Although annual internet ad spend was up one per cent, revenue slowed nine per cent year on year.
That was one of the key findings from this year’s Internet Trends 2019 report by venture capitalist Mary Meeker.
Meeker has been publishing her analysis and predictions since she was at Morgan Stanley in 1995 and has been proven correct on a number of her insights over the years.
And while some of this year’s revelations were to be expected, such as Americans are now spending more time on their mobile devices than watching TV, others were more surprising.
Parts of the online world are slowing down.
After some decades, more than half of the global population is now on the Internet, but with smartphone shipments declining for the second year in a row, a slow down looms.
This has ramifications in regions like Africa and the Middle East where the use of the Internet is less common, as smartphones have often been used as ways to get people online.
Internet ad revenue for the top platforms also decelerated to 20 per cent growth in the first quarter of 2019, down from 37 per cent this time last year.
As to be expected, the majority of this revenue is going towards Facebook and Google, but competing platforms like Amazon, Twitter, Snap and Pinterest had strong growth.
There has been a 42 per cent rise in programmatic ad buying from 2012, which according to Meeker is now negatively impacting pricing.
Better targeting, new creative, machine learning, and high-relevance are all serving as ad share gain drivers.
Customer acquisition cost is continuing to rise, but this isn’t sustainable when the cost is greater than the lifetime value, says the report.
She uses the example of Spotify to demonstrate where this has been done well, where the combination of a free ad-supported product and premium users have led to a rising lifetime value to subscriber acquisition cost.
Effective marketing can be as simple as a free trial, with 42 per cent of people listing free trial/tier as their reason for trying a new platform, like Spotify.
Meeker lays out the following formula: Effective + Efficient Marketing = One’s Own Product +Happy Customers + Recommendations.