Sunday, January 01, 2006

Linear vs. exponential growth

Two of my recent posts have talked about the prospects for online advertising revenue in 2006. The first suggested that 2006 could prove to be the ""tipping point" for online advertising. The second suggested that there could be a substantial rise in absolute terms in the coming year.

I have a strong feeling that traditional publishers are not factoring this possibility into their thinking; I saw an internal projection the other day from a senior advertising working party in which they were predicting that the total amount of online advertising would overtake conventional print advertising by, I think, 2014!

The basis of this assumption is a linear interpretation of current (internal) trends. This could prove to be badly wrong.

I've just finished reading Ray Kurzweil's book The Singularity is Near and he makes a strong point about the dangers of applying a linear view if, in fact, we are looking at something with exponential characteristics.

Given the notorious difficulty of forecasting this market (Veronis Suhler forecast a market of $9.9bn in the US by 2005; Forrester have just put the figure at $14.7bn) an open mind is probably required.

If we are, indeed, at the tipping point or the "knee of the curve" as he calls it, our future planning assumptions could be dangerously out of kilter with reality.

At the very least, we should have a couple of alternative views of the future...
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