Mary Meeker Internet Trends Report 2016 – Top 5 Key Takeaways

9th June 2016

It’s very difficult to imagine a world whereby VC’s eagerly anticipate the arrival of report containing over 200 detailed slides on the state of all things internet. But every year when Mary Meeker produces her internet trends report, the whole of Silicone Valley sits up and takes notice. Mary Meeker is a partner at VC firm Kleiner Perkins Caufield & Byers and is considered by many analysts to be the ‘voice of the internet’. Mary Meeker has been producing reports on the key factors influencing web based trends since way back in 1995 and it’s fair to say that every year when the new report is launched, businesses all over the world pay serious attention. If you’re a business involved with technology, and particularly the web, it’s worth considering the impact of Mary Meeker’s report, not just in terms of where you are right now, but where you need to be going in the future.

Mary Meeker reports are incredibly informative and essential for business owners and technologists. But with over 200 slides, understanding which key trends affect your business can seem like an almost impossible task. If you have the time on your hands to wade through the entire report you can download it here which was recently presented to an audience in California at Code Conference. But don’t worry, the Waracle team has condensed the top 5 key takeaways from the Mary Meeker Internet Trends Report for 2016. If you’re interested in comparing notes with the 2015 report, you can check out the highlights here.

1. Internet growth has slowed

Global growth of internet users has now plateaued and growth in smartphone shipments is also starting to slow. This is driven by the fact that developing economies are finding internet access either unaffordable or inaccessible, whilst developed countries are largely saturated in terms of broadband penetration. The total number of internet users globally has stabilised at approximately 3 billion, with new users in developing economies proving hard to obtain. India is now the one country where internet usage is still growing, up 40% compared to 33% in the previous period. India has now overtaken the US as the world’s second largest market for internet usage, with China in first place. But the reality is, especially when it comes to advertising opportunities (specifically within mobile), that most businesses still aren’t capitalising upon existing and highly lucrative opportunities.

It’s not just internet usage growth that has plateaued, smartphone shipments are also starting to slow slightly, with many developed economies fully saturated in terms of device penetration. In 2015 the Asia Pacific region represented 52% of smartphone users globally. The rapid rate of mobile adoption is now starting to slow dropping to 23% in 2015, down from 35% in the previous year. As ever, the Mary Meeker report outlines the ongoing battle for dominance between iOS and Android with some interesting findings in the 2016 report. Apple experienced its first ever decline in revenue in the last quarter, whilst Android maintains its commanding lead in terms of market share and shipment volume (Apple still dominate when it comes to ASP).

It’s important to remember that the overall slowdown comes after years of explosive growth in terms of internet adoption and device shipments. There are only a limited number of people in the world right now in developing economies who can gain access to the web, with price and accessibility being the two biggest barriers. If you’re a CEO or software development manager, it’s worthwhile taking some time to digest the key facts and figures and understand what impact this might have on your business. The reality is, that within mobile technology, there are highly lucrative rewards up for grabs and many businesses are slow to catch up. We recently covered why demand for mobile capability is damaging big business, so if you’re yet to join the party in mobile, the time to start considering your first move is now. There are huge gains to be made for businesses who can access the right mobile capability at the right time.

2. Advertisers are ignoring mobile

This proved to be one of the key takeaways from the Mary Meeker 2015 report. Rewind 12 months and businesses all over the world are spending too much resource investing in print media. Last years report was quick to uncover the fact that print advertising is a rapidly declining medium. Fast forward to 2016 and very little has changed. Mary Meeker estimates that in 2016 the mobile ad market to be worth $22 billion in the US alone and can be broken down as in terms of media consumption. It’s estimated that consumers spend 25% of their time on mobile devices, compared to 36% watching television, 22% using the internet via a desktop device, 13% listening to radio and 4% reading print based media. There is a huge opportunity here for marketers because as little as only 12% of global ad expenditure is directed towards mobile. This is very similar to the findings of the 2015 Internet Trends report whereby Mary Meeker suggested that businesses are too slow to catch up and that advertising expenditure by channel is disproportionate to where users are spending their time.

According to Mary Meeker the present gap for increased mobile ad expenditure is worth an astonishing $22 billion. Consumption of print media and television has dropped in the past 12 months, whilst consumption of mobile content is still increasing at a rapid rate. If you’re a marketer, the reality is that your audience are switching to mobile devices. They’re spending less time consuming content via traditional mediums and defaulting to tablets, smartphones and wearable devices during commercial breaks on TV. This represents a massive opportunity for advertisers in mobile. If you’re looking to get started with a mobile marketing campaign, there’s a quick way to get started.

3. SEO is changing forever

Way back in May 2014 we discussed how voice activated search was revolutionising consumer search behaviour. Fast forward to 2016 and Mary Meeker has suggested that voice activated search queries are rapidly on the rise. Typing text into a search bar is set to become a thing of the past and by 2020 it’s estimated that over 50% of search queries will be performed by either images or voice. Mary Meeker highlights a fundamental difference between millennials and Gen Z in that millennials prefer to communicate using text, whereas Gen Z prefer to communicate using images and voice control. These factors are set to dramatically alter the world of marketing and search engine optimisation and represent a huge shift in the way consumers interact with the devices around them.

“As speech recognition accuracy goes from 95% to 99%, all of us in the room will go from barely using it to using it all the time. Most people underestimate the difference between 95% and 99% accuracy – 99% represents a game changer” (Mary Meeker, 2016)

There are some profound reasons as to why consumers will rapidly switch to voice activated search according to Mary Meeker. Firstly, as humans, it’s possible to talk 150 words per minute, whereas the average human can type only 40 words per minute. This means that from a consumer search behaviour perspective, we get what we want faster using our voice. Not only that, but voice search is hands free, convenient and instantaneous. Using voice search commands is highly personalised and the cost of providing it is low, given that you only require a microphone, a processor and a speaker. Voice activated search will become the preferred method of communicating with IoT related devices. The great thing about voice activated search is the fact that it’s highly accessible too, you don’t need to be able to spell which makes it perfect for young kids accessing the web.

If you’re a marketer or heavily into SEO, it’s now clear that search engines are quickly becoming less reliant on keywords and becoming increasingly dependent on natural language search queries. As things progress towards voice activated search, anyone working with SEO will need to adapt their strategy quickly. Traditional type-based search will diminish between now and 2020 and your business needs to be geared up for these impending changes. There will be vast rewards for marketers who can keep up to speed with the changes in search behaviour. Keyword matching and search can deliver huge amounts of data whereas voice search queries will generate less data but more specific results. Semantic search will get better as Google gathers data on how people use voice controlled search and help marketers to understand the intent of each search – you will need to study this data to understand how and why your customers make certain searches in relation to your product and build this into your marketing strategy.

4. Messaging apps are about to be revolutionised

Cast your mind back to 2007 when the iPhone was initially launched. It’s fair to say that the home-screen has acted as the entry point for virtually every mobile device. Mary Meeker has now predicted in her 2016 report that in the future messaging apps will become the go-to place for mobile based interaction. Meeker sees huge potential in messaging apps. Messaging apps and platforms can become key components in the new consumer-driven marketplace, purely because of the sheer scale of their users and volume of interactions. WhatsApp was acquired by Facebook for $19 billion in 2014 and has successfully gained a billion active users in less than five years. Facebook’s native mobile app ‘Messenger’, along with Tencent’s WeChat (the dominant Chinese platform), are not far behind WhatsApp in terms of scale. With this sort of momentum, highly innovative disruptive new services are easy to launch for tech startups and mobile app developers, especially if you’re developing a chat based app.

If you’re looking to develop a chat app, you start by giving users what they desire, and so it goes that if you can generate an inexplicably large audience, that the revenue will flow soon after. Basic text messages can become group chats and then multi-user games, and, from there, develop into more complex, enterprise apps such as banking and payment systems. So if you have what it takes to attract a billion users to your chat app, you’re going to have a pretty good chance of some serious monetisation. Enabling chat based communication will be critical to most if not all mobile apps moving forward. Even if you’re not in the business of developing a stand-alone messaging app, it’s fundamental to consider how a messaging based feature set could be integrated into your existing platform to engage users and potentially drive new streams of revenue.

5. Cars are the ultimate mobile device

We already discussed the importance of reaching 99% accuracy for voice activated search. But what’s the key driver behind this magical number and where do we use our voices to control the world around us? According to Mary Meeker, 19% of voice activated search is used whilst on the move or in transit, 43% at home and 36% in the car. Meeker predicts that the car is rapidly becoming a computer as companies such as Apple, Ford and Google all shift towards sophisticated in-car solutions such as CarPlay. Mary Meeker predicts that in the future, we’ll use our smartwatches to summon our autonomous self driving vehicles (Tesla are doing this already with the Apple Watch app). Services such as iCloud will enable us to access all of the data we would normally access via the office, from within the comfort of our cars. Cars will use biometric identification such as touch ID to ascertain you are who you say you are, start the ignition and access all of your apps.

What’s striking about the Internet Tends Report for 2016 when it comes to cars is the fact that all cars will be connected, not just to the driver of each car, but connected to smart-city infrastructure, road transit systems and the vehicles around us on the roads.

If you’re running a business, it’s likely that connected cars will become the ‘smart offices’ of the future. In the same way that mobile has dramatically altered our working habits in the past decade, connected cars have the ability to do the same thing in the next decade. Mobile devices gave workers the ability to access data on the move at any time, from any device and at any location via the cloud. In the same way that mobile revolutionised working habits, the connected car offers enormous potential in redefining the way we work, communicate and travel. In the future, cars will possess the ability to enable us to interact with our favorite apps, participate in video conferencing calls and use voice search to control every element of your vehicle. Mary Meeker suggests that autonomy, mobility and connectivity are the key forces that will define the new digital enterprise.

The final word on the Internet Trends Report for 2016

If you’re a CEO or software development manager looking to the future, it’s essential to spend some time digesting the output from the latest Internet Trends Report for 2016. Understanding how the report impacts your business will be critical to your future success. We know that growth in terms of global internet penetration and shipments are starting to mellow, but we also know that there are huge opportunities within the mobile advertising space. There is a multi-billion dollar opportunity available for businesses seeking to exploit the potential of mobile advertising.

If your business is marketing, understanding how voice activated search is altering the SEO landscape will play a critical role in your future success. There will be lucrative rewards for marketers who can keep up to speed with the changes in search behaviour. In terms of messaging apps and cars, it may not be your core business, but Meeker suggests that autonomy, mobility and connectivity are the key forces that will define the new digital enterprise.

If you’re a business or brand looking to develop a new mobile app, or optimise an existing piece of software, understanding the impact of Mary Meeker’s latest report can seem like a daunting process. Understanding how these factors affect your business and your future opportunities and chances of success can seem like a daunting process. The reality is that many of the trends we’ve covered in this report are liable to have a seismic effect on your business operations and how you prepare for the future. If you’re interested in learning more about how you can adapt to these shifts in the technological landscape, contact Waracle today for more information.

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