It’s Geek Christmas: Mary Meeker Internet Trends Report 2019 UPDATED

The one mandatory must read of the year for my team (and me) is the Mary Meeker Internet Trends Report. It’s worth your time to read the full report (333 slides, but gripping reading) and watch her presentation at Code Conference 2019 (30 minutes, rapid fire).

Ms Meeker’s Report is a great way to stay connected with what is really happening in technology, not just what you think is happening based on the behavior of your small circle of friends. She’s been a great spotter of opportunities — her eyeballs vs spend media charts highlighted that eyeballs were equal between Web and TV in 2006, but the spend wasn’t equal until 2016. Same thing in mobile a few years ago. If you are smart and thoughtful, there’s a lot you can learn about business opportunity in this deck, and at the very least you can base your observations on facts.

I speak quite a lot, and I talk about Mary Meeker frequently. I’m often shocked when I ask an audience if they read and/or are familiar with Mary Meeker, and I only see a smattering of hands. And these are ALWAYS tech conferences — so far I’m not in big demand with dentists. I don’t want to be harsh but … honestly … if you don’t have time to read this, you should find another industry in which to be ignorant.

UPDATE: A well-written post by Cory Doctorow at BoingBoing lists all the key conclusions from the 333-page report, which I should have included. Here’s Cory’s take:

* More than half the world is online so growth is slowing
* Ecommerce is still eroding brick-and-mortar retail
* Infosec is a dumpster-fire, with global political repercussions
* China and India each have more internet users than the US or Europe
* Internet ad growth is nosediving
* Programmatic rules internet ads
* User acquisition costs are climbing
* Freemium has moved from entertainment (where it is still strong) to business (where it’s growing)
* TV is tanking, mobile video is rising, now beats TV
* Payment systems like Square are experiencing strong growth, serving businesses that were historically unable to accept electronic payments
* Gig working is growing
* Image-based communications (videos, photos) are growing at the expense of text-based communications
* Gaming is growing, as is game-streaming
* Businesses are collecting more data than ever
* “Data-plumbers” who provide back-end services for billing, account management, etc are a growth sector and key to the success of many larger businesses
* Customers are more privacy conscious but still willing to share their data in exchange for “personalized services”
* People are less happy with social media and how it affects their lives
* Encryption is growing
* Bad news sells better than good news
* Social media amplifies bad acts, bad news, bad feelings, bad beliefs
* Internet freedom is in global decline, balkanization (“splinternet”) is one the rise
* Unemployment is a growing problem everywhere except the USA
* Online training and education is growing, driven in part by the mounting costs of traditional college
* Immigrants are key to US growth, with many successful tech businesses founded by first/second-gen immigrants
* Proportion of people in America born abroad is at a high-water mark not seen in a century
* US health insurance, costs, efficacy: a total dumpster-fire
* Big Tech is moving to hold Americans’ health data and involve itself in their health decisions
* Chinese consumer confidence is in the toilet
* Chinese growth is in the toilet
* Chinese account balance is plummeting
* Chinese exports have leveled off
* Chinese mobile saturation is high, and mobile growth has ended
* Chinese mobile internet usage continues strong growth
* Chinese “super apps” are totally unlike anything used in the west
* Chinese education is migrating online
* So are Chinese government services

and here’s the take from Recode:

But 333 pages is a lot of data to wade through. So Recode has pulled out some of the significant and most interesting trends in Meeker’s report. (You can find the full slide deck at the bottom of this story.)
Some 51 percent of the world — 3.8 billion people — were internet users last year, up from 49 percent (3.6 billion) in 2017. Growth slowed to about 6 percent in 2018 because so many people have come online that new users are harder to come by. Sales of smartphones — which are the primary internet access point for many people across the globe — are declining as much of the world that is going to be online already is.
As of last week, seven out of 10 of the world’s most valuable companies by market cap are tech companies, with only Berkshire Hathaway, Visa, and Johnson & Johnson making the Top 10 as non-tech companies:

Berkshire Hathaway
Johnson & Johnson

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.

Internet ad spending accelerated in the US, up 22 percent in 2018. 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.

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.

There are a number of problems ahead for targeted advertising, including GDPR impact and other regulation, as well as pushes for more privacy from hardware and software companies like Apple and Facebook.

Americans are spending more time with digital media than ever: 6.3 hours a day in 2018, up 7 percent from the year before. Most of that growth is coming from mobile and other connected devices, while time spent on computers declines. People are also getting more concerned about time spent online, as more than a quarter of US adults say they’re “almost constantly online.”

Innovation at tech companies outside the US has remained robust. Popular areas include fulfillment, delivery, and payments.
Images are increasingly the means by which people communicate, as technology developments like faster wifi and better phone cameras have encouraged a surge in image taking. More than 50 percent of Twitter impressions now involve posts with images, video or other media; Twitter used to be text-only.

The number of interactive gamers worldwide grew 6 percent to 2.4 billion people last year, as interactive games like Fortnite become the new social media for certain people. The number of people who watch those games — rather than participate — is swelling, too.

As privacy becomes a bigger selling point, expect more options to make your online communications safe. In Q1, 87 percent of global web traffic was encrypted, up from 53 percent three years ago.

The internet will become more of a cesspool: Getting rid of problematic content becomes more difficult on a large scale, and the very nature of internet communication allows that content to be amplified much more than before. Some issues: 42 percent of US teens have experienced offensive name-calling online, terrorists are being radicalized on sites like YouTube, and social media has encouraged increased political polarization.

Of the top 25 most valuable tech companies, 60 percent were founded by first- or second-generation immigrants. They employed 1.9 million people last year. New stricter immigration laws could negatively impact the tech industry and perhaps prevent our next Elon Musk from getting to the US.
Health care is steadily becoming more digitized. Expect more telemedicine and on-demand consultations.

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