KPCB’s Internet Trends: Ads, Interfaces, Data (According to Mary Meeker Report)

June 13th, 2016

Mobile / IT News / Web // Zee

Ads, Interfaces, and Data - KPCB Internet Trends from Mary Meeker

Several days ago, Mary Meeker of KPCB Consulting Agency published the annual report on the state of the Internet Industry. This report presents an overview of Internet trends and is considered one of the most accurate forecasts for the Global Network development over the next few years. We have analyzed the report and selected facts and figures related to three aspects of IT-industry development - advertising, interfaces, and working with data. Read about our analysis of Mary Meeker’s report below.

E-Commerce and Internet Advertising

Revenue from Internet advertising in 2015 in the United States reached $60 billion. This is 20% higher than a year earlier. Revenue from mobile advertising also grew by more than 66%, while revenue from desktop advertising grew by only 5%. Thus, we can conclude that the Internet advertising market is far from saturation, while at the same time, the main driver of growth is a mobile advertising.

We can protest, we can argue against it, but the fact remains a fact: the most actively growing advertising format were Facebook ads. Advertisers love Facebook, value the platform, and bring money to the company. Granted, it is not a fully-organic growth - everyone knows that Facebook tries to make the users pay for promotion in various ways - but the fact still is that Facebook is growing faster than any other platforms.

During the period between 2014 and 2015, Facebook’s income from advertising grew by 59%. The major share of this was from mobile advertising. At the same time, Google’s ads income grew by 18% and other companies’ - by 13%.

Facebook and Google have together provided 76% growth in online advertising. This suggests that advertising on social networks, particularly on mobile devices and search advertising today are the major advertising platforms.

Despite this increase in mobile advertising, this segment has not yet exhausted its growth opportunities. As proof of this, the authors of the report gave the following figures: US users spend 25% of their online time on mobile devices, but only 12% of the advertising budgets is allocated to this pastime. This means there is $21 billion of untapped advertising opportunities for US companies in the year.

For comparison, users spend about 22% of their online time on the desktop, but advertisers allocate 23% of the budgets to this.

In 2015, Google earned $75 billion from advertising. This is 14% higher than a year earlier.

However, it is only at first glance that online advertising land is growing without any problems. The research authors noted that a large number of users called ads annoying. Moreover, they are trying their best to get rid of it. Case in point, more than 62% of respondents are annoyed by so-called “pre-rolls” - video ads before the main video. More than 92% are willing to set adblockers. 81% of users make the sound quieter during the ads.

The study authors have learned not only the intentions of users regarding ad-blocking programs but also calculated how many ads are blocked. According to the report, the situation with this monetization killer instrument is getting worst every day - more than 400 million users around the world have installed ad-blocking software on their smartphones. 200 million users are using ad-blockers on their desktop.

Back to good figures for this report section - a strong growth of e-commerce. The share of Internet sales in the United States exceeded 10% in 2015 and $340 billion was spent on e-commerce.

Interfaces Development

The human-computer interaction has developed over decades and if you start with adding machines, this development spans for centuries. From punch cards and magnetic tapes, from the command line and the assembler, from the menu and first graphical interface, the interaction between the man and machine has finally come to the most natural way - to the voice.  

It is a quite logical fact that voice became the basis for the machine-human interface since the voice is the most efficient way of communication. Here’s why:

1. Voice is quick: some people can talk with an average speed of 150 words per minute while they type only 40 words per minute.

2. Voice is simple: it is easy, convenient, hands-free and almost immediate

3. Personalized interface: voice provides the ability to understand the context of a question based on previous questions / interaction / location / other semantic aspects.

Here are a few of voice’s unique qualities:

1. Spontaneous access vs.hierarchical GUI

2. Low cost and portability. All you need for a voice interaction is a microphone, dynamic, processor, and connection, which makes voice an ideal interface option for the Internet of Things.

Granted, for the voice interaction, you also need Natural Language recognition and processing.

Voice interface will become commonplace and the basis of the human-machine interaction (Person to Machine - P2M) when two things will be ensured: recognition and understanding with 99% of accuracy and low data deference in transmission.

Accuracy and low data deference are the two key conditions to create productive voice systems.

If the accuracy will change from 95% to 99%, we will switch from using voice interface rarely to constant and everyday usage. Many people underestimate the difference in 95% and 99% of accuracy, but 99% will be the value that will change the world.

Every year, the number of words that a machine can recognize is increasing. If back in 1970 there were about 10 machine-recognizable words, by the year 2000 there were about 100K, and in 2016 there are 10 million words. At the same time, in 2010 the accuracy was 70%, while today in 2016 it exceeds 90%.

In 2013, only 30% of smartphone owners used voice interface. In 2015, this figure grew to 65%.

The number of Google search queries increased by 35 times from 2008, and 7 times since 2010.

In 2014, the world welcomed the first hardware implementation of a voice interface - Amazon Echo. Before that time, the most popular ones were Apple Siri and Google Now. Amazon Echo’s success surpassed the expectations - 5% of Amazon users from the US have Amazon Echo. Since 2014 (when the sales began), over 4 million devices were sold.

Not without reason, Google and Apple announced that they are working on their own competitors for the Amazon Echo, a device that is a home voice assistant. They obviously are feeling the trend.

Data in the Modern Internet

The amount of data on the Internet grows with the speed of 50% every year and has been growing like that since 2010. The data storage infrastructure costs, on the other hand, are decreasing with a rate of 20% a year.

The main problem the modern Internet is facing is the increasing amount of devices that generate data. It’s not just limited to tablets, laptops, and smartphones. Today, data is generated and stored in the apps in our devices and don’t forget the multitude of available gadgets like fitness bracelets, cars, drones, gaming devices, and even medical equipment.

If one analyzes the evolution of the data processing platforms, we can say that right now we are the witnesses of the third wave of tech development and it’s revolution in working with data that led us to this.

Among modern data tools, we can highlight the ones that will be popular in the future. First, it is the analytical platforms, such as Looker, Domo, Anaplan, forecast and analysis tools such as Gainsight, Datadog, InsideSales, and data storage & security services like Ionic Security and Tanium.  

If data used to be a part of the working process before, today they are a part of the business apps and are used in order to increase the business’ effectiveness. Also, people who deal with this, do it in a whole new way.

For example, today's data analysis platform is designed for analysts to work with the data, as well as for non-technical business users, who can use them to scale their business. Here are some examples of modern data mining systems.

Modern CRM-solutions are helping businesses build stronger relationships with customers, based on data analysis. For example, the latest version of CRM-system SalesforceIQ is able to find information about customers and helps companies build relationships with them.

Modern mapping services are created using crowdsourcing and with the help of cell phone users whose location data help to update the platform in the real-time regime. Mapbox cartographic project is one example of such collaboration.

Datadog, the cloud monitoring platform for system administrators and developers, automatically integrates 100+ sources in real-time, analyzes the information, and presents it to the system users.

Ionic Security - distributed data protection platform - handles billions of API calls, allowing customers to secure and manage their data.

IT Trends From Mary Meeker: Where Is the Internet Heading?

On the basis of the KPCB analytical report, we can create forecasts of the Internet Industry development, at least for the next year. In the segment of the online advertising, the main growth driver will be mobile ads, but ad-blocking tools will require coming up with non-standard solutions from advertisers because who would spend money on an instrument when the target audience doesn’t see it.

Voice interfaces will continue to permeate all spheres of life. Apple did make Siri SDK available at the WWDC 2016 conference, so it's up to mobile app developers to actively introduce voice assistance into their own developments.

So far, the most complex and confusing system is the data and principles of working with it. This market is developing exclusively in the business processes’ segment. Corporate market has learned to work with the data, so now it’s high time for data analysis instruments for ordinary people.  

Check out the entire report here.

Author: Zee

Zee is in charge of the Marketing at the APP Solutions/Grossum. Her areas of interest include quantum physics, astronomy, new trends in the web & mobile development (especially in the areas of AI and machine learning) and digital marketing instruments.

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