Internet Trends 2016 (Part 1: Changing Demographics, Evolving Brands)Claude Harrington 06.06.2016
Nowadays, every business has some kind of online presence. Whether it’s a website, an app, social media channels or another type of digital footprint, it’s just not possible to thrive without an online presence. That’s why staying up to date with digital trends can be a valuable asset to us all. Which brings us to Mary Meeker…
Every year, since 1995, Mary Meeker– a partner at the venture capital firm KPCB–has given an annual talk about the state of the internet. What started as intriguing presentations has now become must-see material for those in Silicon Valley. That’s because, over the years, Meeker has shown a prescient talent for identifying digital trends. For example, since 2010 the Digital Growth Funds she helps lead has bet early on numerous breakout hits; an impressive list that includes Twitter, Spotify, slack and many more. In short: when Mary Meeker speaks, people listen.
So naturally, we were eager to hear what Meeker had to say at last week’s Code Conference in Rancho Palos Verdes, California. There, on June 1, she analyzed the digital landscape in a talk entitled Internet Trends 2016. The full presentation was 213 slides long, so today and tomorrow (in Part 2: Video, Messaging and Communication) we’ll be looking at some of the highlights from her talk and analyzing the implications.
Major Growth in India
India internet user growth is up 40% year-on-year. In fact, in the 4th quarter of 2015, India surpassed the United States to become the number two market for internet users in the world (behind China). Interestingly enough, however: globally, if you exclude India, internet growth is actually decelerating.
The Re-imagination of China
In 1985, North America, Europe and Japan accounted for 2/3 of Global GDP Growth. 30 years later, in 2015, China and Emerging Asia accounted for 2/3 of Global GDP Growth. Additionally, China’s Growth Capital Formation (which is dollars spent on capital equipment, roads and buildings) in the last six years was greater than the previous thirty years.
Google and Facebook Drive Internet Advertising.
As internet advertising in the US continues to grown (up 20% this year, compared to 16% the year before) Google and Facebook continue to be the primary movers. Seeing those two companies inhabit the top spots is not shocking, but this is: together, Google and Facebook accounted for 76% of internet advertising growth in the US.
Mobile Advertising Is Underutilized
Meeker notes that “Advertising remains over-indexed to legacy media.” In particular, she sees incredible opportunity in the mobile space because the ad spend is significantly less than the % of time spent in that medium. It’s a little under a 2:1 ratio (whereas with radio, television and Internet and it’s at 1:1).
Millennials and the Explosive Growth of Marketing Channels
Meeker notes that each new marketing channel has grown faster than the previous one (i.e. internet > television > radio). This is particularly worth thinking about as the demographics of this country (and those with purchasing power) change. Already, as of now, Millennials account for 27% of the population, making them the largest generation in the United States. Meeker adds that, “spending power [among Millennials] will rise significantly in next 5-10 years.
The New Normal is User Data
According to Meeker, the “new normal in retail” is all about leveraging transaction volume to collect user data, and then using that accumulated information to launch new products and, in several cases, eventually launch private brands that cater to that specificity.
Stitch Fix (…or How Hyper-Targeted Marketing is Driving Growth for Products and Brands)
With over 200 slides in her deck, Mary Meeker rarely takes the time to speak at length about any particular company’s business strategy. But, in this presentation, an exception was made to talk about Stitch Fix. And the reason she did is likely because Stitch Fix, in a way, personifies the integration of several of the digital trends she’s discussed.
For those unaware, Stitch Fix is the first fashion retailer to combine expert styling with proprietary technology. There’s a great explainer video on the Stitch Fix website that lays out what makes their service unique, but essentially the service boils down to this:
- Subscribe online for free
- Fill out a “Style Profile” to provide a sense of your fashion likes, dislikes, etc.
- Stitch Fix plugs that information into a proprietary algorithm and combines those results with imput from stylists to send you clothing that fits with your tastes
- After receiving shipment, try on the clothes in the privacy of your home
- Keep (and pay for) what you want, return the rest (no charge)
It may seem like the magic of this process is that middle step (technology + human expertise), and that’s this is why Meeker would single Stitch Fix out, but really its each of those steps–and the entire Stitch Fix experience–that integrates many of the key points she makes during her speech. From Millennial-friendly marketing channels to leveraging user hyper-specific user data to customized offerings (nearly 100% of the “fixes” that ship are unique), Stitch Fix takes digital retail to a whole new level.
And what they’re doing is working. Extremely well! According to the most recent metrics, 39% of Stitch Fix’s users purchase the majority of the clothing that they receive. I’m tempted to close by touting that they also have an extremely high customer satisfaction rate. But, in reality, there’s nothing “also” about that statement as Stitch Fix has found a way to leverage data so that the probability of customer satisfaction is shipped out with every product.
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