Mary Meeker presented her annual Internet Trends Report overnight. Packed full of charts which go up and to the right (illustrating the explosive growth found online) this year’s slide deck comes in at 333 pages.
It’s the first report the famed analyst has presented since leaving Kleiner Perkins Caufield & Byers for her own VC firm Bond Capital last year.
Meeker published her first internet trends report in 1995 as an analyst at Morgan Stanley, since then it has grown into a highly anticipated annual event.
We have selected our 12 favourite slides below, with a focus on advertising, ecommerce and cloud. But there are also chapters on user trends, data growth, the open internet, rising cyber attacks, education, healthcare, immigration and China.
Speaking at the Code Conference in Arizona, Meeker noted the report is designed to be read, not presented, so grab a coffee, click the link and get up to speed with the biggest trends driving the digital economy. Or watch the presentation here.
1. Internet penetration passes 50 per cent. More than 50 per cent of the global population, some 3.8 billion people, is now online. With 51 per cent of the global population now online growth is slowing, up 6 per cent in 2019.
2. US & China dominate global internet companies by market cap. The US is home to 18 of the top 30 largest internet companies by market cap, followed by China with seven in the top 30. Looking more broadly, technology companies make up nine out of the top 30 biggest companies by market capitalisation.
3. Ecommerce continues to gain market share. Ecommerce growth is solid (but slowing down) increasing around 12 per cent year-on-year, while physical retail is growing at 2 per cent. In the US, online sales now make up 15 per cent of all retail (versus 14 per cent a year earlier).
4. Internet advertising is accelerating. Online advertising continues to grow, up 22 per cent in the US, but is dominated by Google and Facebook. Meanwhile, Amazon, Twitter, Snap and Pinterest are gaining share, from a smaller base.
5. Customer acquisition costs are rising in many sectors. Meeker pointed out the cost to acquire a new customer can’t exceed their lifetime value for very long. She highlighted other methods to attract customers such as offering free trials or free tiers, like Spotify or Zoom. “The most efficient and effective marketing is one’s own product, plus happy customers, plus recommendations,” Meeker said.
6. Mobile surpassed TV in 2018. Americans spent 6.3 hours a day on digital media in 2018, up 7 per cent from the year before. Notably the time spent on mobile devices surpassed time spent watching television. And 26 per cent of adults in the US say they are online ‘almost constantly’, up from 21 per cent in 2015.
7. Online gaming is booming. Interactive gaming is an increasingly relevant way to communicate, hitting 2.4 billion users, up 6 per cent year-on-year in 2018.
According to Meeker, “Interactive gaming is shared environments with collective purpose and goals. Are these the new social and friend networks, recreating reality around play and problem solving?”
8. Cloud is also booming. Cloud deployment revenue is up 58 per cent year-on-year and there are twice as many workloads in the cloud than five years ago. Meeker noted interest in cloud computing continues to rise.
9. Images are an increasingly relevant way to communicate. Image creation, sharing and engagement are all growing. Meeker noted that when Twitter first launched it was text only, today more than 50 per cent Tweet impressions are image, video or other forms of media. “People are increasingly telling stories through edited images and videos. Image-based design fluency and story telling is increasingly self taught, collaborative and we are still in the early innings,” she said.
10. Freemium is just getting started. Meeker was bullish on the growth opportunity of freemium business models, which began in gaming and more recently moved to enterprise and consumer products. “All in. we’re just getting started,” she said. The slide below highlights freemium businesses with more than 10 million paying customers.
11. Encrypted traffic is on the rise. Privacy featured throughout Meeker’s presentation. She noted technology companies are dealing with the age old challenge of amplifying good and minimising bad such as over usage, privacy concerns and the spread of dangerous or problematic content. Privacy concerns are high, in response companies are offering more privacy-focused features. In Q1 2019, 87 per cent of global web traffic was encrypted, up from 53 per cent three years ago.
12. Business with the best handle on data will win. Data collection, analysis and utilisation is evolving. According to Meeker, before 1995 winning businesses used human data insights to improve customer experiences, for example IBM focused on product development through “feet on the street input” and Nike gained input from runners to design great products. Since then the internet, mobile devices and cloud emerged, and the machines took over collecting and processing data. “Post 1995 winning businesses use digital data and insights to improve customer experiences,” Meeker said. Her example: Amazon’s use of customer data from its 1997 annual report.