First Ten Years of Internet Growth Nothing Compared to Second
As a prelude to the first ad:tech keynote given by Sequoia Capital Partner Mark Kvamme, ad:tech chair Susan Bratton welcomed a packed room of attendess to ad:tech San Francisco 2006 and told the audience there would be 9,000 attendees to this years show, breaking all former ad:tech attendence records. In addition, she mentioned there would be 300 exhibitors, 200 speakers and 55 sessions, more than any prior conference. Noting the conference’s tenth tyear anniversary, Bratton, calling the show the “biggest, deepest and widest” to date, told the audience ad:tech would be expanding its conference series to Sydney, Hamburg and Paris this year and, in 2007, to Mumbai, Dubai among others.
Following her introduction, Bratton introduced Kvamme who quickly followed the ten year theme Bratton had begun by telling the audience the next ten years will see growth in the Internet space that will make the first ten years seem trivial. Noting all media expcept the Internet is declining in use, Kvamme pointed out the disparity between adspend and consumption comparing television to the Internet. Thirty two percent of people are reached by TV and 38 percent of ad dollars are allocated to TV. In contrast, the Internet reached 32 percent of people but only receives five percent of ad dollars. With TV CPMs hovering around $64 and $10 to $30 for the Internet, Kvamme sees huge growth potential for Internet advertising.
Kvamme noted thirty percent of all retail in Korea occurs online mostly due to the country’s 68 percent broadband penetration compared to the U.S.‘s 28 percent. Using those numbers, he posited if U.S. broadband penetration reached 68 percent, U.S. ecommerce would soar to $1.2 trillion.
In terms of what Kvamme looks for when he and his company Sequoia consider investing, he offered three laws. First, the entity must have a clear and focesd customer benefit. Second, investment should occur after initial site launch and user feedback. Third, investment should occur after the entity is discovered by a user community which is more important than discovery through promotion.
Currently, Kvamme and Sequioa are considering investment in a company that which garners a time spent figure of 1.5 hours. While he wouldn’t divulge the name of the company, he did note the importance of social and community site which naturally have high levels of time spent. with MySace under News Corp. and Facebook in talks with a few, another social site, Multiply, might be a good bet. Of course, we’re not an venture capitalist so don’t take our advice.
