Bond’s Meeker Predicts Our Digital Future in Annual Report

At Code Conference 2019 in Scottsdale, Arizona, Bond Capital general partner Mary Meeker delivered her annual, highly anticipated Internet Trends Report. The 333-page slideshow looked at trends from the growth of Internet ad spending to digital delivery services in Latin America. One eye-opening fact she reported is that about 51 percent of the world, equaling 3.8 billion people, used the Internet in 2018, up from 49 percent (3.6 billion) the previous year. Smartphone sales are slowing since so many people likely to be online already are.

Recode reports Meeker revealed that, “as of last week, seven out of 10 of the world’s most valuable companies by market cap are tech companies, with only Berkshire Hathaway, Visa, and Johnson & Johnson making the Top 10 as non-tech companies.” Those tech companies in the Top 10 are Microsoft, Amazon, Apple, Alphabet, Facebook, Alibaba and Tencent.

Meeker said that e-commerce, whose growth has slowed, is now 15 percent of retail sales, up from Q1’s 12.4 percent. Still, regular retail only grew two percent in the same quarter. Another insight is that Internet ad spending in the U.S. was up 22 percent in 2018, with most of the spending on Facebook and Google. About 62 percent of digital display ad buying is for programmatic ads.

The marketing spending to attract new customers has gone up and is unsustainable in the long run, “because in some cases it surpasses the long-term revenue those customers will bring.” Meeker suggested free trials and unpaid tiers as an alternative.

Targeted advertising is facing several problems, including the impact of Europe’s GDPR and other regulations. She reported that, in 2018, Americans spent 6.3 hours per day with digital media — mainly mobile and other connected devices — up from seven percent the previous year. More than one-quarter of U.S. adults said they are “almost constantly online.”

However, Meeker noted that, “getting rid of problematic content [will become] more difficult on a large scale, and the very nature of Internet communication allows that content to be amplified much more than before.” People are also increasingly interacting via images; more than 50 percent of Twitter posts involve images, video or other media.

The brouhaha about the lack of online security is prompting companies to do something about it. In Q1, “87 percent of global web traffic was encrypted, up from 53 percent three years ago.” Interactive gaming grew, with worldwide participation rising six percent to 2.4 billion in 2018.

“New stricter immigration laws could negatively impact the tech industry and perhaps prevent our next Elon Musk from getting to the U.S.,” said Meeker, who also noted that, “innovation at tech companies outside the U.S. has remained robust.”

Meeker’s full report is available online in PDF form.