Mary Meeker’s annual study of macro trends is always of interest. Meeker has been putting together these “30,000-foot” maps of the terrain of internet media and marketing since the mid 1990s, first for Morgan Stanley and now for Kleiner Perkins, a prominent Sand Hill VC firm. Here are the highlights for the 2016 report:
1. Global internet growth flattens
Y-O-Y growth of internet usage held steady at 9 percent. Some 42 percent of the world’s population is now online, a remarkable feat for a medium a mere 20 years old. Flattening growth isn’t good for long-game companies such as Google and Facebook, whose fortunes have historically been buoyed by connection rates in the double digits. There is also question as to whether the remaining unconnected 58 percent of the world’s population — mainly residing in the developing world — can be monetized sufficiently to meet optimistic investor expectations. For example, while 60 percent of Facebook’s users live outside the U.S., they account for only 25 percent of total revenues. ARPU (Average Revenue Per User) in the U.S. and Canada was $9.30 in 2015, but only $0.90 in the rest of the world — a more than 10X difference.
2. Mobile ad spend is booming
Global mobile device sales growth — while still at a robust 21 percent — has declined from 2015’s torrid 31 percent growth rates, with growth in smartphone shipments dipping from 28 percent to just 10 percent. However mobile advertising — which in 2010 practically didn’t really even exist, now accounts for 35 percent of Internet advertising.
3. Ad blocking and security concerns may curb growth
Meeker mentions ad blocking as a specific threat to the ad tech industry, citing PageFair’s alarmingly high metriics concerning browser adoption of this software. The concern is that if mobile ad revenues are rising 66 percent, but ad blocking rates are rising 90 percent, ad tech is headed toward a trend crash. Fears over privacy and internet security may impede internet commerce and advertising and the willingness to socially share. Meeker notes that 45 percent of internet users are “more worried about their online privacy than one year ago, and that 74 percent “have limited their online activity in the last year due to privacy concerns.”
Meeker is a seasoned tech analyst; her annual reports are always thoughtful and the provenance of data she cites is hard to contest.
You can read Meeker’s complete presentation here: