👩🏻‍🏫 Meeker 🎭 advertising 🚧 ad-blocking

Each year Mary Meeker, a partner at venture capital firm Kleiner Perkins Caufield & Byers (KPCB)
👩🏻‍🏫 Meeker 🎭 advertising 🚧 ad-blocking
By Connected Paths (Riaz Kanani) • Issue #20 • View online
Each year Mary Meeker, a partner at venture capital firm Kleiner Perkins Caufield & Byers (KPCB) releases a report on what she is seeing as big trends in the world today. It is done through the lens of what KPCB is itself looking at investing in so doesn’t cover everything. It is interesting as it ties together disparate sets of data to create a view of the world. There is a danger to doing this of course but it is better than not having any data at all.
Make no mistake, it is a huge report. The speedy overview is a 30 minute presentation which you can view here. The report itself is a presentation which is meant to be read and spans 355 slides. Find it here.
I’m going to focus on a few areas from the report this week - advertising and ad-blocking. Both are on the rise, both are changing rapidly and both have significant impact on the way we use the Internet.
Finally, it has been a sad sad day again here in London. It is clear there has been another attack in London Bridge last night, following on from the attack in Manchester last month and the Westminster attack before that. My heart goes out once again to the victims, friends and family.

Advertising
Growth in online advertising is accelerating with mobile ad spend outstripping desktop ad spend in 2016. Desktop spend is flat though so really all the growth is coming from mobile. 
Each year Meeker has this neat graph which shows you time spent on a channel (TV, radio, print, mobile etc) vs the amount spent on advertising and each year the gap between time spent on mobile and ad spend on mobile decreases. 
The graph pushes to the limit, the idea that ad spend should go to where people are, but really ad spend should go to where the people you want to communicate with are - not where everyone is. I think it works directionally though and if you do believe the graph, print ad spend is going to continue to fall, whilst mobile spend will continue to increase. I believe that will continue for a few more years at least. Does that means all advertisers should shift ad spend from print to mobile? Of course not.
I measure therefore I know.
Finally after nearly two decades, Internet ad spend is set to overtake TV ad spend. Whilst Internet ads can, like other direct response channels, be tracked directly, they offer a greater amount of brand value than just direct response making the ability to actually measure how valuable these ads are not dissimilar to TV advertising. 
Perhaps unsurprisingly then only 20% of advertisers were using conversion and revenue to measure success. The majority though (56%) are using a non-standard metric called engagement, which translates to brand awareness but isn’t. The result is 61% of advertisers see understanding the return on investment from advertising as their leading challenge.
In turn that leads to challenges securing budget and resources, with 38% of marketers seeing exactly that. For ad spend to continue to rise, understanding value beyond “engagement” needs to be resolved. Internet advertisers could learn a thing or two from TV here I think. Despite, Internet advertising overtaking TV ad spend, TV ad spend has managed to stay relatively flat over the years.
Cometh the ad, cometh the ad-block.
Ad-blocking is on the rise globally but there is some interesting insight within Meeker’s numbers. On the desktop, ad-blocking continues to grow but at a slower pace than before, whilst mobile ad-blocking is rising fast. 
With Google rolling out limited ad-blocking capabilities within Google Chrome (the most popular web browser), these numbers will sky rocket across both desktop and mobile. At the same time, I think the overall number will become irrelevant in the next few years. 
By rolling out its own ad-blocking capability, Google can give users a choice between advertising and paid for alternatives in a way no-one else has managed. The metric that will become more important to ad-reliant businesses will be the percentage of people who choose to pay over receiving the service for free with ads. Previous trials did not show much adoption, but also did not block entry as publishers and Google themselves are suggesting will be the result this time around. Similar to Sky TV here in the UK, we may even see a blend of the two over time.
Initially Google is only blocking the most irritating types of ads - ads that interrupt, have sound switched on and potentially slow down the browsing experience for example. Google is using the Coalition for Better Ads, which includes Facebook, Washington Post, News Corp among others to decide which ads do and do not get blocked though what happens when they decide to cross paths with Google’s ads themselves will be an interesting fight should it ever happen.
The underlying problem that will need to be resolved is that publishers make more money if they can deliver ads to people they know about - i.e. targeted ads vs people obviously do not want their lives to be tracked. Google could roll out an ability to manage this relationship between consumer and publisher but it would mean Google holding even more data on an individual. 
That isn’t an approach I would foresee them doing. Potentially they could develop a system similar to Apple Pay, where data can only be accessed via a fingerprint and is only stored locally. Data legislation could then mandate that companies have to remove specific information if a user later requests it.
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Connected Paths (Riaz Kanani)
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