Who are these startups that lead innovation within their industries?

Animoto is revolutionizing cinematic artificial intelligence. Their product thinks and acts like a movie director and editor. No movie sideshow is ever the same.

Pandora creates a custom individual music station catered to each users music preferences. Their algorithms allow for the best passive music listening experience.

In case you haven’t seen the news over the past two years, Netflix just finished a contest with a $1 million prize for the team that could improve their AI based movie recommendation tool for their customers.

Clickable.com claims to have the smartest PPC management tool anywhere. Their tool makes recommendations for your PPC campaigns, so you can attain a larger ROI from your PPC advertisements.

Then of course, with the good, their is always bad. Many scientists have begun to worry that machines will soon be able to outsmart humans, and eventually take advantage of us. While this is likely not an immediate concern, scientists are proposing that research be stopped, so that humans will always have control over computers. Checkout this New York Times article.

Also, largely unseen to consumers, internet advertising is extremely sophisticated now when it comes to targeting. Many advertising networks now allow major corporations to enable targeting to a specific demographic; and then re-targeting based on a users actions if they did or did not buy the advertisement offer.

In the short term internet companies that are funding research and development for their AI products will succeed at having the most innovative, and likely most profitable product in their industry. Not to mention the value proposition against competitors is a major advantage to have in their industry.

Anyway,  he posted a quote in his blog about a week ago on an article about Twitter changing the way we live, from Time magazine.

When we talk about innovation and global competitiveness, we tend to fall back on the easy metric of patents and Ph.D.s. It turns out the U.S. share of both has been in steady decline since peaking in the early ’70s. (In 1970, more than 50% of the world’s graduate degrees in science and engineering were issued by U.S. universities.) Since the mid-’80s, a long progression of doomsayers have warned that our declining market share in the patents-and-Ph.D.s business augurs dark times for American innovation. The specific threats have changed. It was the Japanese who would destroy us in the ’80s; now it’s China and India.

But what actually happened to American innovation during that period? We came up with America Online, Netscape, Amazon, Google, Blogger, Wikipedia, Craigslist, TiVo, Netflix, eBay, the iPod and iPhone, Xbox, Facebook and Twitter itself. Sure, we didn’t build the Prius or the Wii, but if you measure global innovation in terms of actual lifestyle-changing hit products and not just grad students, the U.S. has been lapping the field for the past 20 years.

Think back 10 years, and think of the ways that products in America have changed the way you live. We are innovators, no longer inventors.

Wilson also did a recent interview on the current trends on the internet, and what he expects to see in 2010:

Fred Wilson – Venture Capitalist Speaks On Future Web Trends

Who is doing idea and feedback sharing right?

Adobe

They are using a custom service from Brightidea, Inc. that allows Adobe users to collaborate and decide which innovative ideas they like best.

Whole Foods

Based off the service from Get Satisfaction, like the name says, everyone is satisfied! Whole Foods gains valuable insight from their shoppers.

TweetDeck

Somewhat similar to Whole Foods, TweetDeck is using UserVoice. The best part is that UserVoice is being the most innovative!

CrowdSound

I don’t have much experience with this one, but it is an awesome tool to gain feedback from all areas on your site.

Are you letting your customers give feedback that will allow your company to be innovative, and drive business to the next level?

Online advertising spending is projected to reach $25.7 billion in 2009, and $42 billion by 2013. A 78% increase over 2008′s $23.6 billion in online spending.(emarketer.com) For an industry that is growing at astonishing rates, most of the companies that are heavily profiting have not put much back into researching and devloping new tools to capitalize on this growth in the coming years. To all affiliates out there, please name 3 recently released tools that allow you to be more productive, your campaigns to be more efficient, and ulitmately more profitable. Not so easy, huh? This lack of innovation will only hurt affiliates in the future. This is because the few networks that are investing in developing better ways to market online now, will blow past competition when growth slows. The affiliates who are associated with the networks that are investing in the right places will benefit tremendously, no doubt.

There are a few reasons for a lack of innovation by both affiliate networks and advertising networks. First, a lot of affiliate networks don’t care because there isn’t a lot of competition, and today they are growing strong. Their antiquated tracking systems work, and affiliates continue to promote their hot offers, which not to mention always “higher payouts than anyone else”. Secondly, advertising networks keep seeing gross clicks and impressions increase as the web is used more and more. So, advertisers will have cheaper rates and the publishers will make more and more money. In other words, the mentalitly of the affiliate and advertising networks is that people will continue to go where the money is. That’s definitly not a sound long term business strategy.

So, the question is which people are setting the right example and more importantly, are setting themselves up for strong business in the future? Most certainly Advaliant/MediaTrust, Motive Interactive, and Wes Mahler/Prosper202. Both Advaliant and Motive posses the leading affiliate interfaces that will soon posses algorithims to match offers with an affiliates past history promoting other offers, and maximize the relationship between affiliates and advertisers. Wes Mahler is worthy of being thanked by every single successful affiliate today, thanks to his opensource PPC tracking system Prosper202.

On the flip side, the companies that are lacking in the innovation department (among others): MaxBounty, and almost all networks using DirectTrack. Take a look at MaxBounty’s homepage, when I applied at first I thought  I was in the wrong site. Their site is straight out of the dot com bust. Seriously, would you feel safe putting your PPC budget into very technology developed 9 years ago?  Remeber that’s like 100 internet years. To the networks using the DirectTrack interface, great, you are making lots of money. However, DirectTrack serverly limits the amount of customization in the affiliate interface. Not good when it comes to 2010 and several other netowrks have more powerful tracking sytems and limitless opportunities to help out affiliates even more. Props to Ads4Dough for initiating their own switch over to their own custom tracking platform.

So, to the affiliate networks out there, take the hint, you will be ahead of the competition down the road if you invest now. As for the advertising networks, first make an effort to be friendly with some of your biggest spenders, then innovate. Watchout in the coming months for industry leading changes by Advaliant. They are brewing up some pretty neat features for affiliates, not seen anywhere else.