Kleiner Perkins Caufield & Byers analyst and internet aficionado Mary Meeker presented her annual internet trends report at the Code Conference in California last week.

This year’s report includes 294 slides, which is smaller than last year’s 355 page slide deck, but still choc full of stats on online advertising and commerce, technology trends, and a big section on China.

We have selected our ten favourite slides, but as always if you have an hour to spare, grab a coffee, click the link and dive deeply into one of the most interesting presentations about the Internet you will see this year.

We’re glued to our screens

Internet user growth is slowing as the market matures. In 2017 global internet users grew 7 per cent, down from 12 per cent the year before. More than half of the global population is now online.

But we are spending more time on our devices. Internet usage remains solid, up 4 per cent year-on-year, driven by mobile. US adults spent 5.9 hours per day on digital media in 2017, up from 5.6 hours the year before.

The shift to mobile advertising

Mary Meeker’s attention versus advertising slide continues to deliver bad news for print, which currently receives more advertising than attention. Meanwhile, time spent on mobile is up but advertising hasn’t quite closed the gap, leaving a $7 billion opportunity. It’s worth noting that last year Meeker’s slide called mobile a $16 billion opportunity, advertisers responded by moving more money into the channel.

As acquisition costs rise, lifetime value becomes more important

Looking at return on ad spend, the cost is rising faster than the reach, but both are still rising. This is driving an increased focus on customer lifetime value, Meeker said. “Lifetime value divided by customer acquisition costs is increasingly an important metric for retailers and brands.”

Technology adoption curves are almost vertical lines

The speed of technology disruption is accelerating — the internet was adopted faster than the TV and the telephone, thanks to cheaper computer power and more storage capability.

Voice technology is taking off

Voice-controlled technology has reached an inflection point., with Google’s machine learning word accuracy reaching 95 per cent and Amazon Echo’s install base surging to an estimated 30 million at the end of 2017.

Tech companies are facing a “privacy paradox”

Meeker articulated the dilemma facing data-driven marketers post-Cambridge Analytica: how do we balance privacy with the need to collect data to refine products and services?

“With personalisation, data improves engagement in experiences and drives growth and scrutiny,” Meeker said. “Internet companies are making low price services better in part from user data. Internet users are increasing their time on internet services based on perceived value. Regulators want to ensure data is not used improperly and not all regulators think about this in the same way.” She used a cartoon to illustrate the point:

Brand Safety and Big Tech

The rise in scrutiny is forcing tech companies to clean up their platforms. Google and Facebook have both published their enforcement figures to highlight how they are making sure ads show up in brand safe environments.

The rise of China

Meeker devoted a large section of her presentation to China. This slide should demonstrate why: of today’s top 20 internet leaders 11 are in the US and nine are in China, up from just two five years ago.

Alibaba versus Amazon

Thanks to their similar lines of business in ecommerce, physical retail, payments and cloud computing, Alibaba and Amazon make for an interesting comparison.

Alibaba has much higher GMV, (meaning it is processing more transactions), while Amazon has much higher revenue and market cap.

Ecommerce accelerates

Looking at ecommerce more broadly and online sales continue to grow. In the US, ecommerce revenue was up 16 per cent in the US in 2017, versus 14 per cent in 2016. Amazon is taking a bigger slice of those sales at 28 per cent. Meanwhile China has the highest penetration rate and fastest growing ecommerce sales.

Internet Trends 2018 Report from Kleiner Perkins Caufield & Byers.

Happy reading!


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