Mary Meeker 2015

Mary Meeker 2015
by Paul McLellan on 06-17-2015 at 7:00 am

Every year Mary Meeker of Kleiner Perkins produces a large presentation on internet trends. And when I say large, I mean it. This year’s presentation is 196 slides. It is not really possible to summarize the presentation since it doesn’t really have a single theme, it is more like a meal of small plates than a prime-rib dinner. Instead, as I have done in previous years, I’ll pick a few slides that I found interesting or surprising to whet your appetite to go through the whole presentation yourself.

First, the really big picture. In the 20 years since 1995, internet penetration has gone from under 1% of the world population (35M users) to almost 40% today (2.8B users).
 Mobile is even more dramatic, going from 1% (80M users) to 73% (5.2B users) last year, and is expected to reach essentially 100% this year with the number of mobile phones roughly equal to the world population (some people with more than one phone and some sharing).

In both cases, internet and smartphone, growth continues to be good but the growth rate is slowing. There just aren’t enough people left who are not already online and mobile, and those are in markets with lower GDP and less spending power.

One area that Mary highlights each year is the amount of time spent on various media and the advertising spend. She points out that advertising is very slow to change. For example, print (newspapers and magazines) only use up 4% of our media time but get 18% of advertising dollars. Radio, TV are about matched between time and dollars. Internet overall is also about right but mobile is completely unbalanced. We spend 24% of our media time on mobile but it only gets 8% of advertising dollars. In the US alone, bringing the spend up to 24% is a $25B opportunity. It is currently growing at 35% CAGR though.

One trend I’d never even thought about is the orientation of viewing video. 29% of video is viewed on a vertical screen (including TVs and monitors and rotated smarphones as the horizontal viewing). You wouldn’t think it would make that much difference but on Snapchat, vertical ads have a 9X completion rate versus horizontal mobile ads. That’s a 9X (800%) not 9% difference.

Of the top apps used, 6+ are messaging apps such as WhatsApp, weChat and Facebook messenger. The number of users and the number of messages and the growth rates are pretty incredible. For example, WhatsApp (now owned by Facebook of course) has 800M users who send 30B messages a day.
 The trendsetters are 12-24 year olds. They are all over Instagram, Snapchat and Pinterest. Facebook is declining, just a little in usage but a lot when they are asked which social networks are the most important to them.
 US is declining as a percentage of global GDP, down to 16% from a peak of 46% in WWII. Interestingly, China used to be 33% of global GDP back in the early 19th century, declining to about 2% and then growing to be roughly equal to the US (and Europe, a sort of 3-way tie) today.

China has very low take-rates (commisions etc) which has driven growth much faster than the US equivalents that have much higher take-rates. Taobao is over 4 times the size of eBay, Meituan is about twice the size of Groupon.

India seems to be poised to take off. China has more users but India is adding users faster (63M adds last year). One interesting question is who the catalyst companies will be, the equivalents to Netscape, Yahoo, Amazon and eBay in US, or Tencent, Alibaba and JD.com in China. Or will it just be Facebook, Twitter, Youtube etc for whom India is already the #2 market (China is blocked for many market leaders like Google, Twitter and Facebook).

 Finally, looking at the top 20 internet giants by market cap and revenue, there are names in there that you probably haven’t heard of since they don’t operate in the US at all.

Mary’s presentation is here.


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