Mary Meeker's 2016 Internet Trends Report

A tour through Mary Meeker's 2016 internet trends report

One publication that's eagerly awaited by anyone looking for the big-picture view on internet trends in the coming few years, backed up by credible and authoritative facts and figures, was published on June 1.

The 2016 edition of venture capitalist Mary Meeker's annual Internet Trends report addresses a wide range of major trends, including the impact of macroeconomic forces on internet growth; the outlook for smartphones; the rise of video and image messaging, artificial intelligence, bots and voice communication; the evolution of retail and online shopping; data privacy; and much more.

There's a huge amount of information to digest in this deep-dive report that packs significant analysis and insights into its deck of 213 slides. Quite a few authoritative voices have published their takes on Meeker's analysis, many in some depth. I've linked to some good reports at the end of this post.

Just as I've done with previous Meeker reports in 2013 and 2014, I haven't made an attempt to assess the whole thing. Rather, I'm focusing on a handful of areas that caught my attention that I think will be of interest and relevance to you, especially if you're a business communicator and have a keen interest in the evolution of the business and technology landscapes and people's behaviours.

In this post, I've focused on Meeker's analyses with screenshots under six broad headings:

1. Big Trends: Smartphones, Macro-Demographics, Online Advertising
2. Retail Evolution
3. Re-Imagining Communication: Images and Messaging
4. Re-Imagining People and Computers: Voice
5. Re-Imagining People and Computers: Transportation
6. Data Privacy

The deck includes a large section on China (21 slides) that I haven't commented on.

So let's start the tour…

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Source: Neville Hobson, https://www.nevillehobson.com/2016/06/08/mary-meeker-2016-internet-report/
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 License.

Big Trends: Smartphones, Macro-Demographics, Online Advertising

In the beginning there was the internet – and growth in overall users is slowing down says Meeker. Even global smartphone growth is slowing quite dramatically as this chart, looking at overall smartphone shipments by operating system, shows.

I wonder if the slowdown suggests that people aren't upgrading their phones as frequently as they used to. As smartphones become ever more advanced and feature-packed, and continue to be relatively pricey items to acquire, perhaps there's not so much user demand for the latest models (with affordability factors in developing markets in particular).

I can testify to that from my experience with my Galaxy S6 (an Android phone) that I bought less than a year ago where I have resisted the temptation to upgrade it to the latest Galaxy S7.

Maybe there isn't yet a tipping point, a game-changer device or feature, that would present consumers with a truly compelling proposition that would drive them in droves to the latest devices.

Demographic trends show slowing global population growth, declining birth rates and longer life expectancies Meeker says – just one macro-metric set to place alongside others in her report that address global debt, interest rate trends, and more, all of which show changes that suggest, says Meeker, that the years of easy growth since the mid 1990s are now behind us.

While Meeker's metrics for internet advertising growth relate to the USA, I think there are clear indicators of what's happened and will likely happen in other developed markets especially in Europe as desktop advertising continues to slow and mobile advertising growth begins to really accelerate.

Google and Facebook enjoy the lion's share of internet advertising growth – 76% year-on-year between them. While Google leads by a large margin in revenues, Facebook's 59% growth from 2014-2015 easily outpaced Google's at just 18%.

I can't talk about online advertising without mentioning ad blocking, a topic I've written about here quite a bit in recent months.

Meeker's report addresses the topic, noting that ad blocking increased by 16% year-on-year on the desktop, but by a whopping 94% on mobile.

It seems clear that mobile will be the next battleground for advertisers aiming to catch the attention of consumers and not get blocked. Hard to see worthwhile outcomes for advertisers unless they create better ads as Meeker's slide notes.

Not only is ad blocking software readily available to consumers, but also mobile operators like Three UK are starting to experiment with ad blocking at the network level. Where will this go, I wonder. The stakes for advertisers are high especially as the use of video advertising on mobiles starts to take off with Meeker citing use cases with Snapchat that garnered impressive viewing figures.

Retail Evolution

The report analyses trends in retail in some detail, reporting that the evolution of retail is shaped by the evolution of technology and distribution. It shows that millennials are impacting and evolving retail, noting that this generation currently comprises 27% of the US population (the largest generation group), whose spending power should rise significantly over the next 10-20 years.

The report states that in retail, technology, media and distribution are increasingly intertwined. It charts a historical path illustrating the journey over the decade to 2015 that saw physical retailers become digital retailers, that in turn is leading to digital retailers becoming data-optimized physical retailers. A circle closes, as it were.

Now, internet-enabled retailers, products and brands are on the rise bolstered by always-on connectivity, hyper-targeted marketing, images and personalization.

Re-Imagining Communication: Images and Messaging

In the rise of visual communication, Meeker says that usage will continue to increase led by millennials' social network engagement leadership across visual media channels like Facebook, Snapchat and Instagram.

Of particular interest is the next evolution stage in behaviours with Generation Z markedly evolved from millennials when it comes to visual communication: text for the latter, images for the former. Where second screen denotes millennials (the 'tech savvy' generation), five screens characterize the Zs (the 'tech innate' generation).

In video use, Meeker surveys an expansive landscape where usage, sophistication and relevance continues to grow rapidly. Smartphone usage behaviour increasingly means camera plus storytelling, creativity, messaging and sharing.

Consequently, advertisers and brands are finding ways into that camera-based storytelling, creativity, messaging and sharing ecosystem.

And with general (non-video) images, usage, sophistication and relevance continue to grow rapidly.

Note Facebook's strong position as owner of four of the most popular platforms in 2015 for sharing images: Facebook itself, WhatsApp, Instagram and Facebook Messenger.

In messaging platforms, this area is evolving rapidly from enabling simple social conversations to becoming the means for more expressive communication. It's penetrating the business arena with increasingly-sophisticated business-focused communication that not only builds value-connections between a business and its networks of customers, partners, influencers, etc, but also enables transactions to take place including payments.

Look at Facebook Messenger – you can't seriously view Facebook any longer as only a place where people chat and share videos about babies, barbecues and cats.

Line is an interesting one, a Japan-based messaging platform founded in 2011 that I've started hearing more about in recent months, both from the consumer and business perspectives. An alternative to WhatsApp is a common comment I've heard.

Note the word chatbots in the slide above, a word we will hear a great deal about in the rest of this year and into the next.

And Meeker has a clear message for businesses – misunderstand or ignore generational preferences in how people wish to be communicated with at your peril. The best ways for businesses to contact millennials (Gen Y in the slide below) are by social media and chat. The worst way: the telephone. Flip that for boomers and older.

Not a rosy picture in the long term for call-centre marketing and customer service.

And here's further evolution where the home screen on your smartphone isn't just the set of app icons you might be accustomed to. Instead, it's live with your favourite messenger app as either the secondary home screen, or one of the many home screens you can have on your smartphone.

Connecting within easy reach. How long before your favourite chat app becomes your primary home screen?

Re-Imagining People and Computers: Voice

A new paradigm in human/computer interaction is how Meeker introduces her analyses of this segment, one that she discusses at length over 22 slides. She notes that there have been "innovations every decade over the past 75 years, from punch cards for informatics in the early 19th century right up to voice on mobile and on connected devices in the second decade of the 21st century.

The time is now for the next development, Meeker says, citing significant improvements in speech recognition technologies and capabilities, and natural language recognition and processing, that lends credence to the claim that voice should be the most efficient form of computing input.

I'd also add reference in the slide above to current real-world (and rapidly evolving) capabilities with conversational speech recognition that IBM Watson is capable of as described in this VentureBeat report last April. Look at this aspect of machine speech recognition in a year's time and see evolution in front of your eyes.

The computing interface is evolving from keyboards to microphones and keyboards (keypads on mobile devices), Meeker says, but adding "it's still early innings". She's clearly a baseball (or cricket) fan.

Note the growth of "Navigate home" over the past three years, with the obvious connection to being mobile (eg, primarily in a car).

I talk to my phone all the time; pretty soon, it will look like I'll no longer seem weird to most people.

Meeker then considers voice as the computing interface in the context of hands and vision-free that expands the concept of 'always on' when you're busy or unable to use your hands or give something your full visual attention.

The correlation between 'reason' and 'setting' is not hard to grasp where 'Home' is the most popular. 'Work' hasn't made it up the ranking (yet). What I think is highly significant is the second most popular setting – the car.

Re-Imagining People and Computers: Transportation

Another new paradigm, says Meeker, as she explores over 24 slides the myriad and rapid developments and changes happening in one of the most evolutionary industries. A large part of this segment looks at the evolution of the auto industry and how new entrants to the field have fared and are faring.

It's notable that the USA has the potential to be the hub of a global auto industry once more, Meeker says, as it has many key components of the new ecosystem that is rapidly coming to the fore.

Much of the USA's leader potential lies in areas related to technology and innovation, from Tesla's leadership in electric-powered sports cars (and battery tech), to Google's autonomous driving experimentation, to NVIDIA providing the graphics power for new-generation high-resolution digital dashboards and second screens, to disruptive innovators such as Uber.

And Uber, along with other ride-sharing services, is getting attention from some car makers, notably GM and Ford as they 're-imagine' their industry.

And Meeker speculates on what a 'Second Golden Age' for auto makers might look like, with some provocative questions.

Data Privacy

Meeker's report wraps up with a close look at data privacy, a topic that gets more attention as we become more aware of the risks that come with the benefits of living our lives online.

Concerns about data privacy have made a significant number of people limit their online activity, Meeker reports, where surveys show nearly three-quarters of respondents say they have done so.

People's concerns are largely focused on data selling, storage, access, and being identified individually, areas that attracted majority concerns in the surveys Meeker cites.

Will this picture of concern change or improve? Change, to be sure, but it's hard to be highly confident of improvement that diminishes those concerns.

I think much comes down to trust – who do you trust to safeguard your data and personal information? Recognise the dynamic and rapidly-shifting nature of this huge landscape upon which we travel. It used to be that, if you wanted to be wholly happy about such things, then don't go online. Very hard to see that as a common-sense approach to life or business today and certainly not tomorrow.

Takeways

Mary Meeker's 2016 internet trends report is an important work, one that is worth studying for the insights you can glean that may enrich your own understanding. My tour is but a snapshot on elements that I found of distinct interest. I encourage you to read the full report, embedded below, for additional insights.

You can also see Mary Meeker presenting her report at the Code conference in San Francisco last week. Reading a deck is one thing; seeing its creator present the story is something else entirely.