State of the Internet

I want to summarize some data from Kleiner Perkins recent Internet Trends Report. Click here if you want to shiny 350+ page version.

Global internet use and smartphone base is growing at 10% and 12% respectively. While slowing, this growth is coupled with more attention paid to connected phones, which are increasingly targets for ads. Out of $73 billion spent on ads online in 2016, the majority of it went mobile – probably in response to popular adblockers.

This year, global internet ad spend will surpass TV ads for the first time, even as TV ads continue to rise. Online, social media is the best place for advertisers to place investments. Both engagement and ROI remain extremely high. On Facebook, as of March 2017, 26% of ads click ended in a purchase. This is measurable for marketers who can be assured that for ever 4 clicks, 1 should end in a buying action. Of course, the cost, doesn’t take into account product/service mix, and was a small survey population versus the number of Facebook users.

What’s the future hold? Pictures over keywords according to Pinterest Founder.

Nothing drives engagement like User Generated Content (UGC), which is why people like Kim Kardashian can charge half a million for a post a social influencer. Brands like Qatar Air, Red bull, Netflix, and Starbucks have used influencer marketing and UGC to drive market recognition.

Another part of the future will be voice assistance – Apple, Amazon, Google leading the way. Voice recognition has come a long way in just 15 years with machine learning matching human word accuracy.

Marketers still ruin everything. Ads are becoming more interactive, more easily ignored, and in some cases, more deceptive. People like online chat engagement thanks to cool web chat services, but even more people stop doing business with a company after a bad experience – 82% in 2016.

People are still shopping, just online. Google’s parent Alphabet just announced a 21% increase in revenue with paid clicks (the company’s bread and butter) up 52% year over year. This bodes well for Facebook, Snap, and Twitter. Convenience is still top consumer priority. When shopping, Instacart re-purchases options make it 8x more likely for the visitor to buy. Don’t forget that Amazon continues to disrupt retail, which is great for the customer because mediocre retail experiences are disappearing.

Gaming IS REAL BIG. There are now 2.6 billion gamers worldwide spending over $100 billion a year, up 9% Y/Y. Gaming apps are generally free, earning the majority of money by scaling and taking fees for faster gameplay or extra goods from a small portion of users – some companies generate billions this way. Gaming Platform Twitch has 10 million daily active users with nearly 5 billion hours streamed in 2016. More and more people are moving into the virtual reality world thanks to gaming. In fact, on average gamers spend more time playing than people on Facebook.

Even businesses are starting to gamify usage to drive more engagement, and more cash spent. Pokemon Go captivated everyone in 2016. People are drawn to trophies and badges on Forsquare, Yelp, AirBnb, etc.

If you can, plant seeds in China fast. $40 billion in online ads, up 30% Y/Y, driving $681 billion in eCommerce gross merchandise value (71% mobile). China will be the world’s largest economy in less than a decade.

Finally, underlying everything is data. The internet drives data accumulation at monsterous levels, making the necessity to collect, organize, manage, and analyze that data the most important part of any businesses job. Knowing the numbers is great, but not too long from now, I’ll listen to conference calls with public C-level executives that have conceptualized data to produce better pictures of where their companies are going.

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