Rich Media: the next watershed for Web advertising

Emerging Rich Media technologies will raise the bar for e-commerce and enterprise communications, creating a US$34 billion industry within the next four years, according to a report issued by FAC/ Equities.

As Web-based advertising evolves and continues to account for a greater share of overall advertising dollars, Rich Media is expected to become an essential e-commerce tool.

BOSTON - Emerging Rich Media technologies will raise the bar for e-commerce and enterprise communications, creating a US$34 billion industry within the next four years, according to a report issued by FAC/ Equities.

The report, "Rich Media, Rich Opportunity", was authored by John Bowen, a research analyst, FAC/Equities.

This study focuses on companies producing applications and infrastructure for the delivery of streaming video, voice, data and other technology over the Internet or corporate networks.

"Rich Media is a burgeoning field that combines the best attributes of the Internet, television and radio into one medium," Bowen noted. "It is helping to create new user experiences that will be driven in the near term by e-commerce applications and organizational communications."

Broader deployment of high speed, broadband Internet access, along with improving hardware and compression technology, will help fuel the sector's growth.

"While many associate entertainment applications with Rich Media, the technologies that support applications and infrastructure that drive revenues, such as advertising, sales/marketing, service, training and development, will lead the way. This is particularly true given the market's renewed focus on the ability of emerging technology companies to demonstrate a strategy that will drive predictable and consistent revenues and earnings," Bowen observed.

Engaging user experience
According to Bowen, Rich Media results in higher recall and clickthroughs and can be an important tool for raising a company's advertising above the static clutter of most Web advertising.

He noted that the META Group forecasts that within two years, two-thirds of the Global 2000 Web sites will have Rich Media capabilities, compared to less than one percent now.

"However, in addition to helping generate business, the real value of Rich Media will come in its ability to enhance the customer experience by making it more engaging and effective. The combination of Web analytics and Rich Media technology will allow for a more customer-centric eCRM (Customer Relationship Management) experience.

"Businesses are beginning to understand that reducing customer attrition can be a major boost to profits. As a result, the need to attract, retain, collaborate with and better service customers has become more critical in today's environment. We anticipate that companies will look to Rich Media to gain an advantage," Bowen said.

Bowen added that the widespread use of Rich Media for entertainment will not come until future enhancements have been made to the Internet infrastructure.

"Rich Media will not become a significant entertainment factor in the short-term because it cannot deliver the level of quality consumers currently receive with television, film or videotape. In addition, media companies must have the ability to sufficiently protect their content and receive payment for it. Over time, technology improvements which enhance the quality of the experience will drive greater demand."

Bowen says that four major market groups are emerging within the Rich Media sector:

  • Rich Media Content Creation: applications and services that enable the creation, editing, production, and encoding of digital video/audio, animation, and graphics. These tools create and edit the original content that end-users see.
  • Rich Media Asset Management: applications and services that catalog, index and annotate original content, that allow for the repurposing, search and retrieval, and database integration of rich media content.
  • Distribution Methods and Infrastructure: products, technology and services that facilitate distribution over the Internet or corporate networks.
  • Content Aggregation: service-based companies offering repurposed content, aggregation, hosting and syndication.

    About FAC/Equities
    FAC/Equities, the investment banking division of First Albany Corp., provides research, corporate finance and capital markets capabilities to technology companies in the communications, Internet and software industries. The firm has an affiliate relationship with META Group, an independent market assessment company providing research and analysis of technology industries.