Three Takeaways from Meeker '16

Mary Meeker presented her annual “Internet Trends” report two weeks ago at Code Conference.

The report is always a great State of the Union for all things tech. Here are my three biggest takeaways from Meeker’s talk.

Takeaway #1. Legacy media channels are still over-indexed; more mobile ad spend growth to come. 

My annual favorite in Meeker’s report is her comparison of consumer time spent to ad spend across major channels. I’ve stacked a few of these annual charts below to show how they trend: in short, ad spend lags behind consumer trends.

When a new channel makes itself available, consumers get there first, enjoying a honeymoon period of ad-free usage before 1) the channel implements a monetization strategy and 2) advertisers convince businesses to use it.

Here’s the chart from 2010’s report when “internet” (what, today, we’d call digital ad spend) was the new channel where advertisers were under-spending.

And here’s last year’s chart. Internet advertising had equalized, but mobile emerged as a new channel with under-indexed ad spend.

Now this year’s version. There’s still plenty of room for mobile ad spend growth.

As I mentioned in a blog post earlier this year, I think most of this will go to Facebook (though Snapchat has shown advertisers that they can deliver unique mobile content that resonates with users, as Meeker discusses in page 48 of her report -- included below.)

Takeaway #2. U.S. E-Commerce is not finished taking share from traditional retailers.

In industries “dislocated” by the internet (hat tip to Meeker for avoiding “disrupted”,) big winners have emerged with big market caps. The slide below shows that these big winners have a lot more revenue left to gain in their respective industries.

E-Commerce, in particular, is an industry with a clear winner in Amazon. The lack of any real domestic competition to Amazon has likely caused the media to move on to other topics, and forget how much e-commerce growth is still left for Amazon and differentiated online brands (e.g. Bonobos.)

Many in the U.S. doubt whether e-commerce can completely replace in-store retail. I’m confident that, in the long-term, it will (at the least) take the majority of the market. China is a good example of a market in which this end state is already here.

Takeaway #3. Voice interfaces are here. Increases in voice output (user feedback) signal the next wave of adoption.

I’ve discussed voice interfaces a lot on this blog, both in relation to Amazon Echo and Google Home. Though voice has seen good growth -- one of Meeker’s slides notes a 35x in Google voice queries since 2008 -- many voice queries are still single command queries (e.g. “Call Mom” or “Play Mac Demarco”) and not true input/output experiences.

The righthand chart in the slide below shows the sharp increase we’re seeing in voice interface output.

For voice to really take off (especially in relation to mobile,) it will need to facilitate an input-feedback experience (s/o to @msiegs for this insight via Medium comment.) That is, as a user, I need to be able to navigate through a hierarchy, or specify parameters on a query, through the voice interface itself. It isn’t just enough to tell a voice interface what song to play -- an interface of that simplicity falls short of the smartphone in too many cases.

Users need be able to navigate through a list of Spotify playlists, or hear their grocery list read back to them, through the voice interface they’re addressing. This is why a rise in output is important for voice and why the chart above is an exciting sign of things to come.

Summary

Three key takeaways: two with clear winners and one that’s still up for grabs:

  • Lots of growth left in mobile ad spend. Most of this will go to Facebook.
  • Lots of growth left in U.S. E-commerce. Most of this will go to Amazon.
  • Voice interfaces are about to take off. Though there are early players -- Amazon, Google, Apple -- a clear winner hasn’t emerged and the space is still up for grabs.