THE BEST OF MARY MEEKER’S

2017 INTERNET TRENDS

REPORT

EXECUTIVE SUMAMRY:

GLOBAL

TRENDS:

Mary Meeker, a Partner at venture firm Kleiner Perkins Caulfied & Byers (KPCB), released her

annual Internet trends report on Wednesday. Her 355 slide presentation offers a comprehensive

look at the current world digital technology landscape and what trends we can expect to see. We

have compiled the following summary recap for your easy reading reference:

TIME SPENT PER

DAY ON MOBILE DEVICE

IS 2X THAT OF TWO YEARS

AGO

SHIFTS TO INTERNET-ENABLED MEDIA CONTINUE

18-24

49% 65+

13%

YOUNGER DEMOGRAPHICS SPENDING ALMOST HALF THEIR TIME WITH DIGITAL

COMPARED TO 65+ WHO CONTINUE TO BE DOMINATED BY TRADITIONAL FORMATS

MEDIA EVOLUTION FROM MARKETING TO MILLIONS TO

MARKETING OF ONE X MILLIONS

MOBILE SPEND IS NOW HIGHER THAN DESKTOP FOR THE FIRST TIME EVER

GLOBAL INTERNET SPEND WILL BE GREATER THAN TV IN 6 MONTHS

U.S. Adults now spend 5.6h per day on the

internet, including over 3+h per day on mobile,

compared to under 1h per day in 2011. Desktop

usage has only declined slightly, indicating it’s more of an addiction of mobile

than a shift to mobile.

PEOPLE SPEND 28% OF THEIR MEDIA

TIME ON MOBILE, yet only currently

21% of total ad spend is mobile. Indicating a huge opportunity for mobile

products to soak up this shift.

GLOBAL

TRENDS:

Especially in developing markets where data costs can be high, users are increasingly blocking ads whenever they can.

MOBILE AD-BLOCKING CONTINUES TO SKYROCKET

REVENUE FROM

ONLINE

ADS IS UP

22% IN 2016

28%

18%

24%

16%

11%

58%

28%

13%

3%

1%

AD BLOCKING PENETRATION: TOP 5

MARKETS:

NEARLY

400M PEOPLE AROUND

THE WORLD

BLOCK

MOBILE

ADS

MEDIA TRENDS:

GOOGLE AND FACEBOOK LEAD AD

DUOPOLY WITH 85% SHARE GROWTH

IN U.S. ONLINE ADS

It will increasingly become harder for other platforms to compete given their current share of market and continued pressure to

effectively respond to brands that are seeking to prove effectiveness of their ad spend,

through constant improvement in ad targeting relevance, and measurement.

SHARE OF INTERNET GROWTH:

ADVERTISERS LIKE MEASURABLE ENGAGEMENT METRICS, BUT SOME ARE FINDING MEASURING ROI CHALLENGING

(AS WITH OFFLINE)

However leading online ad platforms are working to help provide solutions for more ways to target & measure ads accurately.

THUS CLOUD WARS CONTINUE

Amazon Web services remains the undisputed leader in terms of cloud adaption, but Google and Microsoft Azure are starting to catch up.

SPENDING ON PUBLIC AND PRIVATE

CLOUDS LAST YEAR ROSE TO $36B, +37% SINCE 2014.

EXPENSIVE CABLE CONTINUES TO CAUSE CORD-CUTTING WHIST ONLINE

STREAMING PORTALS STAY PREVALENT

In 10 years,

Netflix went

from 0% to

more than 30%

of home

entertainment

revenue in the

U.S. This is

happening while

TV viewership

continues to

decline.

NETFLIX IS

SLOWLY DRAGGING DOWN TELEVISION –

GROWING 6.7% YOY WHILE THE

TOP TV NETWORKS DECLINED AN

AVERAGE OF 10%

MEDIA TRENDS:

YOUTUBE LOSES MOBILE VIDEO SHARE AS SOCIAL MEDIA APPS WITH

CONVENIENTLY SHORT CONTENT AND SERENDIPITOUS DISCOVERY DRIVE

MOBILE VIDEO GROWTH

INCENTIVE-BASED + SKIPPABLE VIDEO ADS DRIVING POSITIVE INTERACTIONS

SNAPCHAT IS BENEFITING THROUGH CONTEXTUALLY TARGETING ADS VIA ALGORITHMS LINKING TO REAL-TIME IMAGES – THUS PLACING THE RIGHT AD AT THE

RIGHT PLACE/TIME) AND IT’S BECOMING BIG BUSINESS FOR THEM

EMERGING RETAILERS + CRAFT BIG BRANDS ARE FINDING WAYS TO UTILISE UGC (IMAGES AND VIDEOS) UPLOADED ON CONSUMER’S SOCIAL CHANNELS, TO REPURPOSE

ON THEIR OWN BRANDED CHANNELS.

BRANDS THAT ARE HEAVY IN SOURCING UGC ON INSTAGRAM & RE-POSTING CONTENT:

MEDIA TRENDS:

USER & INFLUENCER GENERATED CONTENT REPURPOSED CAN GENERATE 6.9x HIGHER ENGAGEMENT THAN BRAND GENERATED CONTENT

75% 70% 62% 53% 44%

They’re continuing to transform the marketplace by offering better user experiences and lower prices, while leveraging big data and scale.

Their quick delivery is also having major

affect on the closures of many

retail chains locations.

AMAZON PRIME AND OTHER ONLINE RETAILERS HAVE CAUSED THE PACKAGE

AND PARCEL SHIPPING VOLUME TO GROW

9% YOY

RECORDED MUSIC REVENUE FINALLY GROWING THANKS TO THE SUCCESS OF

STREAMING PORTALS

Representing 52% of music recording revenue compared to 0% 13 years ago.

50M Subscribers

18.3M(est.

) Subscribers

20M Subscribers

Google, Pinterest and Facebook are using the increasing willingness of consumers to buy

online to earn revenue through visual ads for products. Thus meaning you’ll soon be served

ads based on what you’re looking at.

“A lot of future search is going to be about pictures instead of keywords – Ben

Silbermann, Pinterest Founder/ CEO”

TAKING PHOTOS AND USING VOICE CAN ERASE TYPING WITH THE VISUAL WEB

CONTINUING TO GROW IN IMPORTANCE AND SOPHISTICATION

Led heavily by the popularity and breadth of Amazon Echo and other voice assistants, such

as Apple's Siri, and Google Assistant. Currently 11m Echos installed in the U.S.

VOICE IS BEGINNING TO REPLACE TYPING IN ONLINE QUERIES

SEARCH CONTEXT:

20% OF

MOBILE

QUERIES

WERE MADE VIA

VOICE IN 2016,

WHILE ACCURACY IS

NOW ABOUT 95%

ALGORITHMS INFER IMAGES/ PROJECT AR OBJECTS INTO STORIES.

IMAGE RECOGNITION WILL SOON BE ABLE TO PROVIDE CONTEXTUAL

RELEVANCE FOR BRANDS TO ADVERTISE

IMAGE-BASED PLATFORM

IMAGE-BASED PLATFORM

GAMING GOES MAINSTREAM

There are nearly 2.6b quarterly video gamers now compared to 100m in 1995. Collaborative

play compared to individual gaming is more prominent than in the past.

GAMIFICATION SLIPS INTO ALL APPS. WHETHER DATING TO PERSONAL FINANCE, AND IT’S INFLUENCING

BUSINESS’ TOO: Gamification in virtual worlds is leading real

world simulations such as simulating cities and power/ web networks.

GAMING:

VIDEO GAMES SOAK UP

MORE DAILY MINUTES

THAN FACEBOOK

KEY TOOLS/ PLATFORMS CONTINUING TO EVLOVE THIS SPACE:

Diving into what all this interactive behavior means for consumer engagement. Gaming

can improve real-world performance through utilizing video + VR to repeatedly run plays/

scenarios, or the use video analytics to review key players and have real time digital stats to

measure performance.

IMMERSIVE GAMING TOLLS HELP IMPROVE ATHLETE PERFORMANCE

“I could go ten hours at a stretch playing soccer video games, and often spot solutions in the games that I parlayed into real life. – Zlatan

Ibrahimovic”

GAMING:

E-SPORTS VIEWING TIME WAS

UP 40% YOY TO 161M ACTIVE

MONTHLY VIEWERS

E-SPORTS LIKE TRADITIONAL SPORTS IS GENERATING MONEY STREAMS, WITH

EXPANDED GAMING ECO-SYSTEM

79%

<35YO… 29% FEMALE

ESPORTS LEAGUE OF LEGENDS

CHAMPIONSHIP VIEWERS: 43M, +19

YOY

PARTNERSHIPS AND INVESTMENTS ARE HELPING BRING E-SPORTS INTO MAINSTREAM

Millennials: 27% have significant preference for E-sports- which is the same for traditional

sports

CUSTOMER SERVICE IS SHIFTING TO CHAT WITH REAL TIME ONLINE CONVERSATIONS

There’s a rapid rise in the % of customer service conversations happening via real-time

online chat instead of phones, as users demand faster response times and wider

access. The bar for quality customer support is rising. Social media is helping drive brand accountability, Airlines are a great example that everything is documented and customer

service must be adhered to. 82% of customers stopped doing business

with a company in 2016 after a bad experience compared to 76% in 2014.

DIGITALLY NATIVE BRANDS ARE GOING OFFLINE TO CREATE EXTENDED RETAIL

EXPERIENCES

While the top internet companies all started in different industries, many are now attacking each other out of control for e-commerce,

messaging, hardware and advertising.

Facebook feed acts as browsable storefronts, emails as curated storefronts, Instagram as a motion to tap to book, and Snap/ Instagram to swipe up to buy. Facebook contextual ads are

helping drive direct purchases – via messenger

RETAIL/ E-COMM:

26% THAT

CLICKED ON A

FACEBOOK AD MADE A

PURCHASE

THE LINE BETWEEN ADS/ CONTENT/ PRODUCTS AND TRANSACTIONS ARE ALL

BLURRYING

“That’s not to say retail itself is dead, just mediocre retail experiences are dead – Neil Blumenthal, co-CEO @ Warby Parker

Stitch fix taking online retail to a whole new experience level LAUNCHING A PRIVATE-

LABEL CLOTHING BRAND THAT’LL BE COMPLETELY

COMPUTER-GENERATED BASED ON

CONSUMER DESIRE

Whereas Pinterest are turning browsing into buying

via product discovery + targeted visual Pins.

TECH IS IMPROVING HEALTHCARE

New inputs like 3D scans and wearable devices, data monitoring, willingness to share

health data, new health apps is making electronic health adaption at record time

high.

TECHNOLOGY:

25% OF AMERICANS

OWN A WEARABLE,

+ 12% YOY

MEANING THAT LEADING TECH BRANDS

ARE WELL-POSITIONED

IN THE DIGITAL HEALTH MARKET

60% ARE

WILLING TO

SHARE THEIR

HEALTH DATA WITH THE

LIKES OF

GOOGLE

TOP SENSORS IN WRIST WEARABLES:

FITNESS CATEGORY

APPS LEAD THE WAY FOR HEALTH

RELATED APPS

WITH 36%

CHINA DEEP-

DIVE:

INTERNET HOLDS

55% OF THEIR MEDIA

TIME, WITH MOBILE USAGE

GROWING 30% IN 2016. KEY DRIVERS

BEING ECOMMERCE AND GAMES

CHINA IS IN THE GOLDEN AGE OF MOBILE ENTERTAINMENT

THE COMPANIES THAT ARE COMMANDING MOBILE MINUTES FROM CHINESE

CONSUMERS ARE:

Live-streaming receiving high

consumer engagement + willingness to

pay – generating a

strong monetization opportunities

The mobile payment capabilities have paved the gateway for Internet leaders to become

diversified financial services platforms.

E-COMMERCE GROWTH +24% YOY

KEY TAKE-

AWAYS FOR

ADIDAS: FROM THE BIG SCREEN, TO THE SMALL SCREEN, TO THE EVEN SMALLER

SCREEN

MOBILE IS DOMINATING THE DIGITAL SPACE AND HAS LARGE POTENTIAL TO BE

LEVERAGED AD $$ WISE. WE CAN EXPLORE OUR MEDIA MIXES TO MAKE SURE

WE’RE THINKING ABOUT EXPANDING THE USE OF MOBILE.

SPEED IS PARAMOUNT

THE LAG TIME IN RESPONSIVENESS AND INTERACTION WITH BRANDS

CONTINUES TO SHRINK. CONSUMERS EXPECT BRANDS TO BE ALWAYS ON,

ALWAYS ENGAGING. WHETHER THAT BE THROUGH CUSTOMER SERVICE CHAT

BOTS OR INSTANT RESULTS THROUGH VOICE & VISUAL SEARCH. WE MUST

FIND WAYS TO CAPITALIZE ON THESE NEW BEHAVIORS AND DELIVER BOTH

UTILITY AND CREATIVITY.

INCREASED FOCUS ON SELF

HUMANS ARE PLACING AN INCREASED FOCUS ON THEMSELVES AS WE MOVE

INTO THE FUTURE. WHETHER THAT BE EXPLORING OUTLETS TO EXPRESS

THEMSELVES THROUGH CREATIVITY OR TRACKING THEIR BODIES AND HEALTH

THROUGH WEARABLES. THERE IS AN INNER FOCUS WITH THIS GENERATION.

WE SHOULD EXPLORE WAYS THAT EMPOWER AND ENABLE OUR CONSUMERS

TO CONTINUE THIS SELF EXPRESSION AND MAKE IT PART OF OUR OPEN

SOURCE MODEL.

THE LEGACY PLAYERS CONTINUE TO GROW

GOOGLE AND FACEBOOK ARE DOMINATING THE MARKETPLACE; WHILE WE

SHOULD ENSURE COVERAGE WE SHOULD LOOK TO LEVERAGE OUTSIDE

PARTNERS SUCH AS SNAPCHAT WHO CAN POTENTIALLY PROVIDE GREATER

CUT-THROUGH.

AN ERA OF PEAK CONTENT

WITH STREAMING PLAYERS EXPLODING, MOBILE VIDEO ON THE RISE AND

SOCIAL NETWORKS EXPLORING ORIGINAL CONTENT, WE’RE IN AN ERA OF TOO

MUCH CONTENT, MAKING IT HARDER TO BREAK THROUGH. THIS PLACES

GREATER EMPHASIS ON CUTTING THROUGH THE CLUTTER WITH PRECISE

TARGETING, CUSTOMIZED MESSAGES, AND UNIQUE CREATIVE EXECUTIONS.

THE CUSTOMER JOURNEY IS SHRINKING

VOICE AND VISUAL SEARCH, DIGITAL COMMERCE THROUGH FACEBOOK

MESSENGER, SHOPPABLE PINS ON PINTEREST. ALL FORMS OF TECHNOLOGY

THAT ARE FUNDAMENTALLY CHANGING THE WAY CONSUMERS SHOP. SNAP A

PHOTO OF SOME SHOES YOU SEE ON THE STREET AND LIKE AND INSTANTLY

BE ABLE TO PURCHASE THEM ON YOUR SMARTPHONE. SEE A PRODUCT ON

INSTAGRAM AND PURCHASE IT THROUGH A FACEBOOK MESSENGER CHAT BOT.

WE AS MARKETERS MUST BEGIN TO RE-THINK WHAT THE CUSTOMER JOURNEY

LOOKS LIKE WITH THESE NEW TECHNOLOGIES.