In 2011, over 940 web companies in the fields of ecommerce, advertising and digital media have been funded by US investors with a volume of more than 13,6 billion US$. This is the tip of the iceberg of our analysis that investigated most investments by US venture capital companies and business angel in 2011. Beside the data we collected, I wanted to find out, which specific trends in each of the most relevant web business segments can be derived from the identified investment patterns and which impact these trends will have on investment behavior in Europe/Germany. more on http://www.medien.nrw.de

1. 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

2. 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
2 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

3. How we conducted the anaylsis
1 2 3
Clustering search results Identification of trends
3.939
Mn US$
• Tech companies funded • Aggregating search results • 1st: quantitative analysis
between Jan-Dec 2011 into 12 most relevant digital • 2nd: identification of accu-
• 2 investment funding sizes: media segments mulated new business
100K-10M and 10M-1000M • Sorting out tech companies mechanics within each
• 95% US investors, with no media connection digital media segment
5% European (e.g. security, energy, nano) • Derivation of trends
Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia
3 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

4. Thesis 1: USA = „Home“ of digital media innovation
(Nearly) all successful business models in digital media originated in the US
Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia
4 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

5. 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 3-4 months
Social networks
Content/gaming
Vertical search apps Group deals
Paid search
Portals
9-12 months
Daily deals
Auctions Online Crowdsourcing
classifieds LBS
AR
12-18 months Reverse Targeting
auctions UGC Real-time bidding
2002 2004 2006 2008 2010 2012
Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia
5 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

6. Investment categories in digital media – overlaps may
occur due to combined business mechanics by startups
eCommerce/ Games Social B2B tools
eTransaction networks
websites that all types of non- social platforms to tools that increase
convert traffic into console games & publish, consume efficiency in digital
sales (leads) gaming middleware & engage media processes
Advertising Productivity Crowdsourcing B2B solutions
solutions apps outsourcing of
platforms & solu- mobile apps that intelligence and solutions that boost
tions that enhance enhance everyday workforce to web companies’ digital
the ad eco system aspects of life community media business
Content-driven Search LBS Others
platforms websites with a services & tools
all types of audio, focus on vertical & that increase user all other companies
video, picture and local search experiences at with a touch point
text content sites (no e-commerce) point-of-location in digital media
Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia
6 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

7. Overall summary -
Investments in digital media tech companies 2011
942 no. of companies
13,6* bn US$
investments in
digital media comp.
690 252
2,6 bn US$ 11,0** bn US$
single investments single investments
< 10 Mn US$ > 10 Mn US$
** 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
7 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

8. Overall summary -
Digital media investment clusters 2011
138 no. of companies
total funding per cluster (in Mn US$)
3.939 125
57
115
92
1.899 112
1.660 1.534 111
54
1.088 34
888 40
696 571 43 21
347 476
260 236
eCom- Adver- Games Content B2B Prod. B2B Search Social Crowd- LBS Others
merce tising solut. apps tools netw. sourcing
Source: Crunchbase, Marc Ziegler, Media Cluster of North Rhine-Westphalia
8 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

9. Ranking of investment clusters according to funding vol.
Source: Crunchbase, Marc Ziegler, Media Cluster of North Rhine-Westphalia
9 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

10. Ranking of investment clusters according to funding vol.
Investment category < 10 Mn > 10 Mn Overall
eCommerce/eTransaction 5. 1. 1.
Advertising solutions 1. 2. 2.
Games 9. 3. 3.
Content-driven platforms 6. 4. 4.
B2B solutions 3. 5. 5.
Productivity apps/tools 4. 6. 6.
B2B tools 2. 8. 7.
Search 8. 7. 8.
Social networks 10. 9. 9.
Crowdsourcing 7. 11. 10.
LBS 11. 10. 11.
Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia
10 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

11. Categories with investment volumes above average
Many multi- high operating
browser games costs (e.g. inter-
publisher among nationalization),
top-funded comp. high profit potent.
62,1 63,7
56,1
Investments > 10Mn US$ Ø 43,8 Mn US$
Content- Games eCommerce/
driven eTransaction
platforms
Investments < 10Mn US$ 4,6 4,9 Ø 3,7 Mn US$
Advertising B2B
solutions solutions
Source: Crunchbase, Marc Ziegler, Media Cluster of North Rhine-Westphalia
11 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

12. Details on „eCommerce“ (1)
10 biggest single investments 2011 3.939 Mn US$
138 companies
in eCommerce/eTransaction platforms (Mn US$)
daily deals
couponing member-only
(daily) deals
group buying
576
Chinese
fashion
eCommerce
305
230 200
165 150 138 123 120 112
Source: Crunchbase, Media Cluster of North Rhine-Westphalia
12 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

13. Details on „eCommerce“ (2)
Major trends (some of them ongoing)
Group deals/daily Neighborhood Socially assisted UGC monetizing
deals/couponing commerce commerce platforms
• … still investors’ • eTransaction on a • … another ongoing • platforms that
darling, but … local scale gain serious trend is convert user
momentum social shopping generated content
• stronger verticaliza-
into sales also
tion to be observed • Mostly people from • These sites support
scored on investor
the neighborhood social interaction,
• especially fashion & side
offer goods and user contributions
apparels, grocery,
services to let or to and recommenda- • Most of these sites
home design, mums
sell (topics: mobility, tions to assist in deal with design,
& kids
cooking, nanny, …) buying products & fotos and articles
services from the community
Hottest verticals: mobility/car sharing, fashion & apparel, food delivery, home design, travel
Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia
13 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

14. Details on „advertising solutions“ (1)
10 biggest single investments 2011 1.899 Mn US$
125 companies
in advertising solutions (Mn US$)
mobile ad
network
long-tail ad digital
marketplace marketing
multichannel services
marketing solut. watch ad
next gen. later
200 200 TV targeting
paid search In-app
monetization In-video
monetization
61 52 51 50 49 48 37 35
Source: Crunchbase, Media Cluster of North Rhine-Westphalia
14 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

15. Details on „advertising solutions“ (2)
Major trends (some of them ongoing)
Targeting Real-time bidding Data-driven In-app, in-game,
solutions solutions marketing in-video solutions
• more sophistication • demand-side- • big data solutions • different approa-
platforms that analyze… ches to increase
• tracking targeting monetization within
performance • matching supply • … ad performance apps, games and
and demand of ad across multiple
• targeted television videos
inventory as well as platforms
advertising performance adjust- • … in most cases via
• … demographic
• search-Retargeting ments in real-time analyzing user
trends and deliver behavior (clicks,
• overall: stronger • … similar to inventory social media com-
specialization on Google, potentials accordingly munication,
social media/ for hub role within
• … local information purchases, etc.)
contextual behavior ad eco system
for contextual ads
Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia
15 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

16. Details on „productivity apps/tools“ (1)
Biggest single investments 2011 888 Mn US$
112 companies
in productivity apps/tools (Mn US$)
file
management
personal
communication
250 personal
finance
pers. traffic
management personal
129 personal learning
fitness
50 10 10
30 23 19 16 15
Source: Crunchbase, Media Cluster of North Rhine-Westphalia
16 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

17. Details on „productivity apps/tools“ (2)
Major trends (beside productivity “champion” file management)
Personal Content produc- Personal Personal
finance tion & discovery learning / educ. communication
• Tools helping to • Tools that ease the • Tools that enhance • Tools that improve
better organize (self-)production, the personal lear- cross-platform com-
everyday’s finance adaptation, organi- ning experience by: munication capabili-
life, related to … zation & discovery tracking progress, ties, such as …
of various media exchanging with
• … accounts, debts, • … inbox notification
assets / contents others / bench-
loans, bills, receipts, management,
such as … marking, grade
fixed expenditures, dialing without
tracking, etc.
bank transactions • … pictures, videos, numbers, real-time
etc. music, articles, … • Fields of interest: radiation indication
languages, college,
science
Further hot app genres: health/wellness/fitness, kids & family, travel
Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia
17 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

18. Details on „games“ (1)
Biggest single investments 2011 1.660 Mn US$
57 companies
in games (Mn US$)
(social)
browser
games
entertain-
ment Mobile
software games
490
distribution
Multi-platform
video game
350 MMSGs streaming
200
85
42 40 30 30 26 24
*
* partially secondary investment
Source: Crunchbase, Media Cluster of North Rhine-Westphalia
18 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

19. Details on „games“ (2)
Major trends
(differentiated) Gamification of In-game (traffic) Cross-platform
social games real-world markets monetization game middleware
• Players in pursuit of • Non-entertainment • Beside p-a-y-go and • Rapid game
finding USPs in the companies increa- subscription-based creation techno-
space of social singly discover the gaming biz models, logies
games such as … power of games to various in-game re-
• Solutions for cross-
address real-world venue sources have
• … cross-platform platform game
challenges, as … been developed:
distribution development
approaches, mobile, • … in the fields of • Real rewards for in-
AR, social bench- health, wellness, game achievements
marking, kids, education, research,
• Performance-based
edutainment recruiting, etc.
advertising tools
Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia
19 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

20. Details on „content“ (1)
Biggest single investments 2011 1.534 Mn US$
115 companies
live in content (Mn US$)
strea-
ming/
VOD (e)Book
content retailer
sharing/
discovery interactive
MOD out-of-home
legal entertainment music
250 content detection
platform
content cognitive
discovery enhance-
100 ment
85
66
50 46 45 40 33 32
Source: Crunchbase, Media Cluster of North Rhine-Westphalia
20 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

21. Details on „content“ (2)
Major trends
Enhanced music/ Next level of eLearning plat- Multi-chan. video
audio experience content discovery forms/tools & more sharing, casting
• platforms & tools for • platforms that • environments for • web video enter-
increased digital intelligently aggre- sharing & discovering tainment beyond
audio excitement, gate content from learning materials & youtube, such as …
such as … various sources & curricula with co-
• …sharing (mobile)
channels to create students & teachers
• creating & sharing videos in real-time
new (and mostly
audio content in • video-based learning
dashboard-driven) • … social live video
real-time, detecting communities, social
user experiences casting & commu-
music, do-it-yourself prep-center, online
nication, social
music-related sites • focus varies: either course creator suites,
video upload.
& apps, music per- by type of content or interactive tutorials
sonalization suites distribution platform for coder, designer … • … VOD services
Further hot topics: social TV guides, textbook rental sites, eBook hubs, tech & financial content sites
Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia
21 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

22. Details on „crowdsourcing“ (1)
Biggest single investments 2011 260 Mn US$
43 companies
in crowdsourcing (Mn US$)
UGC monetization
crowdfunding
crowd-
lending
35 people corporate
powered idea
antivirus sourcing social
trading
26 25
19
17
10 10 10 10
8
* *
Source: Crunchbase, Media Cluster of North Rhine-Westphalia * see also under eCommerce trends
22 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

23. Details on „crowdsourcing“ (2)
Major trends
Crowdfunding/ Crowdsourced Enterprise / brand Community
-investing labor/jobs/tasks empowerment opinion aid
• enforced by tre- • platforms that target • solutions for • platforms that help
mendous kickstarter companies who are corporations that individuals to sort
success, various outsourcing tasks to engage and activate out the wheat from
other crowdfunding the crowd (and brand audiences, the chaff in terms of
platforms evolved users who search especially within “taste bench-
that have speciali- for such tasks) in the social networks … marking”
zed in … fields of …
• … to measure • mostly these sites
• … social projects, • … design/graphic brand awareness are related to
private investments, arts, programming, fashion, food, enter-
• … for assistance to
creative ventures translation, text cre- tainment, travel,
“spread the word”
and big ideas/trends ation, research, … lifestyle, …
Further hot topics: social lending, collaborative trading, enterprise innovation, social benchmarking
Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia
23 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

24. Details on „search“ (1)
Biggest single investments 2011 571 Mn US$
54 companies
in search (Mn US$)
car
search
local
service
search/ (mobile)
review job
200 search real-estate
search meta
local
editorial search
supported caregiver
search search wedding
84
search
30 27 23 18 15 12 11 10
Source: Crunchbase, Media Cluster of North Rhine-Westphalia
24 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

25. Details on „search“ (2)
Major trends
Comment on ma- App search / Travel-related Job-related
jor search trends app discovery search search
• the “search” invest- • platforms that help • platforms that allow • even the highly
ment cluster does to search for apps in a better search contested job
not reveal as many general (discover & experience beyond search market
distinct trends as experiences new monothematic que- generates new
others apps) or business ries, mostly fueled approaches with
apps in specific with community supporting specs:
• however, as in pre-
know-how
vious years, most of • most of these • internship search,
new search plat- include reviews from • multi-parameter job-related metrics,
forms tend towards the community requests, finding employer reviews,
increased speziali- private homes to job advices, focus
• also purpose:
zation and include stay, local reviews on job verticals etc.
market research
SoLoMo functiona-
lities
Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia
25 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

26. Details on „location-based services“ (1)
Biggest single investments 2011 236 Mn US$
21 companies
in LBS (Mn US$)
geo- geo-location
location service
social (Russia’s
network Foursquare)
geo-location
110 gadget P2P (shared
location payment interests)
(LaaS)
real-time
LBS real-time urban
50 location family
game navigation tracking
tracking
15 13 5 4 3,5 1,0
10 10
Lashou.com
Source: Crunchbase, Media Cluster of North Rhine-Westphalia
26 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

27. Details on „location-based services“ (2)
Major trends
Comments on Geo-location services Other LB-Services
major LBS trends (but no distinct trends)
• due to the small and • investors identified geo-location • P2P/NFC mobile payments
heterogeneous field related services as a promising • WIFI location solutions for
of players in this field of business. These services retailers
segment, few dis- cover a wide range of functional-
tinctive trends could ities and focus such as … • LBS-enhanced local search
be retrieved • local guides/ local discovery
• real-time location tracking
• small number of • LBS-based social networks
• family tracking & neighborhood
“pure” LBS compa- (e.g. for mums & dads)
safety
nies results from the
fact that LBS fea- • find interest-alike people nearby • urban navigation services
tures are often inte- • on-demand delivery services
• LBS + gaming elements
grated into products
with different core
Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia
27 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

28. Details on „B2B solutions“ (1)
Biggest single investments 2011 1.088 Mn US$
92 companies
eCommerce in B2B solutions (Mn US$)
check-out
event
organizer mobile app
& ticketing developm.
platform solutions
inflight online
social commu-
enter- video
nication platform
155 prise solution
136 softw. on-demand
online- billing &
degree subscriber
progam managemnt.
kits
54 50
35
33 24 20 19 19
Source: Crunchbase, Media Cluster of North Rhine-Westphalia
28 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

29. Details on „B2B solutions“ (2)
Major trends
iPad POS solutions Context-sensitive commerce platforms
In-flight entertainment & communication
(Cross-platform) app development suites Mobile device identification/profiling
In-restaurant solutions
Mobile shopping solutions Mobile payment solutions Social loyalty & rewards
White label app storefronts Video management platforms
Billing & subscriber management
Social commerce solutions
Real-time shopping-cart recovery
Publishing/app/video monetization services
Augmented human intelligence
(Mobile) payment processing
Event organizing platforms
Personalized customer experiences & engagement
eCommerce checkout / order fulfillment
Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia
29 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

30. Details on „B2B tools“ (1)
realtime Biggest single investments 2011 696 Mn US$
frame- 111 companies
works in B2B tools (Mn US$)
video
rights
manage- customer
ment retention
brand
consumer fb power talent
engage- tool for intelli-
100 adaptive ment musicians gence
learning
eLearning social
tools financial
marketing office
SaaS tool
33
25 25 24 20 18 17 16 16
Source: Crunchbase, Media Cluster of North Rhine-Westphalia
30 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

31. Details on „B2B tools“ (2)
Major trends
(Real-time) user behavior analytics
Social media performance tracking
Social media monitoring/analytics Instant loyalty programs
Social recruiting tools
Community building tools Social media Social media engagement
tools
Rental marketing tools
Social media campaign mgmnt. Control & centralize social media
Social talent engine
(universal) tag management
Big data analytics/visualization
Online accounting/invoicing
(Adaptive) eLearning tools App analytics Twitter filter
SEO improvement tools Developer
tools Backend as a service
Business productivity tools for SME
SDK for social apps Gesture-based interfaces
Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia
31 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

32. Estimated digital media investment radar for Germany/
Europe – what will be top on investor’s list in 2012?
hot 1 Group/daily deals/coup. 17 Enhanced music exper.
high 2 Neighborhood com. 18 Next level content disc.
17 18 6 3 Social commerce 19 eLearning platforms
21
Chances to get funded in GER*
5 4 UGC monetizing 20 Multichannel video
4 3 2 12
9 26 5 Targeting solutions 21 Crowdfunding
10 8 20
11 28 6 Real-time bidding 22 Crowdsourced work
19
22 30 7 Data-driven marketing 23 Brand empowerment
7 1
27
24 23 25 15 8 In-app/-video/-game adv. 24 Community opinion aid
29
13 9 Personal finance 25 App search
14 16 10 Content prod.+discovery 26 Travel search
11 Personal learning 27 Job search
funding chances within
B2B sectors vary and 12 Personal communication 28 Geo-location services
could possibly be higher
13 Social games 29 B2B solutions
14 Gamification 30 B2B tools
15 In-game monetization
low
16 Cross-platf. middleware
low high
Market biz & capitalization potential
Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia * assuming that team is excellent and respective product has USP
32 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

33. 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 …
Source: Marc Ziegler, Media Cluster of North Rhine-Westphalia
33 30 trends that will shape European web & digital media business in 2012 Marc Ziegler

34. 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