Ah, summer. Season of BBQ, vacations and Mary Meeker's internet trends report. OK, maybe that last one is a bit less universal than the others, but to those in the know around Silicon Valley, the prominent VC from Kleiner Perkins' annual report on what's hot on the web is a favorite summer institution.
So the headline this year? The empowered consumer, driven by better and cheaper sources of data.
Advertising is the cash engine that continues to make the web go round, worth $60 billion per year at last count. And that $60 billion is just an early drop in the buck according to Meeker, as advertisers and ad men have actually been much slower to make the same level of digital jump that their target audiences have. Meeker estimates that the inertial drive to stay with traditional media is netting out to $22 billion a year in underspending. Good news for the mobile ecosystem, but not great news for the traditional media.
The big winner in web advertising is Google — a surprise to no one anywhere — with Facebook picking up a distant second. Google is a full half of the market, and given the new slew of ISP rules coming care of the FCC, it will be hard for any new entrant to wrest that away.
The big bummer in the story this year was privacy, as users are very conflicted about exchanging access to their information for access to free or subsidized content. Ad blocking is on the rise, and half of all consumers reported being very concerned about the use of contextual information. This concern, however, exists in a backdrop of consumers volunteering ever larger amounts of data to service provides.
However, Meeker does note that users moving to a less liberal mindset about trading in personal data, combined with the possible consolidation of splintered and inconsistent privacy regulations both within the United States (the FCC vs. the FTC, for example) and abroad (the U.S. vs. the EU, for example), could be a very dark cloud looming on the horizon.
But in sunnier weather, some services are settling into a very nice commerce niche. More than half of all Pinterest users, 55 percent, report using the service to shop for products and place heavy emphasis on endorsements by other users whose posts they follow. Meeker notes this creates a rather unprecedented opportunity for users and consumers to determine the winners and losers among new products, and for those results to be known pretty fast.
Good news for buyers, but challenging conditions for sellers, notes Meeker, who are in a very asymmetrical relationship with customers when it comes to access to information. It is a result that can be "brutally efficient" for brands.
The other big area to watch is the future of video and video content distributions. When one woman in a Chewbacca mask can net 150 million views a day, one knows they are living in a different world, Meeker notes, and a world that is much more unpredictable.
However, trends indicate that cord-cutting is carrying on, and that in fact media providers are just seeing the very tip of that iceberg as Facebook and Snapchat are both stepping into the arena. That is netting out 18 million videos a day of user-generated content, and it means big pressure for the professionals in content, networks, advertisers, agencies and the regulators who still think they call the shots.
So that's what's now. What's next?
Meeker thinks the future consumer will be flipping through a combination of devices and networks while they see prices fall for all that hardware and storage. She also thinks the landscape coming up is more user driven and community-oriented, as content isn't just consumed individually, but globally.
This, Meeker says, means open and fertile ground for nimble and responsive startups. Incumbent businesses, she doesn't have quite as rosy a prediction for, noting that being caught off guard is a real and very costly potential risk.
So coming out of this trends report, the incredibly large dimensions of the digital future becomes a bit clearer.
The Top 20 Internet companies, Meeker reports, now have a market value of nearly $3 trillion. Thanks to a longstanding U.S. policy of “permissionless innovation,” over half are American companies. The other half are Chinese, needless to say their innovation policy is not exactly permissionless. As with last year, the EU has no firms on the board.
To view Mary Meeker's full 2016 internet trends report, click here.