Every year, I sit down to think about the next year. What’s going to happen in SEO? Growth? What big trends shape organic growth and customer acquisition next year?
I find the process to be a catalyst for stepping back and thinking about the greater picture. It’s a nice way to wrap up the year and look forward.
If you’re curious, check out my previous predictions:
2021 predictions - revised
As always, let’s start with my predictions for this year.
1. The Micro-SaaS movement will show more $1M companies
Last year, I predicted the Micro Saas trend to continue and foster more $1M ARR companies. Micro Saas is the result of the no-code/low-code trend and creator movement. Companies provide point solutions and are often run by just a single person. Examples are Carrd, S3 Stat, or Storemapper.
A good gauge for the growth of micro-saas is looking at app stores (example: apps.shopify.com), platform marketplaces (example: marketplace.atlassian.com), and VC reports.
In 2020, Shopify’s app store doubled in size. In 2021 alone, Atlassian’s marketplace added 600 new apps and is “home to hundreds of founder-led, highly profitable businesses who have built and scaled SaaS offerings in partnership with Atlassian.” Trends.vc shows the growth of Micro SaaS. Microacquire, a marketplace for Micro SaaS, recently raised $5m.
Even though I couldn’t find specific data about the number of Micro Saas companies that hit $1Min ARR, I found a lot of evidence speaking for its overall growth.
2. Social commerce / algorithmic commerce coming to America
The idea behind social commerce is to shop directly on social media platforms. In my 2021 predictions, I overemphasized the group aspect a bit much while “social commerce” refers more to the aspect of shopping on social media. A more elegant way to express my thought could have been “social networks will add e-commerce features.”
Quite a lot has happened in that area. Youtube and Twitter are adding shopping capabilities, adding the foundation for social live shopping. Amazon added a live video shopping feed you can watch today under amazon.com/live. Facebook is making a push into e-commerce by providing a native online storefront. Tik Tok and Instagram launched Shopping features.
My framing wasn’t tight, but I was right about the push social networks made this year. Social commerce has hit critical mass.
3. Tik Tok will grow to a serious advertising channel other than Facebook and Google
Tik Tok is the first major challenger to Meta’s social empire and Youtube. In 2020, Tik Tok's mother Bytedance more than doubled its revenue. In 2021, TikTok surpassed Facebook in average time spent per user. It even replaced Google as the most popular site on the web! Though more an entertainment than a social network, its advertising surface is very much an issue for US incumbents.
So far, Tik Tok gets about $1.3b in US ad revenue compared to the $2.2b for Twitter, $2.6b for Linkedin, and $48 for Meta and Google. However, ad dollars follow eyeballs. I would say I’ve been correct but Tik Tok has a lot of room for growth.
4. Short-form video will continue to dominate
It’s hard to argue with the success of TikTok. Its product is so good that Instagram copied the main feature, turned it into Instagram Reels, and spurred the next level of product growth. Then Youtube did the same with Youtube Shorts, which doubled daily view from 6.5b in March to 15b in July.
In May 2021, Tik Tok surpassed Youtube in user engagement. The average user spends over 24h per month on the app! For comparison, consumers watch Netflix a bit more than 2x as much ~60 hours/month. That’s pretty good for a social/entertainment app.
Short-form video continues to dominate and I don’t see an end in sight.
5. Clubhouse will continue to grow and become an interesting brand-building channel
Clubhouse impressed the world with a fresh format and rapid growth in 2020. When the pandemic forced people to stay at home, audio-only events and meetups were the hot thing to do. It was a run on a new platform as I’ve rarely seen it before.
With 85 people, the company made it to a $4b valuation! But then came the brutal awakening: Missing Android app, no clear monetization model, slow infrastructure scaling, and direct competition from Twitter, which still has the Spaces feature.
Active user numbers tanked. The hype died off in 2021. I couldn’t have been more wrong. Today, no one in my cycle even speaks about Clubhouse anymore.
6. Dinosaur brands will continue to die
The pandemic is an accelerant for many things: remote work, e-commerce, entrepreneurship. But it also speeds up companies that were already slowly bleeding out. In 2021, multiple dinosaur brands filed for Chapter 11: L’occitane, Paper source, Lorna Jane, Hertz.
However, I didn’t find as many old and established companies that went bust in 2021 as I thought. I assume that many are still propped up by PPP loans and government bailouts. Once government support runs out, many companies will declare bankruptcy, consolidate with competitors, or sell off large chunks of the business.
7. Apple will not launch a search engine
Last year, several people noticed Apple’s documentation for its web crawler, Applebot. A lot of loud voices yelled that Apple would step into the ring with Google and Bing. Tom Anthony even presented good arguments and concepts for an Apple search engine at SMX.
After all, Google pays Apple $15b every year (and maybe more in the future) to remain the default search engine!
But Apple hasn’t launched a search engine and I still don't think they will. In fact, search has been there all along: Spotlight and Siri.
Why would Apple enter a market that’s ripe for regulation (search) and go after a tough business model that’s slowly fading (advertising)?
8. The newsletter movement will grow and lead to newsletter fatigue
While subscription fatigue might be a real thing, subscriber fatigue is still way out. The rush of journalists and creators to publish their own (paid) email newsletters caused a flood of small, independent publications. After the collapse of the traditional media around 2008, tools like Substack, Memberful, and Revue opened up a new path to success for journalists.
However, I couldn’t find any data supporting newsletter fatigue. On the contrary, (paid) newsletters are flourishing. Substack hit 500,000 paid subscriptions around February. People enjoy daily news via email and podcasts these days.
That brings me to my predictions for 2022.
1. Inventory is the new competitive advantage
In finance, inventory is an asset. Since the supply shortage in mid-2021, it’s also a competitive advantage. Companies that have enough inventory to satisfy demand win. The supply shortage makes it happen.
A fantastic Bridgewater article explains how stimulus packages in 2020 caused a spike in demand, which led to a shortage in supply. Stimulus-induced consumer demand overloaded several supply chains: raw material, production capacity, labor, inventory, energy, and housing.
Three additional factors are creating the perfect supply storm: a tight labor market, a shortage in computer chips and the Ever Given fiasco.
The Great Resignation caused more people to start their own businesses (that need supply) and remove service workers from many industries. From January to October 2021, 4.5m new businesses were started.
The chip shortage is a result of high consumer electronics demand during the pandemic. People stock up on Nintendo Switches, X Boxes, Playstations and computers to entertain themselves or work from home. On top of that, car makes shut plants down during the pandemic, which led to demand fluctuations. Lastly, sanctions against China strained chip supply.
When the ship “Ever Given” blocked the Suez Canal for a week in March, it caused damage of $10b a day. Speaking about a bottleneck! At the time, the demand spike was already well underway and with global shipping depending largely on container ships, the chaos was perfect.
Having inventory is enough to have an edge over competitors in many cases because consumers are impatient. When encountering out-of-stock items, 32% of consumers switched the retailer and 39% switched the brand or product. Only 13% waited for the item to be in stock again.
E-commerce businesses, especially DTC (direct-to-consumer), need to carefully pick and choose suppliers. Manufacturing overseas - popular among Dropshippers - is a cheap but risky choice these days. Instead, local suppliers might be a better choice.
Margins are slimming due to higher material costs, which can kill businesses that don’t have solid cash reserves. The US Consumer Price Index is up +20% year-over-year, meaning customers might be more selective with where they spend their money, once government stimulus is used up.
In 2022, we’ll see many cases of companies that lose market share due to supply issues.
2. Organic traffic reverts back to baseline, in some cases below
In 2022, I see organic traffic levels for most industries revert back to pre-pandemic baselines or even below. Three trends lead me to this prediction.
First, when the pandemic broke out in March/April 2020, consumers looked for specific goods that keep them entertained, moving, and supplied. Google search demand for goods like “kettlebells” or “nintendo switch” and services like “home workout” or “food delivery” spiked.
As countries across the world lockdown and open back up, demand and search volumes for pandemic goods fluctuated. However, they’re now coming back to baseline.
Second, the share of e-commerce of total retail spending is coming back to baseline as well. After an initial spike from ~12% in Q1 to 16% in Q2 2020, levels are falling back to pre-pandemic growth rates.
That’s an early indicator that e-commerce wasn’t catapulted 10 years into the future but saw a temporary spike in 2020 and 2021. Since e-commerce and Google Search are tightly connected, I expect this trend to lead to lower search volumes for many goods and less organic traffic.
Third, Google needs to make more money over time. and the biggest cash cow is still Search. The giant is trying to diversify revenue streams and their best bet so far is productivity tools. They also create more ad surfaces with new features in other apps like Busy Areas in Google Maps.
But nothing touches the revenue from search ads. As a result, Google has to continue squeezing search at the cost of organic traffic to websites. This will come in the shape of more ads and SERP Features. The recently launched push into more visuals and shopping ads already creates a Pinteresque experience that leaves little room for organic results. The median growth of Saas blogs has already been negative in 2021.
My prediction for 2022 is that companies in most industries will see lower organic traffic, even with stable organic rankings.
3. More companies will grow through M&A
Growth sees diminishing returns over time: the bigger you get, the slower you grow. A popular way to keep growing is simply buying other companies to expand the product portfolio or feature set.
2021 was a record M&A year fueled by low-interest rates and strong venture capital funding. Big tech spending $264bn to pick up smaller rivals. Globally, M&A value rose to $5.7 trillion (+64% YoY).
A few examples:
- Red Ventures, owners of healthline.com, acquired several companies in 2021 to prop up its impressive roster: PlateJoy, healthgrades.com, and lonelyplanet.com.
- Dotdash acquired Meredith ($2.7b)
- Zendesk acquired SurveyMonkey ($4b)
- Intuit acquired Mailchimp ($12b)
- Salesforce acquired Slack ($27b)
- Square acquired Afterpay ($29b)
When Netflix CEO Reed Hastings said “we compete with sleep”, he illustrated that attention is finite. Consumers can only install so many apps, read so many newsletters, and listen to so many podcasts. As a second-order effect, customer acquisition can be a zero-sum game. M&A is a way to buy attention, for example, by acquiring communities, newsletters, podcasts, or publishers to gain more exposure to new customers.
In 2022, the M&A pace will accelerate as more companies struggle to survive or keep up in the pandemic economy.
Who could be on the market?
- Pinterest: PayPayl was apparently in talks, then pulled back
- Peloton: struggled with inventory but has strong retention
- AMC or GameStop: victims of big shorts, but maybe flooded with enough cash to restructure the business
- Grammarly: silent but powerful app (+30m customers), loads of data
- Reddit: tons of eyeballs
4. Brand strength becomes a success gateway
A strong brand has always been important. Long before the internet made marketing more measurable, brand marketing was all there was in marketing. Some people literally went through magazines and cut out press clippings. Data was sourced through surveys and focus groups. Not a bad idea, but not scalable either.
But today, we find ourselves in a stalemate. With only four scalable growth channels and consumer platform stagnation, three factors predict the success of a company: superior IP, more capital, or brand. In most cases, brand is the result of #1 and #2 and now it’s becoming an absolute must-have for success.
A strong brand strength can be a proxy for PMF and lead to significant market share gains. Every month only ~6K people search for “find a job” but 2.6M search for “indeed jobs” and 13M for “indeed” in the US.
Brand traffic is “free” and highly intentful. Google Search results prioritize strong brands even more in 2021, in part because Google wants to rank trustworthy sites higher to combat fake news and keep trust with customers themselves. Remember, Google’s market position is the direct result of how much searchers trust it.
Similar to startups, every DTC company on the market inevitably faces competitors that imitate the product and business model over time. Caspar has over 200 competitors, Warby parker at least 12. Whether you face hundreds or tens of competitors, you need to stand out and brand is the key.
Tesla spends almost nothing on Marketing and a lot on RnD. Brand is a moat you can build strong customer relationships and defenses on.
When looking at the search volumes for the keywords “macys” and “nordstrom” below, which one do you think has a higher chance of gaining market share over time?
In 2022, companies will invest more in building and monitoring stronger brands as a driver of higher ROAS (returns on ad spend), lower CAC (customer acquisition cost), and organic rankings.
Topics not covered
That concludes my predictions for 2022. I see a lot more interesting topics on the horizon for the future.
A looming data cliff is coming for us: the death of the cookie. Google and Apple are working hard on monopolizing that through in-browser tracking (FLoC). Apple’s ATT (app tracking transparency) changes already hit Facebook and Snapchat. It’s. Only. Getting. Worse.
Web3 successfully rebranded Crypto and Blockchain tech. It’s hard for consumers to really understand the new technology, but many invest due to the fear of missing out (FOMO). On the one hand, the complexity of Crypto gives ground to scammers and Ponzi schemes (think: ICOs). On the other side, we have a massive flood of talent and excitement. The list of use cases for Blockchain tech is long I’m long-term bullish and short-term bearish on Web3.
Lastly, the Metaverse. What even is the Metaverse? Everyone has their own definition, but 2 of the 5 biggest companies are working on pushing it forward today: Meta and Microsft. It’s too early to tell what will come out of it, but Facebook bet the farm when rebranding to Meta. We’ll see how that plays out.
Every big trend has a counter-trend. What’s the counter-trend for Crypto? Blockchain? Web3? We will find out.
Until next year.