If history is any guide, digital media startups will need a special combination of engineering and operational talent, internal product development, leadership and execution, favorable market timing and luck if they want a shot at raising ample capital and emerging as market leaders ripe for acquisition or IPO. There are literally hundreds of emerging digital media companies, all trying to establish themselves as viable investments with venture firms and as potential targets with larger digital media and Internet companies or public market investors.

OnMedia, one of the leading business media brands targeting the advertising, marketing, branding, and public relations entrepreneurial community, produces a list each year of the top 100 companies in digital media. We thought it would be interesting to look at the 2012 and 2013 OnMedia 100 lists to better understand which emerging trends form a common thread in the market.

TREND #1 – Venture-funded

87% of the companies had documented VC backing, with nearly 1 in 5 raising between $10 million and $20 million. One of the reasons VCs are so attracted to this market is that we have witnessed outsized exits for businesses that have shown relatively low capital intensity.

TREND #2 – User engagement drives value

Each company claims to be at the top of their respective niche, all with great comScores and other engagement metrics, but few have generated revenue, let alone cash flow, to help fund growth. Then again, in an industry where Facebook acquires WhatsApp for $19 billion to obtain access to 450 million active users, but with reported annual revenue of only $20 million, it is evident that user engagement continues to be the most important metric driving acquisition value. No matter how valuable a user or click-through proves to be, all of the startups have developed engaging content, addictive apps, and/or demonstrated the ability to saturate users with incredibly accurate, shockingly pointed advertisements.

TREND #3 – Old dogs and young pups

No obvious pattern emerges when looking at the ages of the companies on the list: 11% are over 10 years old – they are the Senior Citizens of digital media where actual years are calculated like those of a dog. After all, Facebook is 10 years old and YouTube will turn 9 in 2014. On the flip side, 20% were founded this decade so determining their viability has to be made based on potential rather than performance. Of the remaining companies, 43% are 3-6 years old and 26% are between 7-10 years of age.

TREND #4 – Red states need not apply

The only observation that is crystal clear in the analysis is the fact that the coasts of the US are where the action is. Of the 200 companies listed, approximately 90% of them are in close proximity to the Atlantic or Pacific oceans. California has long been a great source of technology start-ups and it is no surprise that the Golden State is the home of 37% of the companies on the list. But what may make this technology cycle unusual is the importance of New York City, where 39% of the companies reside. We note that the bicoastal distribution has forced the larger, California-based digital media acquirers to establish strong beachheads in NYC as evidenced by recent aggressive expansions in the Big Apple by Google, Yahoo, and several other Silicon Valley Internet giants.

TREND #5 – Geographic concentration leads to M&A concentration

We all know that long distance relationships are hard to establish and even harder to maintain over time. Similar to in romance and love, proximity and ease of meetings also tend to lead to success in business. Interestingly, a third of the companies have made a staggering 181 acquisitions of other private companies and 20 have been acquired by a larger company since appearing on the list, most with close proximity or established relationships with their merger partner. Digital media sure seems like an incestuous industry.

It will be interesting to see if these trends continue in the 2014 list, which will be announced on June 10th.