As the internet is the primary foundation for industry disruption, every year I look forward to Mary Meeker's latest trends report.
Global Internet Growth is Slowing
The internet global population is now at 3 billion. Overall growth is flat at 9% year on year. Excluding India, global internet growth was only 7%. This contrasts to 2009 when the internet was growing at over 15% per year.
India now has 277 million people on the internet, growing at 40% in the last reported year. In 2015, India passed USA to become the number two global user market behind China.
After five years of high growth, global smartphone shipments are dramatically slowing down from 28% to 10% year on year. Asia growth dominates expansion at 52% of the global share in 2015. Asia's smartphone growth slowing to 23% versus 35% in previous years.
Global Economic Trends
Global economies are slowing. Growth in the last six out of eight years is below the 20 year average. Over the last 20 years global economic growth was at 3.8%. The year 2015 was a tough year with growth across all economies just over 3%.
The shift to the East in economic growth continues. In 1985, North America, Japan, and Europe represented 63% of real GDP growth contribution. In 2015, China and Emerging Asia represented 63% of the GDP contribution growth.
Demographics are also pointing to slowing population growth, slowing birth rates, and aging populations. Population growth was at 2% in 1975, 1.2% in 2015, and will decline to nearly 0.5% by 2050. Global birth rates are down 39% since 1960. Average life expectancy up 36% since 1960 to 72 years global average.
The Online Conversation
USA internet advertising has gone from $0 to $60 billion in 20 years. Today Google and Facebook account for 76% of online advertising USA growth. In 2015, Google advertising revenue grew 18% to nearly $30 billion. Facebook advertising revenue grew 59% in 2015. Advertisers have been slow to move to the new online conversation and are substantially sticking to traditional older channels of communication.
Many online ads are ineffective. An amazing 81% of ads are muted by audiences; 62% are annoyed / put off by brand forced pre-roll viewing; 93% consider using ad blocking software.
Billions of photos are shared online every day with the leading platforms being Facebook and Snapchat. Photos are important as 55% of Pininterest users report using the platform to find and shop for products. "Product endorsements by other consumers are becoming the dominant method by which consumers decide what to buy, and consumers speak to each other through the volume of images they post."
Photos are a transitioning visual template to video. "As Meeker notes, Candace Payne's viral video in a Chewbacca mask, viewed over 150 million times in just one day, twice mentioned Kohl's department store. The result? The company's app leapt to the top in the iOS app store. No planned campaign (and expensive) campaign could have hoped for such outcome." Facebook and Snapchat account for 18 billion video views per day.
The Internet Retail Revolution
In 2015, 10% of USA retail sales were online versus 2% in the year 2000. "The time it takes retailers to get to $100 million in online sales is shrinking. It took Nike 14 years from the time its retail site launched, compared to nine years for Lululemon, and eight year for Under Armour."
Brands emerging in the new retail space "are being heavily impacted and influenced by the millennial generation...Today, internet enabled retailers, products and brands are significantly on the rise, bolstered by always-on connectivity, hyper-targeted marketing." According to Meeker, Stitchfix is a great example on the role of images and personalization. Stitchfix "brings Spotify and Netflix-like discovery into fashion. With each customer getting a differentiated experience thanks to its advanced algorithm."
Using Mary Meeker's key charts, summarizing the retail connected revolution ahead:
The internet, smartphone adoption, and global economies are slowing. Business as usual is a recipe for failure. The online conversation is exploding and it is increasingly visual. Strong brands and user experiences are the foundation elements to the future shopping revolution. These are the only 2016 and beyond Internet trends that matter.