Last week Mary Meeker presented her annual Internet Trends report for 2019 at Code Conference. One of the most authoritative Internet analysts gathered all her insights and analysis and released just 333 pages. Though for data nerds and enthusiasts this is like Christmas in June, for many the volume might seem a bit overwhelming.
We know that the contents of it are interesting to everyone. So we rounded up the most significant insights from Meeker’s report for you to stay in the loop as the changes are coming your way.
1. Internet Users
Key takeaway: ~4 billion people are served by only a few top IT companies.
- 51% of mankind is now online with the Asia Pacific leading in global Internet users. However, for the first time ever, the sales of smartphones have declined. E-commerce is struggling as well – the sales growth has slowed down, though the change isn’t critically affecting businesses.
- There are less new users on the Internet and the audience growth has slowed down. All the existing users are shared between several IT companies that are serving them.
- 9 out of 30 top world companies are in the tech industry. In 3 years, the 30 top have doubled their capital. 25 out of the 30 companies are based in the USA (18) and in China (7).
- Social networks are putting more effort to reduce problematic content – from fake news to extremism. However, the results are not so positive. 42% of US teens are still experiencing offensive name-calling online, 32% have suffered from false rumours about them and even 16% received physical threats.
2. E-commerce & Advertising
Key takeaway: big data is transforming e-commerce and advertising industry.
- E-commerce sales growth has slowed down to 12.4% in Q1 compared with 2018, while physical retail was only 1,5-2% in Q1.
- Today 33% of the advertising budget is spent on mobile ads and 18% on desktop. This is a huge change in the industry, considering that a decade ago digital space wasn’t seen as real competition to print ads. With reports showing people spending more time online and on their phone, it only makes sense that the budget spend will continue to increase.
- 62% of digital display ad buying is spent on programmatic ads. Advertisers now find it more beneficial to focus on advertising where their audience is, not going to specific platforms. That’s why most of the budget goes to a few giants such as Google, Facebook, Amazon, Twitter, Snapchat and Pinterest.
- In 2019, advertising faces one problem and has one opportunity. The problem is privacy which complicates targeting for inbound marketers. The opportunity, however, is data gathering using several different platforms. Since Internet users today are using several screens, they leave a lot of data about themselves.
Key takeaway: China’s Internet, which has 817 million users, is a development model for many markets.
- The usage of short-form video in China has grown rapidly. Internet users spend 600 million hours watching such format videos every day. That’s the main reason why the mobile data stream has tripled in 2018.
- Visual content is led by games. Mini-games installed in the app “WeChat” transformed the service payment system, e-commerce and educational system. Every useful mini application attracts tens of millions of users.
- The super app strategy is becoming more popular around the world and China is profiting from it. For instance, the Chinese app for group buying “Meituan-Dianping” combined 30 different services and attracted 28% more users. “Alipay” payment system also connected 200 000 mini-applications and now has ~1 billion users, with 70% of them using 3 and more financial service providers.
4. Internet Usage
Key takeaway: People will continue to spend more time online since the Internet is a universal tool to connect with everything humans have created and businesses are offering.
- The most positive thing about social networks is an opportunity to express yourself. The platforms that experience rapid growth in popularity are the ones that provide the most creative freedom.
- The number of interactive gamers has reached 2.4 billion last year with Fortnite become a new social interaction form. And the number of people just watching gamers is rapidly increasing as well.
- Visual formats, including stories, have shaken the video world by popularizing vertical content. Instagram and Youtube experienced the most active growth. 28% of the total viewed content in the USA is digital video, the rest is TV.
- Americans spend 6.3 hours with digital media per day, with 3.6 hours spent on their smartphones. For the first time in history, people spend more time on their smartphones than watch TV (226min vs 216min).
- Podcasts grew from niche format to highly watched and demanded platforms. In the last 4 years, their audience has grown to 70 million listeners (USA). Advertisers see podcasts as a new great marketing opportunity.
- Text is replaced by video/images. Even Twitter, which initially was text-only, now counts that >50% Tweet Impressions go to images and videos. Meeker believes that the visual evolution will influence serious changes in design, entertainment and communication.
5. Internet Usage: The Existing Dangers
Key takeaway: while social networks are reducing online abuse and bullying, governments are still looking for ways to control the Internet. Because of that, Internet users put more effort into protecting and encrypting their data.
- The biggest problem is information overload. In 2018, 28% of Americans have spent nearly all of their time online. 18-29 year-olds have spent 39% of their time browsing, scrolling and engaging in other ways. 63% of the USA’s population try to limit their time on the Internet.
- Another huge problem is the amount of toxic information that turns text into video, is strengthened by recommendation algorithms and is suggested by social networks. “Facebook” and “Youtube” are trying to reduce this type of content the most by hiring thousands of moderators.
- Privacy concerns are increasing amongst people. However, with new laws going into effect regarding privacy, platforms are forced to look for ways to protect personal data. Facebook, for instance, will launch Clear History later this year to minimize the previous damage and prevent a deceleration of revenue growth. Such actions reduce the concerns amongst the community a bit, but the demand for information encryption is increasing. In just 3 years the encrypted data stream grew from 53% to 87%.
- Internet is not free. 55% of its users live in the countries where part of the content is blocked, 47% – where governments have tightened Internet surveillance. The same percentage was confronted with the blocking of social networks. 42% of the users experience frequent Internet and mobile network shut down by the government.
- Cyber attacks will continue to increase and they will become even more sophisticated. It’s predicted that many of them will be organized by the governments.
6. Freemium – future business model
Key takeaway: the selling of enhanced user experience proved it’s worth not only in gaming.
- End users are ready to pay for a good product after they try it out. This is the USP of the “freemium” model-free trial/basic and an improved paid version. The free version enables more usage, engagement, social sharing, but paid version enhances the experience, drives monetization and product innovation. In 2018, >40% of Spotify’s audience agreed to pay for a better music selection. “Amazon Prime” reports similar numbers.
- For more than 10 years now, the “freemium” model is being tested in three directions – gaming, enterprise services, applications. The possibilities there are endless and increasing. One of the leaders in applying this business model is “Google”. They offer many free tools, but increase their revenue by selling G Suite – users are already used to the tools and demand workplaces to use something they’re familiar with.
- The key feature of this model – increasing the share of paying customers, and even better – start with a big number of them. Depending on the product, the number of paying customers can make <1% (“Rovio” games) or >25% (“Slack”) of the total customer base.
- Two main “freemium” enablers – cloud deployment that simplifies the development of Internet add-ons and efficient digital payments.
7. Revolutionary growth changes in data volume
Key takeaway: mankind is not able to analyze the data collected.
- If earlier mobile apps were made of code and data, then now data itself has become the new apps. The application of artificial intelligence methods to big data can improve user experience.
- Human’s ability to adapt to technological changes is increasing, but people are still behind and can’t keep up with it. With the help of new educational methods, this could be regulated and improved.
- The pace at which data volumes are captured, created and replicated is increasing every year. Primary data creates more and more secondary information. During 2019, the amount of data in the cloud will surpass the amount of data users are accumulating. In 2022, the data in the cloud will surpass the data in corporate servers.
8. Online education
Key takeaway: the demand for knowledge is higher than ever and it will continue to grow.
- Though the price of online education is increasing, more students are choosing online courses. In 2012, there were 74% of students enrolled in various online courses. However, in 2017, the number dropped to 67% (due to increased pricing). Most of the universities have already announced their e-programs and offer to study online different disciplines (including MBA programs).
- New business models have emerged: income share agreements (“Lambda School”), applications for financial aid (“Chegg”), independent study constructor (“Quizlet”).
- 59% of Generation Z says that “Youtube” is a better tool for studying. There are 4.5 billion video tutorials watched daily.
- E-education stills show a strong inclination to technology. The 80% of profit “Coursera” makes is from courses dedicated to technologies, data analysis and business. The most popular courses are artificial intelligence development, learning, health and cryptocurrency.
You can also find the whole report HERE.