as they move from the familiar world of atoms to the undefined world of bits. And that’s plain old scary!

The competition is getting clobbered. “The New York Times” reported last week that Google is quietly building an enormous new data center — a huge, distributed supercomputer, really — in Dallas, Oregon. This year it will invest $1.5 billion in its capital infrastructure. Only one player has the capital and cash flow to compete with that kind of investment: Microsoft. And it is, by its own admission, way behind. Can it catch up?

This is corporate warfare. My prediction is that Google will leave most, perhaps all, of its direct competitors in the dust over the next three years.

The good news is consumers win, at least in the short term. It becomes easier to find whatever we’re looking for from any source and always at the very best price. It becomes free or very cheap to communicate in all channels and with all media. Google may have wreaked havoc on media, advertising, and retail as we knew it, but I the consumer have more informed choice and there’s a lot more transparency than there was.

You Have Lost Control. Get Over It

Why should I listen to what you say about your product or service when I can just as easily seek the wisdom of a crowd? Whether you think the “mob” is smart, or gets it or not, is of little consequence. With consumers enabled by new technologies and pervasive connectivity, you can engage with them one way: facilitate and join clean, well-lighted virtual spaces where they can congregate and share with you, and each other, exactly what they think, what they like, and how they feel.

When every phone has a 5 megapixel camera that can scan barcodes for any product and instantly compare prices and pull up reviews, and when every phone has a built-in video camera that turns us all into sleuths and entertainers, and when every phone has a GPS chip that lets us leave virtual notes and reviews at any location with a couple of clicks, forget spin or trying to control messages. Openness is the only way, lest you be outed as a fraud.

The Battle for Personal Information Has (Really) Heated Up

The fight for control of personal information is at the intersection of a raging battle between the quest for corporate profitability, the need for national security, and the inalienable right in a free society for personal privacy. In an information economy, our personal information and identity is a valuable asset. And like all valuable assets, powerful forces are vying to harvest and control it. Big businesses are trying to control the asset, as are governments. And in the shadows of cyberspace, sundry characters are lurking, trying to steal it. The problem is though everyone wants control over the asset, we have no established framework that defines who has the legal right to claim ownership.

Nevertheless, the best way to survive in 2010 is to know your customer and engage with them better than the competition does. Insight and prediction based on both observed and shared data can give your company a competitive advantage. As it becomes harder and more expensive to get customers to come to you and buy your product or service, you better make sure they stay once they walk in the proverbial door. But bear in mind the rules are changing. As the information trail we leave behind becomes more comprehensive, detailed, and intimate every day, a strong need emerges for entirely new business and legal frameworks for how we handle personal information.

Trust Is Harder to Earn and Easier to Lose

If you think phishing email scams, spyware, and viruses are bad now, just wait a few years. Stealing personal, confidential information will only become more lucrative for the cyber underworld as more and more of our personal (and financial) lives are conducted online. With growing access to online content through mobile devices and phones, and as these devices become a payment platform (i.e. you can shop anywhere using your mobile phone), it’s only a question of time until phones are a target for hacks and scams.

Couple this with how easy it is to access and share information about any business and product, and trust must becomes central to any quality brand. Finding ways to build trust with your customer base through responsive, authentic, and open dialogue is crucial. Trust is earned over time and will carry a business through a rough patch if it’s targeted with a scam, its customers’ personal information gets compromised, a product has quality problems, and the like. Customers will stand up and defend a business or service they trust and will pounce on one they don’t.

Bits Are Free, Blogs Are Different, and Search Is Social

Storage and bandwidth costs will continue to decline at a fast rate. Anyone who’s basing a business on selling storage- and bandwidth-related services will have to change their model by 2010. Large operations, probably mostly operated by Google, Microsoft, and a few others, will make it so cheap to save and access documents, pictures, audio, video, and anything else that can be made into bits, that I the consumer will just expect unlimited storage and access to my stuff, always available in the “cloud.”

As a result of free bits, new media forms will evolve. Blogs as we know them will become very different. Though there will continue to be the journal format we identify with blogs today, new formats and much richer, more compelling means of expression and entertainment will have evolved by 2010.

Active participation of the individual in remixing the Web and in creating and readily sharing thoughts and opinions in the new media formats will mean new ways of discovering what’s interesting; what’s hot and what’s not will evolve. What’s called social search today, will become a part of the fabric of online life in 2010. Smart mobs will inform the online experience at every level.

We’re living in a time where even those who chuckled with an I-told-you-so grin on their face when the Internet bubble burst in 2000 are scratching their heads and are forced to admit the world is becoming a very different place, and “the Internet” is the change agent. We’ve given it names such as “Web 2.0,” “ubiquitous computing,” “software as a service,” “user-generated content,” and “anywhere [wireless] access,” but the reality is all those things and more are converging in a perfect storm, leaving a path of destruction in its wake.

In the wake of destruction comes opportunity. Some may see this as a net-loss game for which the outcome is shrinking advertising budgets and the decline of old media with no new growth or emergence of comparable jobs and industries. I think not. The current climate is growing whole new ways of working, new industries, even new titans. I’m an optimist and an entrepreneur. Dust off those reading glasses. Pay attention and you’ll discover new opportunities blossoming where you least expect.

With that, I’m signing off to explore some of those very opportunities.

Thank you for reading.