• by Dave Morgan , Featured Contributor, December 6, 2007

You don't have to have been in the digital media business for a very long time to realize that we are in a period of extraordinary change. Over the past two years, there have been tectonic shifts in everything from enabling technologies to user behavior to business models to regulatory scrutiny. Two years ago, social networks were emerging ideas. Today they are dominating all others in user growth and engagement. Two years ago Google was an exciting, fast-growing search company that was just starting to really crank up a text ad network. Today, it is a dominating digital media company -- with a capital "D" -- with a $16 billion annualized revenue run rate and regulators in the U.S. and abroad scrutinizing many of its moves. Two years ago, a widget was what companies in business school case studies made. Today, consumers interact with Web widgets to the tune of billions a day, and they're starting to show up on mobile devices as well.

What is driving these changes? Here are some of the drivers:

More robust foundational technologies. Today, Web pages and services are no longer driven just by HTML programming and static image files and text. More and more, they are being built with much more robust technologies and flexibilities, like Java and Javascript and Ajax and Flash and .NET. These technologies make it much easier to deliver more dynamic and more personal content and web services. They enable much richer user feedback loops -- whether positive or negative -- which means that Web sites and services can learn, modify and evolve their offerings much, much faster.

Changing user behaviors. Users are no longer just following forced navigation paths foisted on them by their Internet Service Providers or limiting their browsing to bookmarked "favorites." Instead, they are exploring and searching more and more. They are interacting with and consuming content from millions of new and emergent Web sites. Every day, millions of them create content, share content, critique content. Their browsing patterns are becoming much more about them. This means dramatic shifts in audience fragmentation for Web publishers. It means extraordinary pressure on the branded portals and vertical sites that have dominated user attention for most of the past ten years, but are now losing their hold on their audiences.

Social networks. The new foundational technologies, the adoption of much more straightforward user interfaces -- thank you, Google -- the proliferation of portable, object-oriented Web applications, and the desire for users to have persistent connections with others, have all driven the development of dynamic social network platforms. The recent explosion of MySpace, Facebook and Bebo is just the start. Users are making these networks their own places, they are building profile pages and customized news feeds that are all about them -- not all about just what publishers want to push to them.

Ad network proliferation. As audience fragmentation accelerates, the need for advertisers and agencies to aggregate target audiences at scale increases in parallel. Targeted reach and frequency at scale now requires massive ad networks with robust targeting. It is becoming less and less about delivering ads to particular places -- pages, products or programs -- and more about delivering ads to particular groups of people. This will only accelerate as we see more adoption of Internet-Protocol-driven mobile and television platforms, and more user-centric advertising on more digital devices.

What's next? Content orbiting is coming. I think that we are very soon going to see massively scaled content, social and Web service networks spring up much in the same mold as today's online ad networks. They will take over parts of the pages of widely distributed networks of thousands and millions of sites and "orbit" content around users, just as ad networks "orbit" ads around users. We are already seeing Google and other large players get into the content syndication business. We will very soon see the syndication players become "content orbiters," shifting their models from placing content on pages to targeting highly relevant content to users, on whatever pages they happen to be surfing. What do you think?