Internet Trends
A Morgan Stanley team consisting of "Queen of the Net" Mary Meeker, David Joseph and Anand Thaker recently did a presenation on Internet Trends.
The presentation focused on the topics of usage patterns, social networking, widgetization and componentization, measurability and transparency, customer satisfaction, video, monetization, mobile, emerging markets and last but not least, recession.
According to the presentation, consumer IP traffic will surpass business IP traffic in 2008 as consumers use more than 5,000,000 TB of data per month. Since 2005E, there has been a 58% CAGR in IP traffic.
Just this week, AT&T revealed that without significant investment, the Internet's infrastructure will reach it's capacity in 2010. No wonder, some are calling it the d-day of the Internet. Jim Cicconi, SEVP of External and Legislative affairs for AT&T warned:
"The surge in online content is at the center of the most dramatic changes affecting the Internet today. In three years' time, 20 typical households will generate more traffic than the entire Internet today."
If that's hard to believe, keep in mind that Apple recently announced that it will start offering DVDs throught iTunes on their release date.
Consumer Information Technology (CIT) Advancing Faster than Enterprise
No surprise here, really, thanks to Web 2.0 and media intensive applications.
Google's ex CIO, Douglas Merrill, who has since then left Google to join EMI Digital as President, is quoted in the presentation:
"Fifteen years ago, enterprise technology was higher-quality than consumer technology. That's not true anymore. It used to be that you used enterprise technology because you wanted uptime, security and speed. None of those things are as good in enterprise software anymore (as they are in some consumer software). The biggest thing to ask is, 'When consumer software is useful, how can I use it to get costs out of my environment?'"
Douglas originally gave this quote in a WSJ interview while answering the question, "What's driving the "consumerization" of tech in the enterprise, where companies are borrowing tech ideas from the consumer Internet?"
Massive Transition in Available Ad Units
This part of the presentation shows massive decline in the number of page views Yahoo! used to enjoy since 2002. At the same time the Alexa graph comparing Yahoo!'s page views to Google, Facebook and Youtube shows interesting patterns. Specifically YouTube's rapid rise to become the #2 destination on the Internet. This slide also touches on an important point that Supply of ad units is now greater than demand. An important thing to note is that Alexa changed their ranking algorithm recently. The latest Alexa graph for these sites doesn't go back to 2002, however it tells a slightly different story:
- Page views wise, Yahoo! is still number 1, followed by YouTube, Google and Facebook.
- Reach wise, Google is number 1 followed by Yahoo!
Social Networking Characteristics - Fast Growth and Low Penetration
Next slide has a graph from from comScore's "Digital World: State Of The Internet" report which highlights growth in Emerging Internet Markets. The graph shows very fast growth for social networking sites but at the cost of low penetration. In contrast, the online search sector showed very high penetration but low levels of growth. Online personals, retail movies and Retail music industries depicted significant decrease in growth. Multimedia, on the other hand, shows decent growth but much higher penetration than social networks. Visitors growth to community focused sites that aren't social networks also decreased although these sites still have a strong penetration (even stronger than social networks).
Some other interesting findings from the comScore report that weren't in the Morgan Stanley presentation:
The next presentation slide highlights new entrants in the top-10 list of Alexa as well as top-10 sites of 2005 that have lost significant traffic. The sites that lost their top-10 ranking since 2005 include ebay.com, amazon.com, microsoft.com (not counting Microsoft Passport), google.co.uk, aol.com and go.com.
The new entrants in the top-10 list as of 2008 (based on old Alexa ranking model) included youtube.com, live.com, facebook.com, hi5.com, wikipedia.org and orkut.com. If the ranking list was a top-15 list, my employer would have been included at number 13.
How People Worldwide Spend Their Time Online
Comparison of popular sites
Facebook (#4 in global minutes) has experienced most growth (305%) since last year reaching 101 million members according to comScore. YouTube (#3 in global minutes) had the second highest growth (94%) with a total of 258 million users. Other two sites mentioned are PayPal and Skype, both eBay properties.
Two interesting facts about YouTube that I didn't know: A very high number of YouTube visitors (51%) visit the site weekly and half of the users "watch all videos to the end"
What is the most important source of Information?
Citing a study titled "Online World As Important to Internet Users as Real World?" conducted by Annenberg School for Communication , the presentation makes an important point: personal and online sources are two most important sources of information, and together they are the "essecnce of a social network."
The original report by digitalcenter.org also says that "online communities are a catalyst for connection and activism" and that "involvement in online communities leads to offline actions. More than one-fifth of online community members (20.3 percent) take actions offline at least once a year that are related to their online community." The original report also states that online activism is making online users get involved "in causes that were new to them when they began participating on the Internet" and that "more than 40 percent (43.7 percent) of online community members participate more in social activism since they started participating in online communities."
Another interesting point is that according to the Digital Future Project, Internet users 17 years of age or older trust Internet more (80%) than personal source (73%)
Some other important findings from USC-Annenberg Digital Future Project's report:
Next, there are some metrics from Facebook's growth. Some highlights
Other Sources:
The presentation focused on the topics of usage patterns, social networking, widgetization and componentization, measurability and transparency, customer satisfaction, video, monetization, mobile, emerging markets and last but not least, recession.
According to the presentation, consumer IP traffic will surpass business IP traffic in 2008 as consumers use more than 5,000,000 TB of data per month. Since 2005E, there has been a 58% CAGR in IP traffic.
Just this week, AT&T revealed that without significant investment, the Internet's infrastructure will reach it's capacity in 2010. No wonder, some are calling it the d-day of the Internet. Jim Cicconi, SEVP of External and Legislative affairs for AT&T warned:
"The surge in online content is at the center of the most dramatic changes affecting the Internet today. In three years' time, 20 typical households will generate more traffic than the entire Internet today."
If that's hard to believe, keep in mind that Apple recently announced that it will start offering DVDs throught iTunes on their release date.
Consumer Information Technology (CIT) Advancing Faster than Enterprise
No surprise here, really, thanks to Web 2.0 and media intensive applications.
Google's ex CIO, Douglas Merrill, who has since then left Google to join EMI Digital as President, is quoted in the presentation:
"Fifteen years ago, enterprise technology was higher-quality than consumer technology. That's not true anymore. It used to be that you used enterprise technology because you wanted uptime, security and speed. None of those things are as good in enterprise software anymore (as they are in some consumer software). The biggest thing to ask is, 'When consumer software is useful, how can I use it to get costs out of my environment?'"
Douglas originally gave this quote in a WSJ interview while answering the question, "What's driving the "consumerization" of tech in the enterprise, where companies are borrowing tech ideas from the consumer Internet?"
Massive Transition in Available Ad Units
This part of the presentation shows massive decline in the number of page views Yahoo! used to enjoy since 2002. At the same time the Alexa graph comparing Yahoo!'s page views to Google, Facebook and Youtube shows interesting patterns. Specifically YouTube's rapid rise to become the #2 destination on the Internet. This slide also touches on an important point that Supply of ad units is now greater than demand. An important thing to note is that Alexa changed their ranking algorithm recently. The latest Alexa graph for these sites doesn't go back to 2002, however it tells a slightly different story:
- Page views wise, Yahoo! is still number 1, followed by YouTube, Google and Facebook.
- Reach wise, Google is number 1 followed by Yahoo!
Social Networking Characteristics - Fast Growth and Low Penetration
Next slide has a graph from from comScore's "Digital World: State Of The Internet" report which highlights growth in Emerging Internet Markets. The graph shows very fast growth for social networking sites but at the cost of low penetration. In contrast, the online search sector showed very high penetration but low levels of growth. Online personals, retail movies and Retail music industries depicted significant decrease in growth. Multimedia, on the other hand, shows decent growth but much higher penetration than social networks. Visitors growth to community focused sites that aren't social networks also decreased although these sites still have a strong penetration (even stronger than social networks).
Some other interesting findings from the comScore report that weren't in the Morgan Stanley presentation:
- more than 300 million Internet users from Asia Pacific region, 15 years of age or older, were online in January 2008. This shows an increase of 14 percent over 2007 numbers (compare this to 10.4% increase in worldwide users). According to comScore, this increase "makes Asia Pacific the largest of the five worldwide regions"
- Latin America and Middle East-Africa are two other regions that have also experienced "above average audience growth" since 2007. Latin America experienced 16.6% growth where Middle East-Africa experienced 20.2% growth, the highest percentage of growth among five worldwide regions.
- US online audience now only represents 21% of worldwide Internet users.
- Visits to social networking sites by global Internet users increased 34%
- approximately 2 out of every 3 Internet users now visit a social network site with total visitors to social networking sites exceeding 530 million
- MySpace and Facebook both now attract more than 100 million visitors per month
- YouTube leads the way in online entertainment. Video is now the "dominant online entertainment format." More than 250 million visitors visited YouTube in January alone.
The next presentation slide highlights new entrants in the top-10 list of Alexa as well as top-10 sites of 2005 that have lost significant traffic. The sites that lost their top-10 ranking since 2005 include ebay.com, amazon.com, microsoft.com (not counting Microsoft Passport), google.co.uk, aol.com and go.com.
The new entrants in the top-10 list as of 2008 (based on old Alexa ranking model) included youtube.com, live.com, facebook.com, hi5.com, wikipedia.org and orkut.com. If the ranking list was a top-15 list, my employer would have been included at number 13.
How People Worldwide Spend Their Time Online
- 22% time is spent in online communication
- 16% time is spent in social communication. The presentation makes a note that this category didn't exist 3 years ago.
- 8% time is spent in online shopping activities
- 14% time is spent in entertainment and leisure activities
- 6% time is spent in work, business and education activities
Comparison of popular sites
Facebook (#4 in global minutes) has experienced most growth (305%) since last year reaching 101 million members according to comScore. YouTube (#3 in global minutes) had the second highest growth (94%) with a total of 258 million users. Other two sites mentioned are PayPal and Skype, both eBay properties.
Two interesting facts about YouTube that I didn't know: A very high number of YouTube visitors (51%) visit the site weekly and half of the users "watch all videos to the end"
What is the most important source of Information?
Citing a study titled "Online World As Important to Internet Users as Real World?" conducted by Annenberg School for Communication , the presentation makes an important point: personal and online sources are two most important sources of information, and together they are the "essecnce of a social network."
The original report by digitalcenter.org also says that "online communities are a catalyst for connection and activism" and that "involvement in online communities leads to offline actions. More than one-fifth of online community members (20.3 percent) take actions offline at least once a year that are related to their online community." The original report also states that online activism is making online users get involved "in causes that were new to them when they began participating on the Internet" and that "more than 40 percent (43.7 percent) of online community members participate more in social activism since they started participating in online communities."
Another interesting point is that according to the Digital Future Project, Internet users 17 years of age or older trust Internet more (80%) than personal source (73%)
Some other important findings from USC-Annenberg Digital Future Project's report:
- 64.9 percent are involved in new causes
- 43.7 percent now participate more in social activism
- 56.6 percent log in to their community once a day
- 70.4 percent of community members "sometimes or always interact with other members of their community while logged in"
- 7.4 percent of American Internet users maintain a blog
- 23.6 percent of Internet users now post photos online. Previously only 11 percent were posting photos online.
- 12.5 percent of users now maintain their own website.
- Internet users meet an average of 4.65 "friends online whom they have never met in person" and 1.6 "friends met in person whom they originally met online"
Next, there are some metrics from Facebook's growth. Some highlights
- as of 03/08 there were more than 14 million photo uploads a day being uploaded to Facebook and 6 million active user groups on Facebook.
- there are 55,000 total networks (partitions?/shards? :) ) and 50% of the networks are outside of college. I wonder how many networks are location based?
- Segment of users who are 25 years or older are the fastest growing segment. No surprise for me as my mother in law just joined Facebook.
- There are more than 250,000 new registrations per day since January of 2007.
- There are more than 859 million installations of 20,000 applications
- Super Wall by Rock You! is the most popular application with 28 million installs on Facebook followed by Top Friends (26 million installs) and Fun Wall (25 million), both by Slide
- Both Slide and Rock You! have 3 applications each in top 10 applications.
- Facebook's own Video application is ranked #7.
- advertising that is considered less intrusive
- news feed that is personalized
- UI that is cleaner
- friends section that receives more prominence
- ads that are more personalized
- more applications
- more mobile friendly
- facebook focusing more on monetizing word-of-mouth and conversations
Other Sources:
- Online World As Important to Internet Users as Real World
- Digital World: State of the Internet
- Alexa Ranking Algorithm Changed
Labels: advertising, Facebook, google, internet, monetization, social network, social networking, trends, youtube
posted by Frank at 8:22 PM
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