Spending on internet advertising continues to grow in response to a greater number of users spending more time online, according to trend maven Mary Meeker, partner at Kleiner Perkins Caufield & Byers, who presented her annual Internet Trends 2017 report Wednesday at Vox Media’s Code Conference.
The report focuses on mobile and desktop usage growth, online advertising spending and techniques, the rapidly growing Indian and Chinese markets, and online healthcare services. While always an interesting read, Meeker’s report holds six points of particular interest to businesses in the hosting industry.
- Mobile Internet Use Continues to Grow
The overall growth in the number of internet users was flat in 2016, at 10 percent. Global smartphone shipments were up only 3 percent, compared to 10 percent the previous year, but the global installed base grew by 12 percent. The amount of time Americans spend online grew by 4 percent, with mobile internet use, which was less than 1 hour per day five years ago, surpassing 3 hours daily.
2. Online Advertising Still Accelerating
Spending on mobile advertising surpassed spending on desktop ads for the first time in 2016, and growth in online advertising increased overall from 20 to 22 percent, year over year. Comparing time spent with different forms of media with advertising budgets for those forms, Meeker finds that radio, TV and internet advertising spending are roughly aligned with usage. Mobile internet advertising, however, remains a $16 billion opportunity, according to the report, based on usage being 7 percent higher than mobile advertising’s share of budgets.
3. Bots Surpass Humans in Traffic (Again)
It appears that when the generation of more internet traffic by human beings than by bots in 2015 was an aberration, as bots generated over 50 percent of traffic in 2016, as they did from 2012-2014. The massive proliferation of IoT devices, as well as bots performing tasks like customer service, and automated Twitter accounts contributed to the volume of traffic, and will continue to do so.
4. Mobile, Gaming Big Growth Areas for China
Internet user growth in China is still a robust 12 percent, year over year. Mobile internet use grew by 30 percent, though the pace of growth has slowed from over 60 percent in 2014. Mobile use accounted for 71 percent of e-commerce spending in China, which grew by 24 percent last year to $681 billion. Mobile payment volume doubled to over $5 trillion, and internet use reached 55 percent of media consumption as mobile internet surpassed television by the number of hours spent by Chinese consumers in 2016. China also surpassed the U.S. as the largest market in the world for interactive gaming last year.
5. India Moving Online
India became the biggest market for Google Play apps by number of downloads in 2016, despite internet penetration of only 27 percent as of mid-2016. That represents a 5 percent increase in internet users from 2015 to 355 million, second most in the world behind China. Wireless internet prices remain relatively high in India, according to the report, but they fell by 48 percent as new market entrant Reliance Jio introduced rates far below those of industry incumbents. Data usage, accordingly, has leaped by nine times, year over year.
6. Lock-in an Emerging Concern
The concerns businesses have with cloud providers are shifting, according to the report. The top concerns expressed by those surveyed in 2012 were data security and cost certainty. They remain major concerns, as of a 2015 survey, but fell by 7 and 17 percent, respectively, while compliance and governance increased as a top-three concern from 21 to 27 percent. Vendor lock-in was a top-three concern for only 7 percent in 2012, but for 22 percent in 2015. Loss of control and reliability are other decreasing concerns, while data portability and software compatibility concerns increased.