Dive Brief:
- Google and Facebook together commanded an 85% share, and rising, of internet advertising growth in the U.S. last year, according to the highly anticipated Internet Trends 2017 report from Kleiner Perkins Caufield & Byers partner Mary Meeker, which was released yesterday.
- The annual report highlighted how online browsing is evolving into buying, with 24% of internet users now saying Pinterest is a great place to buy things online, up from 12% in 2015 while Google Product Listing Ads had a 52% share of retail paid clicks in March of this year. On Facebook, 26% of users that click on ads make a purchase.
- Overall, online advertising grew 22% in 2016 compared with a 20% growth rate in 2016, with mobile driving the growth. Mobile spend surpassed desktop in the U.S. in 2016 based on higher growth.
Dive Insight:
Mary Meeker's annual internet trends analysis is closely watched by the mobile marketing industry for its insight into emerging opportunities. A key trend discussed this year by the venture capitalist is how the lines are quickly blurring between ads, content, products and transactions. Increasingly, the transaction is built into the ad, like with tap-to-book functionality on Instagram and the swipe-to-shop feature in Snap ads.
The report also underscored, as it has in the past, that there is still a significant untapped opportunity with mobile marketing as 28% percent of media consumption time is spent on mobile devices yet only 21% of advertising spending goes here.
One development that could help fill this gap is how leading ad platforms are rapidly improving back-end data and front-end measurement tools to deliver targeted ads that users increasingly want, a trend highlighted by the results that Google, Facebook and Pinterest are seeing with efforts to merge browsing and buying.
Other opportunities Meeker points to are Google's location-tagged ads, which have tracked 5 billion store visits and Uber’s partnership with Foursquare, which shows how nearby businesses can target based on location, route, destination and time of day data to deliver an offer right to consumers hands while they are en route.
Meeker also addressed how retail store closings could break a 20-year record in 2017 even as digital natives like Amazon, Warby Parker and Bonobos go offline, suggesting that retail isn't dead but that traditional formats need to evolve.
An emerging trend is the growing importance of images, as demonstrated by the increasingly sophisticated combination of social and user-generated content by brands. The reason why? The report cited research that showed effective user-generated content can generate 6.9x higher engagement than brand generated content on Facebook. Examples include user-generated real-time geolocated images that leverage tapping and filters to replace typing and provide greater context to images. On the back-end, augmented reality is being used to place objects into scenes and driving engagement by providing utility.
