Highlights from Mary Meeker’s 2019 Internet trends report

At Recode by Vox’s 2019 Code Conference on Tuesday, Bond partner Mary Meeker made her presentation onstage, covering everything on the internet's latest trends. Meeker had first started presenting these reports in 1995, underlining the most important statistics and technology trends on the internet. Last year in September, Meeker quit Kleiner Perkins to start her own firm Bond and is popularly known as the Queen of the Internet.

Mary Meeker’s 2019 Internet trends report highlighted that the internet is continuing to grow, slowly, as more users come online, especially with mobile devices. She also talked about increased internet ad spending, data growth, as well as the rise of freemium subscription business models, interactive gaming, the on-demand economy and more.

https://youtu.be/G_dwZB5h56E

The internet trends highlighted by Meeker include:

• Internet Users
• E-commerce and advertising
• Internet Usage
• Freemium business models
• Data growth
• Jobs and Work
• Online Education
• Immigration and Healthcare

Internet Users

More than 50% of the world’s population now has access to the internet. There are 3.8 billion internet users in the world with Asia-pacific leading in both users and potential. China is the largest market with 21% of total internet users and India is at 12%. However, the growth is slowing by 6% in 2018 versus 7% in 2017 because so many people have come online that new users are harder to come by. New smartphone unit shipments actually declined in 2018.

Per the global internet market cap leaders, the U.S. is stable at 18 of the top 30 and China is stable at 7 of the top 30. These are the two leading countries where internet innovation is at an especially high level. If we look at revenue growth for the internet market cap leaders it continues to slow - 11 percent year-on-year in Q1 versus 13 percent in Q4.

Internet usage

Internet usage had a solid growth, driven by investment in innovation. The digital media usage in the U.S. is accelerating up 7% versus 5% growth in 2017. The average US adult spends 6.3 hours each day with digital media, over half of which is spent on their mobiles. Wearables had 52 million users which doubled in four years. Roughly 70 million people globally listen to podcasts in the US, a figure that’s doubled in about four years.

Outside the US, there's especially high innovation in data-driven and direct fulfillment that's growing very rapidly in China. Innovation outside the US is also especially strong in financial services.

Images are also becoming an increasingly relevant way to communicate. More than 50% of the tweets of impressions today are images, video or other forms of media. Interactive gaming innovation is rising across platforms as interactive games like Fortnite become the new social media for certain people. It is accelerating with 2.4 billion users up, 6 percent year-on-year in 2018.

On the flip side

Almost 26% of adults are constantly online versus 21% three years ago. That number jumped to 39% for 18 to 29 year-olds surveyed. However, digital media users are taking action to reduce their usage and businesses are also taking actions to help users monitor their usage. Social media usage has decelerated up 1% in 2018 versus 6% in 2017.

Privacy concerns are high but they're moderating. Regulators and businesses are improving consumer privacy control. In digital media encrypted messaging and traffic are rising rapidly. In Q1, 87 percent of global web traffic was encrypted, up from 53 percent three years ago.

Another usage concern is problematic content.

• Problematic content on the Internet can be less filtered and more amplified. Images and streaming can be more powerful than text.
• Algorithms can amplify users on patterns  and social media can amplify trending topics.
• Bad actors can amplify ideologies, unintended bad actors can amplify misinformation and extreme views can amplify polarization.

However internet platforms are indeed driving efforts to reduce problematic content as do consumers and businesses. 88% percent of people in the U.S. believe the Internet has been mostly good for them and 70% believe the Internet has been mostly good for society.

Cyber attacks have continued to rise. These include state-sponsored attacks, large-scale data provider attacks, and monetary extortion attacks.

E-commerce and online advertising

E-commerce is now 15 percent of retail sales. Its growth has slowed — up 12.4 percent in Q1 compared with a year earlier — but still towers over growth in regular retail, which was just 2 percent in Q1.

In online advertising, on comparing the amount of media time spent versus the amount of advertising dollars spent, mobile hit equilibrium in 2018 while desktop hit that equilibrium point in 2015. The Internet ads spending on an annual basis accelerated a little bit in 2018 up 22 percent.  Most of the spending is still on Google and Facebook, but companies like Amazon and Twitter are getting a growing share. Some 62 percent of all digital display ad buying is for programmatic ads, which will continue to grow. According to the leading tech companies the internet average revenue has been decelerating on a quarterly basis of 20 percent in Q1.

Google and Facebook still account for the majority of online ad revenue, but the growth of US advertising platforms like Amazon, Twitter, Snapchat, and Pinterest is outstripping the big players: Google’s ad revenue grew 1.4 times over the past nine quarters and Facebook’s grew 1.9 times, while the combined group of new players grew 2.6 times.

Customer acquisition costs — the marketing spending necessary to attract each new customer — is going up. That’s unsustainable because in some cases it surpasses the long-term revenue those customers will bring. Meeker suggests cheaper ways to acquire customers, like free trials and unpaid tiers.

Freemium business models

Freemium business models are growing and scaling. Freemium businesses equals free user experience which enables more usage, engagement, social sharing and network effects. It also equals premium user experience which drives monetization and product innovation. Freemium business evolution started in gaming, evolving and emerging in consumer and enterprise. One of the important factors for this growth is cloud deployment revenue which grew about 58% year-over-year. Another enabler of freemium subscription business models is efficient digital payments which account for more than 50% of day-to-day transactions around the world.

Data growth

Internet trends indicate that a number of data plumbers are helping a lot of companies collect data, manage connections, and optimize data. In a survey of retail customers, 91% preferred brands that provided personalized offers and recommendations. 83% were willing to passively share data in exchange for personalized services and 74% were willing to actively share data in exchange for personalized experiences.

Data volume and utilization is also evolving rapidly. Enterprise surpassed consumer in 2018 and cloud is overtaking both. More data is now stored in the cloud than on private enterprise servers or consumer devices.

Jobs and Work

Strong economic indicators, internet enabled services, and jobs are helping work. If we look at global GDP. China, the US and India are rising, but Europe is falling. Cross-border trade is at 29% of global GDP and has been growing for many years. Global relative unemployment concerns are very high outside the US and low in itself. Consumer confidence index is high and rising. Unemployment is at a 19-year low but job openings are at an all-time high and wages are rising. On-demand work is creating internet-enabled opportunities and efficiencies. There are 7 million on-demand workers up 22 percent year-on-year. Remote work is also creating internet enabled work opportunities and efficiency. Americans working remotely have risen from 5 percent versus 3 percent in 2000.

Online education

Education costs and student debt are rising in the US whereas post-secondary education enrollment is slowing. Online education enrollment is high across a diverse base of universities - public, private for-profit, and private not-for-profit.  Top offline institutions are ramping their online offerings at a very rapid rate - most recently University of Pennsylvania, University of London, University of Michigan and UC Boulder. Google's growth in creating certificates for in-demand jobs is growing rapidly which they are doing in collaboration with Coursera.

Immigration and Healthcare

In the U.S. 60% of the most highly valued tech companies are founded by first or second generation Americans. They employed 1.9 million people last year. USA entitlements account for 61% of government spending versus 42% 30 years ago, and shows no signs of stopping.

Healthcare is steadily digitizing, driven by consumers and the trends are very powerful. You can expect more telemedicine and on-demand consultations.

For details and infographics, we recommend you to go through the slide deck of the Internet trends report.

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