While there are many hot takes, predictions, surveys and other reports that analysts and research firms release every month, few are as closely followed as an annual Internet Trends report put together by Kleiner Perkins Caufield & Byers partner Mary Meeker.
Today, at Recode’s Code Conference, Meeker released the 2017 version of her report, and it’s chock-full of charts, stats and graphs about the future of the industry and what’s happening in it today. While marketers might want to spend some time sifting through all 355 pages of the slide show, this year’s 11-part report focuses on topics like smartphone market growth, online advertising, media and interactive games.
According to the report, total growth in internet users will be fairly flat this year, growing by 10 percent over last year. Meanwhile, time spent with digital media will see “solid growth,” especially in the realm of social media and video. For example, over a four-year period, YouTube’s share of mobile traffic has fallen from 30 percent to 20 percent, while Facebook’s increased from 7 percent to 14 percent.
According to First Media CEO Guy Oranim, it makes sense to see that video on social media is becoming more dominant as brands become “very aware” of the increasing popularity.
“We strongly believe that the share of social media out of video consumption will continue to increase in a significant way in the very near future,” Oranim said via email. “Because of this, we continue to increase our investment in these social media platforms and viral video content for young female viewers especially through Facebook and Instagram. These platforms present optimal environments to connect and engage with consumers in an authentic and accessible way.”
Here are a few of the highlights from this year’s report:
1. Smartphone sales are slowing
From 2015 to 2016, total shipments of smartphones grew by just 3 percent, down from 10 percent from 2014 to 2015. Along with that, the smartphone user-base growth slowed as well, growing just 12 percent in 2016 compared with 25 percent the year prior. As of last year, around 2.8 billion people owned smartphones.
2. Digital media use continues to grow
The amount of time adults spent with digital media in 2016 grew from the the previous year, with average time increasing to 5.6 hours a day—up from 5.4 hours in 2015. Of that, mobile accounted for 3.1 hours (increasing from 2.8 in 2015) while desktops stayed flat at 2.2 hours. Other connected devices made up the remaining 0.4 hours.
3. Mobile advertising growth is accelerating
It’s likely no surprise to see that mobile advertising growth continued to skyrocket in 2016, with growth accelerating to 22 percent from 20 percent in 2015. Internet advertising spend in the U.S. totaled $73 billion, with about $43 billion coming from mobile. However, desktop advertising stayed fairly consistent, decreasing slightly but remaining within the same ballpark of where it’s been since 2012. (For the past six years, desktop ad spending has fluctuated between $30 million and $38 million.)
According to the report, time spent with media on mobile devices is still increasing at a faster rate than ad spending, while other platforms such as radio and television are about equal.
“There is obviously a seismic shift from desktop ecosystems to mobile,” said Jason Beckerman, CEO of Unified. “But to me, the more interesting shift is from a world of behavioral and cookie-based targeting to identity-based targeting, leveraging the rich data from the world’s social networks.”
4. Internet ad spend has eclipsed TV ad spend
While internet and TV companies continue to battle each other for advertising dollars, new media finally outpaced old media in 2016. According to the report, total global ad spend last year for both the internet and TV were around $180 billion, with internet spending expected to grow faster than TV in 2017.
Of the internet ad spending, Google and Facebook continued to take the lion’s share, accounting for 85 percent of all growth in the U.S. Last year, Google experienced 20 percent growth over its 2015 revenue, while Facebook grew by 62 percent.
5. Voice-activated devices are getting more popular
The total number of people using voice-enabled assistants like the Amazon Echo suite of products continues to grow. In the fourth quarter of 2016, Echo had an more than 8 million users. That total jumped to 11 million in the first quarter of 2017. Total Echo skills (the voice version of apps) is also rising sharply, from 7,000 in January to 10,000 in February to 12,000 in April.
According to Michael Levine, vp of marketing at Photon, the updates to security and personalization with voice recognition are “a major step forward.”
“We are a society that craves convenience,” he said. “If something saves us steps, we gravitate towards it. Voice and visual are the next frontiers in search and discovery.”
6. Ad blocking is still popular
Ad blocking, especially on mobile, continues to increase, with nearly 400 million devices using ad blockers last year. But desktop ad blocking seems to have slowed—around 240 million devices are using similar software.
7. Incentive-based ads are in, preroll is out
Incentive-based and skippable ads were preferred over other formats, with mobile-app pop ups and preroll ads being the least desirable.