Internet Trends Report 2017 - Key Takeaways

Each year, the Internet Trends report is published by Kleiner Perkins and Mary Meeker. In total there is a whopping 355 slides! We have highlighted 50 key takeaways that are both thought provoking and may help decision making in your business (or your life!).

What is clear, it is an exciting time to be in business – but you must stay ahead of the trends.

1 – Global Internet Users

There are 3.4 billion internet users, that represents around 45% penetration (based on a world population of 7.5B). Year on year (Y/Y) growth is ~10%.

2 – Smart Phones

The global installed smartphone based is 2.8 billion, but Y/Y is down from ~60% in 2011 to 12% in 2017.

3 – Time spent on Digital Media

Taken from US stats, each of us spends on average 5.6 hours per day on a digital device (3.1 mobile, 2.2 desktop, 0.3 other)

4 – Digital Advertising Spend

$73 billion is spent on digital advertising. Mobile rising from insignificant levels in 2010 to ~$9 billion in 2014, and over $36 billion in 2017. Y/Y growth is ~22%

5 – Advertising Usage Shift

The % of Time spent in Media vs % of Advertising spend is interesting.

  • 4% of time is spent reading print, but it receives 12% of ad spend (declining).
  • 9% of time is spent with radio, and 9% of ad spend (declining).
  • 38% of time with TV and 38% of ad spend (declining)
  • 20% of internet and 20% ad spend (declining)
  • 28% now spent on Mobile devices, but ad spend only 21%. That represents a $16B gap (based on the split between digital and mobile spend)

6 – Global Internet ad spending set to exceed TV ad spend

Internet ad spending is set to exceed TV in 2017, around $200 billion for each

7 – Google/Facebook Revenues

Google estimated to be $35 billion, Facebook $15 billion (but growing). Everyone else <$25 billion.

8 – Ad blocking climbing

Despite the growth in digital advertising, the use of ad blocking software is growing fast. Over 28% of internet users in Germany use desktop ad blocking, compared to 1% in India/China. Despite that, 28% and 13% of mobile internet users have mobile ad blocking in India and China respectively.

9 – Parcel shipments

10 billion packages sent per year (UPS, FedEx, USPS) – with a 10% Y/Y growth

10 – Video Advertisement Trends

  • 81% dislike mobile app pop-ups
  • 80% view pre-roll adverts (that cannot be skipped) as negative
  • 51% like skippable video pre-rolls
  • 52% like social click to play videos
  • 68% like mobile app rewards

11 – Hyperlocal targeting is growing in popularity

Community social networks (i.e. Nextdoor) and geo-tracking ads (that can track your commute) are growing in popularity

12 – User Generated Content (UGC) is growing in popularity

Qatar Airways, BMW and Redbull regularly regram/retweet content posted by their followers/fans. Influencers can drive up engagement.

13 – AR and Image Recognition now becoming mainstream

Used in Snap Chat, Google Lens and Google Positioning

14 – Voice recognition now mainstream

20% of mobile queries now made using voice. Google Assistant – 70% of requests are natural language. Amazon Echo growing in penetration and the number of skills available.

15 – Voice recognition improves massively

Google Machine Learning has a 95% accuracy which is similar to human voice accuracy (also 95%)

16 – Where customer services needs to improve

  • 60% of people want easier access to online support channels
  • 53% want faster engagement times
  • 29% want a consistent customer service experience across all channels
  • 21% want faster access to live support

And Why??? Customers are less tolerant. 82% of customers stopped doing business with a company after a bad experience! (Compared to 76% in 2014)

17 – Landlords building parcel ‘drop zones’

US landlords are having to expand package rooms given the rise in online ordering

18 – “Unboxing” is a source of entertainment

33 billion subscribers of channels focused on unboxing!

19 – Eating In is the new Eating Out

Delivery as a % of revenue is 7% in 2017 vs 2% in 2015. 45% Y/Y revenue growth!

20 – Retail stores are dying in the US

The number of retail stores closing in the US may break a 20 year record, with just under 7,000 expected to close in 2017. While Amazon is opening more stores! There is a growing trend in digital retailers having “offline” stores. To quote a CEO, “I don’t think retail is dead. Mediocre retail experiences are dead.”

21 – E-Commerce growth. Unstoppable.

E-Commerce in the US is worth an estimated $390 billion, with just under 18% Y/Y growth in 2016.

22 – Explosive growth in gamers

2.6.B Gamers in 2017 vs 100M in 1995. Gaming is now mainstream. ~34% of the world population! Gaming is shifting from a living room solo experience to a global audience (i.e. Twitch).

23 – Gamer Age

Average gamer age is 34, with a growing cohort of 18-50 year olds playing.

24 – More time spent in the digital world

We are spending more time each day in the digital world:

  • 51 minutes, video gaming
  • 50 minutes, Facebook ecosystem
  • 35 minutes, King mobile games
  • 30 minutes, Snapchat
  • 21 minutes, Instagram

Mobile gaming has seen a 33% increase in session duration from 2015 – 2017

25 – Data Growth

In 2005, there was an estimated 0.1ZB (ZetaBytes) of Data created, 12ZB in 2015, and 47ZB forecast for 2020 and 163ZB for 2025! 1 x ZB = 1 million PetaBytes. 1 x PB = 1 million Gigabytes.

26 – eSports is trending

eSports will be mainstream and overtake traditional sports.

  • 27% of millennials have a significant preference for eSports vs 27% for traditional sports
  • Non-Millennials. 45% of traditional sports vs 13% for eSports.
  • Monthly viewers of eSports is seeing a 40% Y/Y growth and 161m viewers in 2016

27 – eSports stats

  • 53% of viewers are aged 21-35, 75% of whom are male
  • 27% are aged 10-20
  • 18% 36-50
  • only 2% are 51+

28 – Music Subscriptions up

52% of recorded music revenues is from subscription and streaming. This is up from 0% in 2004!!

29 – Netflix

Netflix has 98 million paid subscribers, 1/3 of all home entertainment revenues in the US

30 – Global Cloud Spend

37% of global IT spend on IT infrastructure is spent on Cloud, up from 21% in 2013

31 – Amazon Web Services (AWS)

Amazon has 57% of public cloud spend, followed by Microsoft (34%), Google (15%) and IBM (8%)

32 – IT Trends

  • On-premise IT to Cloud
  • Perpetual licensing to subscription based
  • Generic UX to Personalised UX
  • Constrained Intelligence to Unlimited intelligence
  • Sales to Product growth engine
  • Shift from top-down to bottom-up purchasing decision making

33 – Enterprise Cloud Concerns

Five primary business concerns about cloud

  • Data Security
  • Compliance/Governance
  • Vendor Lock-in
  • Loss of Control
  • Software Compatibility

34 – Cloud Software Trends

  • API / Browser extensions popular
  • Containers and microservices
  • Elastic databases
  • Edge computing

35 – Cloud usage by Vertical

Ordered by vertical

  • Retail, restaurants and hospitality
  • Financial services, banking and insurance
  • Manufacturing
  • Healthcare and life sciences
  • Technology and IT

36 – Enterprise readiness of Cloud

The majority of verticals believe Cloud applications are not truly enterprise ready. 96% of  HR, 97% of marketing and 95% of finance are not cloud ready. On average, 98% of apps are not considered enterprise ready!

37 – Malicious SPAM climbing

The amount of SPAM containing malicious attachments/links is seen rapid growth, 450% change (monthly average) in Q4 2016

38 – Internet activity

Over 50% of internet activity is a bot, just under 50% is human!

39 – Shifts in software development vs design trends

The ratio of designers:developers is changing. LinkedIn had a 1:11 ratio in 2011, it now has a 1:8 ratio. Design is key in software.

40 – Chinese Internet

There are over 700 million mobile internet users in China. $40B was spent on online advertising in China, up from $10B in 2012. China has embraced live streaming and has a high consumer engagement, with high revenues per hour for live streaming, online gaming and TV.

41 – China – Global Leader in on-demand transport

67% global market share in on-demand transportation (by trip volume), dwarfs Europe. Led by on-demand bike sharing.

42 – China payments, low relative cost

Cost of China Bank Cards vs USA Credit cards a fraction

43 – India – Internet

355 million internet users in India.

44  – Healthcare – EHR

87% of US Physicians now use EHR (Electronic Healthcare Records) compared to 21% in 2004.

45 – Patient Digital Records

95% of US hospitals allow digital access to patient records, up from 24% in 2012

46 – Wearables are very popular

102m shipped in 2016, compared to 82m in 2015 and 26m in 2014

47 – Healthcare Data

48% annual growth in healthcare data, estimated to be 153 Exabytes (1 x Exabyte = 1B Gigabytes). A typical 500 bed hospital produces ~50PB of data

48 – Digital Health Adoption

  • Wearable ownership
    • 40% of millenials
    • 26% of Gen X
    • 10% of Baby boomers
  • Have sought remote medical advice
    • 56% of baby boomers
    • 31% of gen x
    • 42% of millennials

49 – Genomics

Accumulation of genomic data leads to a 19x increase in genomic knowledge (i.e. number of known SNPs).

This means in 2017 that 5,000 genetic disorders can be diagnosed with tests, up from 114 in 1993! Progress.

Personalised medicines have increased from none in 2008 to 132 in 2016.

50 – Economic growth predictors

  • Pre-18th century – Cultivation and extraction
  • 19th – 20th century – Manufacturing and Industry
  • 21st century – Computing power and human potential

Full Report

The full slide deck from Kleiner Perkins is available on their website here

 

 

 

 

 

 

 

 

 

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