A Primer On The State of the Internet 2012

The Future of the Internet: A primer on where digital trends are movingThe analysts at Business Insider Intelligence just recently released an overview of where we are in the evolution of the Internet in 2012. The data they collected was one of the best summaries I’ve seen recently covering the shifts happening in the digital world- a great overview for newbies and veterans alike who want a high-level orienting picture of the industry.  I recommend you view the entire deck, but since it’s fairly long I’ve pulled what I think are the most striking slides and collected them below with some commentary.

The Explosion of Mobile

One of the most jaw-dropping slides in the entire presentation- and one that vividly illustrates the seismic shift going on right now–  is this chart of the growth of mobile (a topic I covered in this post a few weeks ago).  Check out the “We Are Here” arrow in the image below (yes cowpokes- we’re in for quite a ride).  As Business Insider points out, last year smartphone sales overtook PC sales for the first time, and this is only the beginning.  Now the explosion of Mobile is poised to disrupt every corner of the media and advertising industries.

The Growth of Mobile

The chart below again shows the scale of the change coming. As Mary Meeker has pointed out, mobile data usage has been rising at a “meteoric” pace:  in 2009 mobile accounted for about 1% of internet traffic.  One year later in 2010 it grew to 4%, and in 2012 it has reached 10%. Projections show it will soon dwarf the fixed internet.

Internet access projections for fixed versus mobile access

With the scale and the speed of change we are seeing here, there is a clear second disruption that is coming connected to the Internet (to fully understand how disruptive innovations impact industries and companies, I’d highly recommend the bible on this topic- “The Innovator’s Dilemma” by Clayton Christensen).  For media companies, there is the clear question of “how do we make money on all of this”.  Mary Meeker has shown that effective CPM’s for Mobile inventory are “5 times lower” than desktop PC inventory, and that is a clear problem as that mobile inventory explodes exponentially.

The Continued Rapid Growth Of Digital Ad Spend

These two charts show how far the market has come in the last 17 years, and the additional room for growth.  The digital ad market is still only 20% of total ad spend, and Business Insider believes that TV is the next market that will begin to rapidly lose share to digital.

US Digital Ad Spend Chart

….and Google has a massive share of the total digital ad spend pie (due primarily to paid search ads)….

Google dominates online ad spend chart

 

Facebook Dominates Online Usage

The chart below shows the massive shift that has happened from consumers spending a significant amount of time on Portals (remember that word?  Brings me back to the late 1990’s Internet world of free Industry Standard jackets and Excite @Home roof deck parties….), transitioning to spending massive amounts of time with social networks.

Social Networks Time Spent chart

Obviously when we say “social networks”, that’s super-secret code for “Facebook” (cause the reality is everybody else isn’t making a dent yet in Facebook’s domination of time spent)…..

Facebook Active Users Chart

Google vs Facebook: Who Is The Ultimate Winner?

Business Insider asks the question- given the size of Facebook, will the social network eventually be bigger than Google?  The answer- “not likely”.  They argue: “Google is the best ad product in the history of the world, because it’s like advertising in a store.  Facebook is like advertising at a party”.  I would tend to agree.  Here is the data they show to help put all of this in context:

Social Network Referrals to commerce sites chart

So that’s it.  Your trip through “everything I really need to know about this internet thing in 5 minutes”.  You get the sense from looking at the data in 2012 that things are just starting to get rolling.  And 2013 is only going to get more interesting….

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