Sandeep Goyal
Oct 10, 2017

Blog: Why the Mary Meeker Report is digital's bible

On the eve of Media360 India, we look at some key takeaways for India from the renowned Mary Meeker Report

Blog: Why the Mary Meeker Report is digital's bible
I normally do not write this kind of stuff in my blog because Campaign India’s audience is not entirely tech or digital. Many Campaign readers may therefore not be interested in stuff that gets too focused on digital media. However, with the rapid convergence of all media on to the mobile handset, digital is no longer niche. In fact it is now becoming more mainstream than a lot of older media choices. 
 
When Prasad Sangameshwaran, managing editor of Campaign India sent me an invite last week to Campaign’s global event Media360 scheduled in Mumbai later this week, I had to regret due to a prior speaking commitment. I wish I could have been there to participate in Media360 India which will be a daylong seminar on topics including leveraging video, reaching consumers in rural markets, key challenges with programmatic, how OTT is changing India’s advertising landscape and more. Prasad asked me if this week I could blog on media related to possible discussion at Media360. I happily agreed.
 
To my mind any media conference anywhere in the world is incomplete without taking cues from and cognizance of the Mary Meeker Report. For those in the digital domain, every year, Mary’s report is bed-time reading for a few nights when it releases annually. For the uninitiated, Mary Meeker is a partner at Kleiner Perkins Caufield & Byers, and her annual Internet Trends report is a bellwether report keenly awaited by the global digital industry. This year Mary Meeker presented her annual report at Code Conference, at the Terranea Resort in California in end May. The 355-slides deck is the most comprehensive analysis of emerging trends in digital worldwide. 
 
Here are some of Meeker’s takeaways for 2017:
 
Global smartphone growth is slowing: Smartphone shipments grew only 3 percent year over year last year, versus 10 percent the year before. This is in addition to continued slowing internet growth worldwide.
Voice is beginning to replace typing in online queries. Twenty percent of mobile queries were made via voice in 2016, with 95 per cent accuracy.
In 10 years, Netflix went from 0 to more than 30 per cent of home entertainment revenue in the U.S. This is happening while TV viewership continues to decline.
Entrepreneurs are often fans of gaming, Meeker said, quoting Elon Musk, Reid Hoffman and Mark Zuckerberg. Global interactive gaming is becoming mainstream, with 2.6 billion gamers in 2017 versus 100 million in 1995. Global gaming revenue is estimated to be around $100 billion in 2016, and China is now the top market for interactive gaming.
China remains a fascinating market, with huge growth in mobile services and payments and services like on-demand bike sharing. 
While internet growth is slowing globally, that’s not the case in India, the fastest growing large economy. The number of internet users in India grew more than 28 per cent in 2016. That’s only 27 per cent online penetration, which means there’s lots of room for internet usership to grow. Mobile internet usage is growing as the cost of bandwidth declines. 
In the U.S. in 2016, 60 per cent of the most highly valued tech companies were founded by first- or second-generation Americans and are responsible for 1.5 million employees. Those companies include tech titans Apple, Alphabet, Amazon and Facebook.
Wearables are gaining adoption with about 25 per cent of Americans owning one, up 12 percent from 2016. Leading tech brands are well-positioned in the digital health market, with 60 per cent of consumers willing to share their health data with the likes of Google in 2016.
 
Let us now look closely at what the Mary Meeker Internet trends 2017 report says about the Indian market.
 
For starters, the report points out India’s Internet users continue to grow, and it now stands at 355 million internet users, which puts India at number two in the market. This is just behind China, which is the world leader.
 
According to the Mary Meeker Internet Trends 2017 report, Indian’s Internet grew 28 per cent till mid-June 2016, with 40 per cent year-on-year growth. However as the report notes, India’s internet penetration is still at 27 per cent, which means there is a long way to go before India even crosses the 50 per cent mark in internet penetration.
 
The other key highlight for India in the report is that we are now the number one global market for time spent on Android. The number of Google Play downloads in India have crossed the US market for the year 2016, which shows how fast the market is growing.  However, this data for India on Android phones comes after excluding China from the dataset. Remember China doesn’t have the official Google Play Store.
 
 
The Mary Meeker Internet Trends 2017 report confirms that India’s smartphone shipments continue to grow 15 per cent year-on-year if the first quarter of 2017 is taken into account. 
 
On the smartphone market, the report also captures how the Indian market has changed. In the first half of 2017, Chinese players like Xiaomi, Oppo, Vivo continued to make gains with smartphones getting cheaper and better, says the report. It also highlights how Indian players like Lava, Micromax, and Jio are now fighting for the low-cost 4G feature phone.
 
 
The report also notes how from 2014 to 2017, players like Micromax, Lava, Karbonn have been fighting for feature phone market share, and how the average selling price (ASP) has also fallen. But the report notes, from 2014 to 2017, the market witnessed the rise of Chinese players and players like Lenovo, Xiaomi, Oppo, Vivo fought for the smartphone market with quality features, online distribution. More importantly the ASP of smartphones has become stable. It also notes how the entry of Reliance Jio’s Lyf branded phones intensified the fight in the smartphone market.
The growth of mobile in India is not surprising. In India, the mobile web traffic is 80 per cent, which is well above the global average, and based on the chart we are second to Nigeria. The fact that India’s internet revolution will be driven by mobile is nothing new, given most first time Internet users are coming online via their smartphone in the country.
 
 
The report also notes how from 2014 to 2017, players like Micromax, Lava, Karbonn have been fighting for feature phone market share, and how the average selling price (ASP) has also fallen. But the report notes, from 2014 to 2017, the market witnessed the rise of Chinese players and players like Lenovo, Xiaomi, Oppo, Vivo fought for the smartphone market with quality features, online distribution. More importantly the ASP of smartphones has become stable. It also notes how the entry of Reliance Jio’s Lyf branded phones intensified the fight in the smartphone market.
 
The growth of mobile in India is not surprising. In India, the mobile web traffic is 80 per cent, which is well above the global average, and based on the chart we are second to Nigeria. The fact that India’s internet revolution will be driven by mobile is nothing new, given most first time Internet users are coming online via their smartphone in the country.
 
 
Not only is mobile traffic dominating India’s internet usage, but as the report shows, Indians spend 45 per cent of their time on mobile phones, and weekly time spent on a mobile is 7X spent of the time spent on a television set. The top activities for Indians on mobiles: Entertainment, which stands at 45 per cent, followed by Search, Social and Messaging that stands at 34 per cent, with news and media occupying just over 2 per cent.
 
 
When it comes to telecom players in India, the report says while Bharti Airtel, Vodafone and Idea collectively maintain over 60 per cent share of broadband subscribers, they’ve also cut data rates thank to the entry of Reliance Jio. This is a trend we saw most of last year, since Jio went on its free trial run, and we are seeing this continue in 2017 as well.
 
According to the Mary Meeker report, India saw a 10 per cent decline in data costs per GB decline on quarterly basis, while voice costs declined 4 per cent quarter on quarter. Mary Meeker report also notes that after the entry of Jio in the market, incumbent players lost subscribers and cut data prices further. By March 2017, the average cost of 1GB of data was down by 20 per cent among incumbents, and if one were to include Jio, the average cost per GB stood at $0.33 or Rs 21 by March 2017.
 
 
 
When it comes to apps and browsers preferred in India, Mary Meeker’s Report shows some even more interesting data. While Google Chrome has 32 per cent of the market share in India, it is beaten by China’s UC Web which has 50 per cent market share. Also India’s top downloaded Android app is WhatsApp, followed by Facebook Messenger. In the top 10 list, four apps are from the US, 2 are from China (these include ShareIt and UC Web), while only two Indian apps are in the list. The Indian apps are JioTV and HotStar.
 
 
According to the Mary Meeker’s report, India’s internet usage is seeing strong growth thanks to low data costs, intense competition as well as government policies. The report also mentions Narendra Modi government’s policies, including Digital India, focus on online payments, UPI as well to showcase these have boosted India’s digital revolution. However as the report notes, data is still expensive for majority of people in the country, and so are the devices, despite falling prices.
On the e-commerce side of things, Mary Meeker report notes while Flipkart, Snapdeal, Paytm, Shopclues and Amazon India are all competing aggressively, it is the American giant which is going all out. As the report shows, Amazon India has increased its inventory and sellers, and is seeing a 3X year-on-year growth on this front. The fulfillment centres from Amazon have grown 30 percent year-on-year in India, which shows the scale of investment from the company in the market.
 
 
 
The Mary Meeker report also talks about the Aadhaar trends data, notes that over 82 per cent of the population is covered under this scheme. It also talks about digital payments and how Paytm rapidly ramped up users thanks to offline and online commerce. Also, according to the report, UPI-based payments, allowing for bank-to-bank transfers via mobile stood at $359 million till March 2017.
 
Out of Mary’s deck for 2017, her best slide by far, to my mind is 
 
ONLINE ADVERTISING (+ COMMERCE) = INCREASINGLY MEASURABLE + ACTIONABLE
Meeker in fact explains in Slide 12 that mobile advertising revenue grew 22 per cent in 2016, eclipsing desktop ad revenue. In Slide 14, Meeker in fact comes up with the whopper that Internet ad revenue is set to overtake TV advertising globally in 2017 (something that’s already happened in the U.S.). Meeker stresses in Slide 15 that Google and Facebook have captured 85% of the growth of the internet.
 
Meeker’s Slide 16 in fact made digital markets nervous the world over saying:  
 
AD MEASURABILITY = CAN BE TRIPLE-EDGED ... WHEN THINGS ARE MEASURED = PEOPLE DON'T ALWAYS LIKE WHAT THEY SEE ... USERS DON'T ALWAYS LIKE DATA COLLECTED
Meeker in Slide 17 cites high concerns among social media marketers about ROI. In Slide 18, she talks about the rising use of ad-blocking software. In Slides 20-27 she makes a point about how leading online ad platforms, from Facebook to Google to Snapchat to Pinterest, are upping their game in terms of effective ad targeting and measurement.
 
Every year Mary Meeker makes her points with authority and aplomb. I hope at the Media360 conference organised by Campaign India, speakers will take note of Mary’s analysis and predictions, and add their wise counsel on top. How I wish I were there!
 
(Sandeep Goyal helped launch the Airtel brand more than 20 years ago. He has remained intensely involved with the mobile and digital domains ever since.)
 
 

 

Source:
Campaign India

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