As we turn the page of our calendars over to June, we once again welcome the arrival of Mary Meeker’s highly anticipated annual review into the Internet Trends of the year. Meeker presented her work to a packed auditorium at the Code Conference in California, joking that, at 355 pages long (!!), the report should be read at leisure. Whilst we would recommend reading the report in its entirety (or watching the fantastic Mary Meeker bring her report to life via the recording of the presentation), we know this might not be the top of everyone’s weekend reading list. Therefore we have handily extracted our top 10 key take-outs for you to digest, at your leisure.
This years’ report is jam-packed with useful and interesting Internet insights. We delve into the new(ish) world of wearables, the benefits to consumers and health practitioners alike. The future of search is visual… and vocal, ad measurability is on the increase, as is ad blocking – both have their challenges and opportunities. Content distribution platforms continue to blaze trails, as do big businesses powering their adverts with UGC. And how do you get a Disney screenwriter to actually put his phone down? OMD EMEA’s top 10 take-outs from the report are here:
Internet beyond the desktop
Global internet use is continuing to grow at a steady rate of 10%, or 8% growth if you exclude India, demonstrating how globally we’re beginning to level out our use. Smartphone shipment growth is slowing down, up 3% year on year versus 10% the previous year. In the USA, where internet usage has increased steadily over the last eight years, we can attribute this with mobile usage being the sole actor (more than three hours a day are now spent on a mobile phone in the USA, versus less than an hour 5 years ago).
Commerce takes centre stage
For the first time, ‘Commerce’ has been included within the ‘Online Advertising’ portion of the report as Meeker concludes this is because advertisements are more and more becoming store fronts to many businesses. It is also noted in the report how these two areas of focus for the industry are concentrating more on measurement around the world. Ad growth is driven by mobile and accelerating at +22% year on year versus 20% the previous year. For the first time, in 2016 mobile ad spend overtook desktop in the USA. Meeker also notes how media dollars are moving to take advantage of consumer usage of a given platform, and move away from legacy buys. The report shows how a disproportionate amount of ad dollars are spent on press in the USA versus the amount of time consumed (4% of time spent versus 12% of ad dollars spent). This is starkly contrasted by the mobile figures, where Meeker identifies a $16bn opportunity in the USA for advertisers (28% of time versus 21% of ad dollars spent).
Engagement vs. ROI- the debate of measurability
Ad Measurability remains a pertinent topic of conversation, with marketers and advertisers continuing to find the right approach for their businesses. When looking at advertisers who utilise social platforms, 56% of respondents said they use “engagement” as a measure of success, however 61% find measuring ROI as one of their top challenges.
The weight of ad-blocking
Ad-blocking continues to grow, especially in developing markets, where users opt-out of content they do not want to see (approximately 240m global desktop ad blockers in 2016, and approximately 380m global mobile ad blockers). It’s clear in markets such as India, China, Russia and Indonesia, mobile ad-blocking is increasingly going to be an issue for marketers and advertisers alike in the years ahead.
The power of the fan and follower
Brands are sourcing content from fans and followers and Meeker notes that ads are evolving rapidly – often organic but with data at the core of their execution. Big brands are collaborating with their fans for crowd-sourcing ad creation. The report notes that effective UGC can generate 6.9X higher engagement than brand generated content on Facebook.
A picture is worth a thousand words
“A lot of the future of search is going to be about pictures instead of keywords”. Image based front-ends within the user experience is beginning to replace word input, and image based back-end algorithms can now infer user context, allowing for contextual relevance for advertisers. That said, voice-based in-home front-ends are also replacing typing, with the Amazon Echo revolution moving into shopping, media, recommendations, video and voice calls in their current and upcoming products.
Thinking beyond gaming age brackets
“When I play a video game, it’s the only time I put away the phone and forget it exists” says Gary Whitta, screenwriter of Disney’s Rogue One: A Star Wars Story. Gaming is mainstream, with 2.6bn gamers around the world versus 100mm in 1995, as Gen X and Millennials have been ‘gamified’ since birth. Gaming is a large, broad and growing business, with global revenue sitting at around $100bn, up 9% year on year. APAC is the largest gaming market ($47bn), with Western Europe ($17bn), Eastern Europe ($3bn) and MEA ($3bn) following behind. Most importantly, gaming doesn’t sit within a particular age bracket, and with the plethora of platforms and experiences available it’s clear why the average age of a gamer is 35.
Capitalising on content
Content distribution disruption is occurring at a rapid pace, with digital leaders transforming those media platforms through better user experiences, lower prices, analysing available 1st party data and scaling that up into a successful business plan. 42% of music streamers are free trial converts, and for the first time in 16 years of -4% annual average growth, the music business is seeing revenue up 11% based on a new business model whose main source of income is through subscriptions and streaming. A prime example of a content distribution company who has successfully capitalised on the transformation approach above is Netflix, who has driven their USA Home Entertainment share of revenue from 0% to 30% in 10 years – equating to 95MM streaming subscribers in that time period.
India is only behind China in the number of monthly active internet users, with 355m at a penetration level of 27%. India’s smartphone cost, excluding data, is still unaffordable for many however the cost of 1GB of data per month has halved in India in the last two years, bringing the average cost down to $23. Incumbents and new wireless carrier entrants have been fighting aggressively over the last four quarters, which has delivered great financial benefits to the consumers in the market. With this, and a Prime Minister focusing on digital initiatives (such as ‘Power for All’, ‘Digital India’ and ‘Startup India) means India will continue to be an innovative, rapidly-growing digital market in the region.
Wearables are gaining adoption, where global wearable shipment volumes were sitting at 102m by the end of 2016, with 25% of all Americans now owning a wearable. Meeker notes a rapidly increasing rise in consumers using Digital Health Tools (Telemedicine, Wearables etc), with 88% of consumers using at least one tool. This adoption is allowing for the leveraging of data to optimise outcomes that benefit consumers, including health management, clinical pathways and preventative health recommendations.
For any additional information, thoughts or details on Mary Meeker’s report, please don’t hesitate to contact us at OMD EMEA