During the past few weeks, there has been a run of a dozen funding announcements to new, young firms in the information industry as VCs have poured nearly $100 million into this market.

Important Details: There have been a few raised eyebrows at this rush of funding, with some being concerned that this activity may be the start of the current decade’s wave before a DotCom bust. While it is unlikely that all of these new firms will make it over time, there are some strong market underpinnings that support all the new activity. New funding has been raised by a range of start-up firms, such as:

* Platfora, which announced [1] a $20 million Series B round in November;

* Lattice Engines [2], which raised [3] $20 million in equity funding led by New Enterprise Associates;

* QuBit, which raised [4] $7.5 million from Balderton Capital;

* Effective Measure, which raised [5] $4 million from Rho Ventures;

* Sumo Logic, which closed [6] a $30 million Series B funding round led by Accel Partners;

* DataSift, which raised [7] $15 million in a Series B funding round;

* Origami Logic, which raised [8] $8 million in funding from Accel Partners, Ping Li, and Jake Flomenberg;

* AgilOne, which closed [9] a $10 million Series B funding round led by Mayfield Fund and Sequoia Capital;

* ClearStory Data, which raised [10] $9 million in Series A funding from KPCB, Andreesen Horowitz, and Google Ventures;

* TrueLens, which raised [11] $1.2 million in funding from Google Ventures with support from Charles River Ventures, Common  Angels, 500 Startups, Boston Seed and several angel investors.

Implications: At the heart of these investments is the world of change and market disruption that strikes at the core of marketing, advertising and market research as we have come to know it. We see three major themes fueling the disruption investment, all enabled by the evolution of technology.

* Today’s customer drives the market and is increasingly in control, no longer waiting for the newspaper or radio or TV broadcast to blast out ads and offers. Consumers search and compare and shop and buy – with every activity leaving digital footprints which yielding tons of what is now affectionately known as Big Data. It has happened over the years, and is now building at such a rapid rate that marketers are becoming overwhelmed by the amount of data available to them and are in search of insights in the midst of the piles of data. We noted a good example of this earlier this year, with the case of EMI Music and its Big Data analytics initiative (see Insights 25 July 2012, Market Research Meets Big Data Analytics and Social Media). So, not only are the tools available and marketers have access to tons of data, but there is a growing realization that companies must pay attention to those customers coming directly to them. They need to understand that customer, and offer the best and most relevant experience possible. This customer-centric shift is having an impact as companies derive revenue directly via e-commerce, resulting in a shift of dollars to support that direct activity while reducing spending on traditional media to support yesterday’s ad-driven world.

* As the world of digital advertising evolves, moving from ad placements to search and beyond with sophisticated real-time buying technology, advertisers have seen that they can measure everything. The digital world offers metrics on nearly every flavor of ad verification and attribution possible, and we see increased VC funding to drive even more sophistication and dashboards. This is extremely welcome – executives have been asking the CMO for years to demonstrate ROI on the money spent on marketing and advertising money, and have long asked, does this spending result in sales, or in more customers? Direct marketing campaigns and e-mail offers were able to show direct correlation in many cases, and now the growing world of digital advertising can show those results as well. Of course, there are always causes and effects, and one of the big implications here is that many of the other media forms still do not have the ability to provide those metrics or ROI. Does that prime time ad on network TV result in more customers or increased sales? It is an age-old problem that remains unmet.

That need to measure and prove results is a driver to more start-ups (and investment) looking at ways to solve the problem of tracking the entire spectrum of media spending.

* Finally, we have speed and timeliness. We operate in a 24/7 world and for a marketer looking at customer activity, orders from a web site, reactions to campaigns, and clicks on ads provide instantaneous feedback. Marketers know right away what is working and not working , all the while adjusting on the fly. Along the way, there is plenty of opportunity to get customer feedback and measure customer satisfaction. The data does not wait. The dashboard shows results continuously. One of the big implications from this continuous feedback is the effect on the market research space, where many research firms provided services in terms of surveying for customer satisfaction or tracking the shopping experience or looking at planned activity. All that takes time to create the survey, field it, get the results back, analyze it, etc. That world has shifted in a big way. We don’t have time to do all that in a digital world.  It has to happen now, on the fly, in real time.

For some, all this activity, new investment and market change is an exciting time and lots of new world opportunities await. For others, it is a frightening time as many of the traditional ways of the world feel under siege. However one views it, change is inevitable and constant and we can expect a continuous flow of new companies and new investment in every aspect of the marketing and advertising space.

Source:  Outsell Inc.  a co-founder of BIIA   – www.outsellinc.com

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