Seven Promising Trends for the Internet�s Future

19 August 2002

Steve Butler examines everything from advertising to access technologies in assessing long-term forecasts for the internet. There is good news out there, and eMarketer serves seven helpings.

By Steve Butler

For the past few months, economists have been saying that despite the near-term uncertainty facing the US economy, the prospects for long-term growth remain positive, as the corrective action of the recent downturn has helped lay the foundation for an economic recovery.

A similar thing may be said about the prospects for e-commerce — with the housecleaning that we�ve experienced since March of 2000, the table has been set for a new period of steady growth for the commercial internet.

For example, among those dot-coms that have survived, most now have much more efficient operations, while traditional companies have a better understanding of how they can best use the internet to their advantage. And as many of the more tenuous projects have been cast aside, industry leaders have set their sights on the future with well thought out e-business strategies.

Here are seven trends that point to continued growth for the commercial internet, which will continue to unfold over the next several years:

  • It is now understood that the internet should be viewed as one of several channels through which businesses may communicate with and sell to their customers. Based upon this acceptance of the internet, most retailers have embarked upon multi-channel technology strategies that will integrate their online and offline operations, and turn the internet into a more robust customer service channel over the next several years.

  • Traditional advertisers have only begun to receive research confirming that online advertising is an effective way to promote their brands. As big advertisers such as consumer packaged goods companies begin to direct more of their advertising budgets online, online ad revenues should see a steady increase.

  • Broadband adoption among US consumers and small businesses has taken off since mid-2001, but there is still a large number of people who are yet to be hooked up. Now that broadband has truly arrived, this opens up new online opportunities for the entertainment industry, while small businesses stand to benefit from improved internet-based communications and hosted e-business solutions.

  • Although the rapid growth of mobile commerce may still be one or two years away, the arrival of 3G wireless networks and convergent mobile devices with voice-data capabilities is a big step in that direction. As handheld device manufacturers and wireless network operators prepare a marketing push for this year�s holiday shopping season, mobile internet use should get a boost in 2002 — similar to what broadband received last year.

  • Because of the recession, businesses have started to look more seriously at how they may use the internet to reduce travel costs and other communication-related expenses. From collaborative extranets to voice over IP solutions, online video conferencing and even instant messaging, many companies have also begun to experiment with several forms of internet-based communications. As technology improves, the use of internet-based communication is expected to increase dramatically over the next several years. Among those B2B exchanges that have survived, many are seeing their membership and transaction activity grow, as the more successful exchanges have figured out how to bring small and mid-size companies online. The most advanced B2B exchanges have only just begun to ramp up in 2002.

  • Whether companies have decided to build private extranets that link to their sales channel partners or deploy supply chain management systems to connect with their key suppliers, many companies have placed a priority upon integrating their internal IT systems before pursuing external e-business initiatives. Among those companies that have begun to embark upon supply chain initiatives, most have only begun such projects during the past two years. As a result, much of the anticipated productivity gains from business-to-business e-commerce still lie ahead of us, with companies continuing to implement e-business systems over the next decade.

Steve Butler is a Senior Analyst with eMarketer. You can reach him at [email protected] with comments, questions or suggestions.

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