2016 Internet Trends Report

2016 Internet Trends Report

We’ve set out our highlights from this year’s internet trends report from Mary Meeker, partner at the Silicon Valley venture capital firm Kleiner, Perkins, Caufield and Byers.

Internet Users

New internet users are going to be harder to target. Emerging markets are less developed and less affluent, limiting the ease of access to internet. A key factor is smartphone access - in many developing countries, smartphones are a material cost. In Ethiopia, for example, the cost of a smartphone is 47.6% of a person’s income (measured as gross national income per capital), according to management consultants, McKinsey.

India’s Growth

India’s internet usage is growing at a staggering 33% year on year. Global internet growth rate is actually decelerating if you exclude India. It’s now surpassed the US as the second largest market for internet users behind China.

Economic Growth

GDP growth in 6 of the last 8 years has been lower than the 20-year average. Commodity prices are down 14% since mid-2014, echoing slowing global growth. The geographic shifts are also significant: in 1985, North America, Europe and Japan accounted for two thirds of global GDP growth, however by 2015, China and emerging Asia accounted for two thirds of global GDP growth. This was mainly due to the significant increase in Chinese spending.

Internet Advertisements

Growth is accelerating, mainly driven by a mobile advertising boom – the desktop computer ad industry is growing by 5% year on year, whereas mobile ads are growing by 66% in the US. Google and Facebook account for the vast majority of online ads.

Do They Work?

They’re lucrative for the ad companies, however, are they effective? 81% of users mute their ads, 62% of users are annoyed with or put off by brands with auto-playing videos and 93% of users consider ad-blocking software, according to adtech company, Unruly. China, India and Indonesia are particularly prone to using ad-blocking software. In total, there are 420 million users of ad-blocking software. If there has ever been a time to create better, more effective ads, it’s now.

What is a Good Online Ad?

Video is becoming increasingly the best form of advertising, as it plays to millennials’ and generation Z’s preferences. Those with the best engagement include Snapchat, Facebook and Instagram. Snapchat is Mary Meeker’s exemplar. Snapchat’s advertising strength is its combination of a camera, storytelling, creativity and messaging/sharing. Brands are able to engage with users through branded filters - the Gatorade Super Bowl lens garnered more views than the Super Bowl itself.

Messaging Apps on Home Screens

The best way to contact millennials is through social media and chat, the worst way is through calling. Smartphone home screens and internet browsers used to be the mobile “power alleys”. Home pages on smartphones are increasingly becoming messaging apps such as WhatsApp and Facebook Messenger.

Businesses in Messaging Apps

Businesses are increasingly using messaging apps to engage with customers. The hotel brand Hyatt uses Facebook Messenger to communicate with customers about reservations, and even room service. Termed “conversational commerce”, retailers are beginning to use messaging apps to sell products. An example is in Thailand where customers browse over Instagram and complete their purchases through a messaging app. WeChat is the messaging app that dominates in China – around a third of users have made a purchase over the platform.

That’s our round up. Have a watch of Mary Meeker’s address that summarises all of her internet trends for the year.

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