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June 14, 2017

Internet Ad Spending Is Projected to Surpass TV Ad Spending in 2017

Analyst/Investor Mary Meeker Reveals This Insight and Others in Her 2017 Internet Trends Report

Mary Meeker built a strong reputation as a Morgan Stanley stock analyst and an investor with the Silicon Valley venture capital firm of Kleiner Perkins Caufield and Byers. Each year Ms. Meeker publishes an eagerly awaited annual internet trends report loaded with data and insights concerning the technology and media industries. This year’s report is no exception. Here are some of her most important observations.

The Rise of Mobile

In 2016, on average Americans spent 5.6 hours on the internet each and every day. That was half again as much as they spent online in 2011 (3.7 hours). The increase traced to rapid expansion and adoption of smartphones (devices combining the functions of cell phones and computers). Mobile device usage quadrupled from 2011 to 2016, jumping from 0.8 to 3.1 hours daily. Over that same time period, use of desktop and laptop computers fell 15%, declining from 2.6 to 2.2 hours daily. So in 2016, Americans relied on mobile devices to access the internet over half the time (3.1 out of 5.6 hours, or 55%).

Mobile’s Share of Ad Spending Skyrocketed

Total U.S. online advertising more than doubled between 2011 and 2016, increasing from $32B to $73B. Once again, mobile was responsible for the dramatic growth. Advertising delivered via mobile devices exploded from less than $2 billion in 2011 to $37 billion in 2016. Consequently, mobile ad spending accounted for slightly more than half of total online ad spending in 2016.

Internet Ad Spending Will Top TV Spending in 2017

In 2011, global television ad spending totaled $160 billion – more than double internet ad spending at the time ($75 billion.) Since then, online has steadily increased its share of total ad spending from 32% in 2011 to 49% in 2016. Meeker expects internet ad spending to surpass TV ad spending for the first time ever in 2017 – roughly $200 billion compared to $195 billion.

Facebook Continues to Gain Ground on Google

In 2016, Google experienced 20% year-over-year growth in U.S. ad sales – from just under $30 billion to a bit over $35 billion. Meanwhile, albeit on a much smaller base, Facebook grew ad sales much faster - by 62%; from $8.5 to $14 billion. Facebook ad sales amounted to 29 percent of Google’s ad sales in 2015, but 39% of Google’s ad sales in 2016. Advertising sales recorded by all other internet media grew only 9%, in comparison.

Online Retail Sales Continue Strong Double-Digit Growth

U.S. e-commerce sales nearly doubled between 2011 and 2016, expanding from $200 billion to just under $400 billion. Sales have increased 15% on average over the past three years and show no sign of slowing. Package shippers have also benefited. Year-over-year growth in parcel volume was a bit under 4% in 2011; more than 4% in 2012 and 2013; then 6%, 8% and 9%, respectively since then.

This ecommerce news summary is presented by Butcher Block Co., an online-only retailer of kitchen furniture, countertops and accessories, principally made of butcher block.

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