Internet Leaders Predicted to Leave Rivals in Dust in 2011

Next year is the year when social media becomes a real business.

That’s not to say companies such as Facebook and Groupon aren’t making real money now. Estimates suggest Facebook’s revenue is north of $1 billion this year and Groupon could be reeling in $500 million in sales each quarter.

But there is more to it. There is a broadening awareness among traditional businesses that they must play in social media and drive advertising and communications in non-traditional ways. And there is a realization that 2011 could be the year when the gap widens between Internet leaders and followers widens, creating an overwhelming advantage.

These assumptions appear to be at the heart of several 2011 Internet market predictions venture capitalists submitted to peHub. Many of these investors have been fascinated with the Internet space this year and will continue to be next year.

According to a survey released Tuesday by the National Venture Capital Association, 82% of VCs expect investment dollars flowing to consumer Internet companies to increase next year. Sixty-nine percent expect the flood to be so significant that “froth” will appear.

With this uptick as a background, venture capitalists are looking to some very specific milestones next year. Take Stacey Curry Bishop, a partner at Scale Venture Partners (pictured). She anticipates social marketing to continue to move mainstream in an obsessive way:

“Social marketing will be top of mind for brands. In 2011, Facebook Fan counts will become social media’s weekend box office. Brands and firms will track their Facebook fan counts obsessively, and they’ll be trying to catch Disney, Starbucks and Lady Gaga.”

At the same time, “the social media investment sector will bifurcate between the market drivers and those fighting for leftovers and table scraps,” predicts Robert Ackerman, managing director at Allegis Capital. “Investors (and customers) will place an increased focus on companies that can drive a measurable ROI from investing in social media.”

For many VCs, it is clear the Internet and online business models will be where the action is next year. This doesn’t stop at the latest and greatest social networking site, says Wright Steenrod, a principal at Chrysalis Ventures:

“In 2011, information proliferation will only accelerate.  Entrepreneurs with vision for how to make sense of all that information for either consumers or businesses will prosper.”

Look for more 2011 predictions from readers this week and next on peHub. If you would like to submit a prediction, please e-mail And have a pleasant holiday.