• by Geoff Ramsey , December 18, 2002

When you’re talking about the future of the Internet – particularly in this environment of economic uncertainty – making predictions can put you on really thin ice. The celebrated and oft-quoted economist, John Kenneth Galbraith, once quipped, “The only purpose of economic forecasting is to make astrology look respectable.”

That said, with all humility, I am going to go out on a limb here and make seven predictions for 2003.

#1) Broadband is coming – really!

Our figure for broadband household penetration this year (growing 50%, from 11.2 million in 2001 to 16.8 million households by year-end 2002), but the fact is that all leading researchers report broadband growth rates of at least 50% for 2002. Next year, there will be 23.3 million households on broadband, representing 22% of all US households and 33% of Internet households. Broadband Internet users across home, work and college will number 50 million in 2003. This will create a “critical mass” of high-speed, always-on connections that will be irresistible for marketers wanting to interact with customers and prospects through rich media ads, streaming audio and video and highly dynamic, personalized websites. Research data also indicates that broadband users spend more time online, get online more frequently and buy more online than their dial-up counterparts.

#2) The At-Work Online Audience Will Become the “Next Big Thing”

Depending on which researcher you subscribe to, there are between 50 million and 60 million Americans who regularly go online at work during the day. Moreover, this massive segment of the population is more affluent, educated and net-savvy than internet users who go online only at home. According to comScore, 86% of at-work internet users are on broadband. By the end of 2003, the at-work online audience will become so important that advertisers will actually start segmenting their online ad buys by time of day and demographic subgroups. Imagine McDonald’s advertising its burgers and fries in the 11:00 A.M. to noon slot on Yahoo!, AOL and Weather.com. Expect to see Michelob ads with rich media-enhanced pour shots on Fridays between 4:00 P.M. and 5:00 P.M.

#3) More Users, Shoppers and Buyers

Though the growth in number of internet users is slowing, there will still be a total of 162 million online in the US by year-end 2003 -- 147 million of whom will be age 14 or older, with money and a desire to spend. This 14+ group will represent 64.5% of the population in that age segment. Advertisers wanting to reach them should also realize that 81%, or 119 million, will engage in online shopping behavior such as researching products and services (whether or not they actually purchase online). The number of online buyers will also grow, rising from 72.6 million in 2002 to 80 million by year-end 2003. This data points to a huge opportunity for advertisers to deliver relevant, timely messages at what could be the point of purchase.

#4) Online Ad Growth Will Outpace Total Offline Media Spending

eMarketer sees online advertising growing by 6.3% next year (after two consecutive years of decline), while total media will rise by only 4.7%. This will be driven by online marketing activity from the big CPG and pharmaceutical firms. Okay, it’s “grandmother research,” but we have seen a huge, groundswell movement in large consumer packaged goods (CPG) and pharmaceutical firms buying research data. It would be logical to presume that purchasing market research is a preparatory step towards doing something in the market place, whether it be online advertising, e-mail or CRM initiatives or some other form of online marketing.

#5) comScore Becomes Transcendent

We’ve seen the rise and fall of many a research provider, and though we always maintain an objective view, we see comScore Networks as a critical link in the research chain. Unlike other internet “ratings” firms, comScore not only measures where people visit online, but also their buying behavior. This 360-degree view of visitor activity provides marketers with vital information they can’t get elsewhere in one place. comScore data is based on the online activity of 1.5 million internet users who have agreed to have their online behavior monitored. We know their buying behavior is accurate because comScore’s estimates for aggregate e-commerce spending align tightly with data provided by the Department of Commerce in its quarterly reports.

#6) More Consolidation in the Research Industry

In a tough economy, the big, or rather the healthy, seek to get bigger. We weren’t surprised when comScore swallowed Media Metrics, and we expect more acquisition activity in the research sector next year. I’m keeping my eye on Forrester, Gartner and IDC.

#7) Final Prediction: Predictions Will Lose Even More Credibility

Forecasts of the future, particularly in the areas of e-business and the internet, will continue to lose impact and credibility. While big-name research firms, Forrester, Gartner and IDC included, can still generate press attention with their projections about future-based market activity, the trust business executives place on these forecasts is waning. Too many rash predictions were made in the excitement of the pre-bubble era, which in hindsight now seem ridiculous. The reality of the languishing telecommunications and IT markets, coupled with the anemic economy and threats of war and terrorism, have left people skeptical of any numerical expressions of future trends. People almost laugh now when they hear announcements like: “This will be an $X billion market in five years.”

Does that mean you shouldn’t believe any of the eight predictions listed above? Just take them with a small grain of salt.

--Geoffrey Ramsey (Gramsey@emarketer.com) is CEO and co-founder of eMarketer, the leading source for e-business research. eMarketer aggregates, filters, organizes and analyzes internet and e-business information from over 1,200 research firms, consultancies, government agencies and other sources.