Seattle-based investment bank Cascadia Capital released a comprehensive report today on the state of the Internet and new media market and its future prospects. The analysis points to social media and mobile applications as areas in which companies are most likely to make money in the next couple of years. It also fleshes out the expected growth trajectory of online marketing and advertising, given the current state of the economy.
Cascadia managing director Warren Gouk leads the company’s Internet New Media practice, and put together the report with his team. Among other duties, Gouk advises regional and national firms on their merger and acquisitions strategy, and generally has his finger on the pulse of where Internet “commerce and community dynamics are converging,” he says.
One of Gouk’s major focus areas these days is online marketing. “I’m still incredibly bullish on the category, I think there’s a huge opportunity,” he told me recently. “We’ll take a few steps backwards before we can push forward.”
Here are a few excerpts from a Cascadia Q&A with Gouk, in which he talks about how social media, mobile, and online marketing are all entwined, and points to several Northwest startups as leading lights:
—On which Internet firms to watch: “We believe companies that are harnessing cloud computing are the emerging leaders in Web 2.5. These companies include various players in the mashup, widget and social networking space. Some of the companies worth noting include: social networking firms like Facebook, Twitter, Wetpaint and Hulu; search entities like Kosmix and Mahalo; data aggregation players like AboutUs and Rearden Commerce; and mobile companies like Admob, Amobee and bluepulse.”
—On the state of Web mergers and acquisitions: “M&A transaction activity is down across all sectors and the Internet market hasn’t been immune to the M&A downturn. However, there are pockets in the Internet that have been less affected: online services with strong brand and critical mass, for example, and online marketing plays that have aggregated unique distribution or possess unique technology/data to drive increased [return on investment] across ad networks. Expect to see record levels of corporate divestitures in the consumer Internet space, similar to eBay’s recent divestiture of StumbleUpon and its plans to divest Skype.”
—On what will drive the growth of online marketing: “There are several factors. (1) Continued advancements in technologies that create better experiences for the consumer/audiences and better conversion rates for the advertiser. (2) Top advertisers entering the realm of online marketing in a
