Thursday, May 07, 2009

Phases of New Online Market Development aka Niches

About 4 years ago I put together a handful of observations on new markets aka niches from the perspective of marketing and business development. Being a seasoned seo veteran and having worked on my fair share of sites, I had seen one thing happen over and over again and was surprised that not many people spoke about it. Today that phenomenon is happening again and its latest incarnation can be found in Twitter. If you want more information on my theory than what I put below you can always ping me directly or hit me up on twitter. I will say that there is not a single new niche industry or market segment that falls outside of this model and I strongly believe this single theory can drive the development of any marketers or entrepreneurs career for the next 50 years.

DATA Business Model and the Phases of New Markets / Niches

1. New market is born and leaders are created. Etsy created a niche for crafters and it's founders are the hand made goods experts. Threadless did this with artists and tees. Twitter is doing this with a new data format of tweets (still needs a recognizable industry name but there aren't enough competitors out there yet). Blogs made feeds sexy but before they were called feeds they were just known by their specs, RSS, all purpose XML and the budding Atom.
2. Key inflencers are sought out for advice and consulting, their blogs are heavily trafficked. When I started mshift I spoke a lot of blogs and feeds and this new democratization of data and interviewed the key folks in the space. Now all those folks companies have been acquired ;)
3. Data is aggregated in silos (services spring up). Don't think walled gardens here. I'm talking about businesses that hone in on this new data source and apply their own meaning to data they see, they key ingredient is usefulness of data. There are hundreds of sites dedicated to Twitter and making it better but many of them will die soon as Twitter adds more features. But once there are more twitter competitors and a real name applied to a tweet, we'll see meta-aggregators spring up. 6 years ago blog directories were springing up and now they've exploded into every niche imaginable.
4. Filtering algorithms are laid on top of aggregated data. Yahoo! Pipes now allows you to aggregate and filter in a wysiwyg interface and when you look at the sources of data they let you fetch, nearly all of it is an xml feed of one sort or another. Back in 1997 we saw the first public display of aggregators and we called them meta search engines. Dogpile comes to mind and it just piled up search results from multiple search engines so you could see all of their results in a simple interface. Today you have to add more meaning than simply regurgitating results back to users but regurgitation is where it all starts. We have a prettier name for it now, it's called aggregate. Stock twits demonstrates this principle on top of Twitter's data.
5. Refinement of the data via filtering occurs. The first place this happens is within the user interface. Stocktwits.com literally only shows you tweets about publicly traded stocks on twitter. So the refinement is built into the interface since this site is already a niche withing the Twitter data niche. Then within that user interface you can filter the data further like seeing only stocks you're interested in or stocks your followers follow and so on. This refinement drives the vast majority of the blog fodder mentioned above and you'll see the industry experts talk about it and get commented on the most.

I hope this helps some of you understand a bit more about the rapidly changing landscape of the internet but that it's all driven by a very simple process and should not be feared!

Posted By Jason Dowdell at 09:31 AM
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