For a while, it seemed a given that the PC would dethrone the television as consumers’ primary screen – and advertisers’ primary outlet. The internet steadily captured more and more of consumers’ media attention, and the PC was their access point. But the smartphone has disrupted PC’s rise – last year marked the first time there were more smartphones sold worldwide than PCs. And according to Mary Meeker, partner at Kleiner Perkins Caufield Byers, we’ll never shift back.
Meeker’s annual internet trends report at the All Things Digital conference is an annual favorite. Here are three mobile trends highlighted in her presentation.
Mobile will rule the online economy
Mobile monetization is growing rapidly in the US – skyrocketing from just $0.7B in 2008 to $12B in 2011. Mobile commerce now accounts for 8% of US ecommerce. In May 2012, mobile usage hit 10% of global internet traffic, up from 5% last year. Still, companies complain that they haven’t been able to monetize mobile as quickly as expected, especially in light of how quickly the mobile market population is growing. Currently, mobile revenue still relies heavily on in-app purchases (71%) over mobile advertising (29%).
Expect that feeling change, as innovation focus shifts (following consumers’ attention) from the internet to the mobile internet. Based on growth rates seen in Japan – the most mobile-advanced nation – Meeker predicts mobile web usage revenue will surpass desktop web revenue in just one to three years.
Advertisers spend in the wrong places – but that will change
Meeker highlighted the mismatch between where consumers spend their media time, and where advertisers spend their media dollars – one of the biggest weaknesses (and opportunities) in today’s internet industry, she says. Right now, 25% of ad spend is spent in the print industry, but print only accounts for 7% of time spent by Americans on media. Internet ad spend is closer to an appropriate level – advertisers spend 22% of total ad spend on the internet, while consumers spend 26% of their media time there.
Not surprisingly, mobile holds the biggest opportunity for wiser ad spend. Only 1% of all ad spend is spent in mobile. But consumers now spend 10% of media time on their mobile phones – and as the smartphone adoption growth rates continue to climb, the time consumers spend on mobile will predictably climb as well. CPM rates are also currently up to five times less expensive for mobile ads than internet ads – making mobile advertising a bargain opportunity in the short term, says Meeker. She believes that monetization gap will close along with the revenue gap – in one to three years, mobile CPM will surpass traditional internet CPM.
Less affluent consumers drive mobile’s rise
Developing nations and less affluent consumers are largely responsible for mobile’s rapid rise over PCs, Meeker points out. This month in India, mobile internet usage surpassed desktop internet usage for the first time. Smartphones are much cheaper than laptops or desktops, and offer convenient, portable internet access. Many global consumers are simply skipping the PC and jumping straight to smartphones.
And there’s still massive growth potential – global mobile penetration is only 32%. Mobile phone users are increasingly switching to smartphones, but there’s a long way to go: of the world’s 6.1B mobile subscriptions, there are only 953M smartphone subscriptions. And there are still only 1.1B global 3G subscribers (an 18% penetration), compared to 2.3B global Internet users.
Mobile is quickly overtaking PCs, and it won’t be long before it replaces the TV as consumers’ and advertisers’ primary screen. It’s not a question of if mobile will be the first screen, but when. And according to Meeker, mobile will take the crown much sooner than you might think.