Rethink those Advertising Dollars: What Mary Meeker’s 2016 Report Means for Marketers

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rethink ad dollars

For checking the health of online marketing, the web, and perhaps technology in general, there is nothing quite like the annual Mary Meeker report. (The SlideShare deck has been viewed over a million times, guys.)

Whether you are looking at the advertising channels that’ll give you the most bang for your buck in the coming years, or checking where the growth is coming from internationally, nothing quite comes close.

If you have time for the entire deck, the 213 slides are worth checking out below. That said, if you have time for just the highlights for marketers, you’ve come to the right place - read on for the marketer’s takeaway.

Slides:

Video:

Let’s get to it.

1. India now has more Internet users than the US, and global internet user growth is flat

There’s a staggering amount of people who are connected now, but with tons of people being connected comes slower growth:

• 3 billion people are connected now, which is impressive, but …

  •  … Internet connectivity growth on decline without India
  •  … India now second to China in total net users, this past year moving ahead of the United States
  •  … it’s harder to find new users for easy expansion

global internet users

SLOWING DOWN: With 3 billion people connected, growth is starting to flatten out.

Marketer takeaway: Easy visitor growth for international businesses is a thing of the past. Moving forward, marketers will need to fight for every inch.

2. About 3 mobile apps used 80% of the time

You know that time when marketers were counting on smartphone users to fire up dozens of apps per day, including the niche app your industry belongs to? Yeah, that time turned out to be totally crazy.

Instead, what happened was, users started depending on a core set of apps. This past year, users spent most of their time on a few apps:

  • 3 apps dominate use (80% of time spent)
  • 12 apps used by users per day
  • 4-5 hours spent on mobile phones

smartphone app use

TOUGH COMPETITION: Users spend a lot of their time on their phone, but if you produce apps, you need to be aware that users spend 80% of their time on just 3 apps.

Marketer takeaway: Think hard if you really need that mobile app, or if you should spend that money making your web site mobile-friendly.

3. Online advertising growing due to mobile

Online advertising is displaying huge growth, but it’s still underutilized compared to advertising on traditional media:

  • 60 billion in ad spend for 2015 (20% growth, versus 16% from the year before)
  • Mobile growing faster than desktop (66% vs 5%)
  • Google and Facebook have 76% of the share of growth (and the share is rising)
  • Advertisers remain over-indexed to legacy media

online advertising growth

MOBILE LED: Online advertising growth due largely to mobile advertising.

google facebook advertising

MONSTER SHARES: Google and Facebook have 76% of the share of internet advertising growth

us advertising by channel

UNDERUTILIZED: Users spend 25% of their media time on the phone, but companies only spend 12% of their ad dollars there. It’s time to change the advertising mix.

Marketer takeaway: It’s time to shift some of the advertising budget to mobile.

4. Smartphones are officially mature

There was a time, not too long ago, when all the news cycles were about mobile growth. It’s time to put that period to rest - global smartphone unit shipment growth has dropped from 28% to 10%. Mobile will continue to grow, but the smartphone is officially mature:

  • Global smartphone users slowing (21% vs 31% Y/Y)
  • Global smartphone unit shipments slowing dramatically (10% vs 28%)
  • Asia driving growth
  • iOS peaked in 2015

global smartphone growth

GROWTH CAP: The number of smartphone global shipments is staggering, but the growth rate is not.

Marketer takeaway: If smartphones have reached maturity but your mobile presence has not, your business is in for a world of pain.

5. Video is tough - ads that work are brief

We naturally intuit that those ads at the beginning of YouTube videos that don’t allow you the option to skip are annoying. Well, it looks like our intuition was right. Here’s the data:

  • 81% of users mute video ads
  • 62% of users are annoyed with / put off by brand forcing pre-roll viewing
  • 93% of users consider using ad blocking software
  • Brief videos tend to work better

The good news is that videos can work - it just requires a bit more effort.

video ads that work

VIDEOS THAT WORK: Short and contextual videos work.

Marketer takeaway: If you’re going to use videos, put in the time it takes to execute well. Make videos authentic, entertaining, in context, and brief.

6. Retail is continuing to switch to online channels

Even as overall growth rate of web connectivity stalls, the size of the online retail market continues to grow:

• Over 10% of retail spend (versus less than 2% in 2000)

• Internet-enabled retailers/products/brands on the rise, bolstered by …

  •  … always-on connectivity
  •  … hyper-targeted marketing
  •  … effective images
  •  … personalization

retail as distribution channel

RETAIL SWITCH: More and more of the retail sales tend to be online sales. (Over 10% in 2015 versus less than 2% in 2000)

stitch fix content discovery

PERSONALIZATION IS THE REAL DEAL: Companies like Stitch Fix are capitalizing on personalization opportunities and hitting the mark.

Marketer takeaway: The retail business opportunity remains huge. The companies with better targeting and personalization tend to win.

Putting It All Together

With easy growth behind most companies, especially international businesses, it’s time to be scrappy.

  • It’s time to reduce spending on traditional media, and to figure out and increase spending on mobile advertising.
  • It’s time to stop thinking about mobile as something that’s emerging, and start thinking about it like what it is - a mature channel.
  • It’s time to re-evaluate whether you REALLY need that mobile app - with 80% of user time spent on 3 core apps, you might be better off improving your web site. (Chrome is one of the top 3 apps, after all)
  • It’s time to invest your resources in targeting, personalization, tracked campaigns, and most other things that increase your marketing sophistication.

The whole deck is available here: