“If it feels like we’re all drinking from a data firehose, it’s because we are,” Mary Meeker told the audience at the Vox/Recode Code Conference in Scottsdale, Arizona last week.
The internet oracle released her 2019 Internet Trends Report, all 333 pages of it, looking back at every important internet trend in the last year and looking forward to what these trends inform in the year ahead. Silicon Valley waits with bated breath for the annual report the Bond Capital founder has released since 1995.
While she may not be on the beauty industry radar, technology executives around the world have used her insights on changing consumer behavior for decades as a guide on where to take their businesses next. Meeker and her team pore over millions of data points each year, synthesizing them into the most important changes in and around technology.
The internet is no longer solely a bastion of technology companies; it transcends borders and categories, making Meeker’s internet “state of the union” relevant to everyone. It is through that lens that we dove in and surfaced a beauty edit.
1. More than half of the global population were identified as internet users, and the amount of time spent online is increasing. The report found approximately 3.8 billion people (51%) of everyone on Earth were connected to the internet, an increase from 3.6 billion (49%) in 2017. More people online for longer periods of time means more opportunities for connection and commerce. Growth will naturally slow, but the biggest growth will come in the the Asia-Pacific region. China and India and Indonesia will soon have by far the most internet users. America currently sits third, but not for long. Places like Brazil, Mexico, and the Philippines are on the rise.
2. Customers are spending more time than ever on digital media. A growing number of adults report being online “almost constantly,” with the average American spending 6.3 hrs per day connected. Twenty-six percent of American adults rarely disconnected from the internet in 2018; among the 18-to-29 demographic, that number jumps to 39%. This increase, coupled with e-commerce contributing 15% of all retail sales, provides advertisers a captive audience primed to click and buy.
3. Customer acquisition costs are rising to perhaps unsustainable levels. With the birth of DTC disruption, the cost of acquiring customers has never been more expensive. This is one of the reasons we’ve seen digital-first brands begin to employ more traditional tactics like brick-and-mortar retail and even direct mail. Meeker’s key insight on the topic is that customer acquisition costs( CAC) cannot exceed lifetime value (LTV) for very long. This will require brands to develop effective marketing plans that are also efficient. Her formula: Effective + Efficient Marketing = Brand’s Product + Happy Customers + Recommendation or, in other words, good old fashionde word of mouth. Spending your way to success acquiring consumers online may no longer be a viable option.
4. Lines between search, social, and e-commerce continue to blur. Amazon, Twitter, and Pinterest collectively saw 6 times year-over-year growth since 2017. Yet, Google and Facebook still reign supreme and continue to see steady growth. Social platforms provide ad share gain drivers; better targeting, new creative, commerce, and high relevance that can all play a role in filling a brand marketing funnel.
5. E-Commerce and physical retail are both growing. US e-commerce sales are up 12.4% over the previous year, only slightly higher then the 12.1% growth rate seen in 2017, but physical retail is also growing, albeit at a slower pace—only 2% in 2018 from the year prior. E-commerce now makes up 15% of retail sales in the US, indicating dynamics between the two channels will continue to shift. Beauty remains an experiential category, and brands will need to continue to strategically balance bricks and clicks driving consumer engagement and conversion.
6. Health care is steadily becoming more digitized. Expect more telemedicine and on-demand consultations. As the lines of health, wellness, and beauty continue to blur, these platforms will provide new distribution channels and content outlets given the merging of health, wellness, and beauty.
7. China leads in digital innovation and apps. Alibaba and JD.com are already well established, but there is a third horseman in Pinduoduo in the Chinese e-commerce landscape. In China, e-commerce at the intersection of live streaming and influencer marketing is years ahead of the West, which will make it next to impossible to keep up in this domain. Alibaba’s “new retail” model dwarfs anything Amazon is doing in brick-and-mortar retail and AI. China has been a growth engine for many brands, requiring them to pay close attention to the digital landscape. As China remains a growth engine for many beauty brands, proficiency in rapid innovation is crucial.
8. YouTube and Instagram are the social platforms gaining the most share of time spent on the internet. However, social media usage overall is decelerating. Podcasts on the other hand have roughly 70 million people listening in the US, a figure that’s doubled in about four years.
9. Don’t overlook voice-activated selling. Over 100 million Amazon Alexas have been sold, according to data released by the company at the end of 2019. But more importantly, the number of third-party companies plugging into Alexa have increased exponentially.
10. Image creation and sharing continues to scale. Humans have always told stories through images—writing was a detour, but social platforms have us reverting to what is most natural. For brands, image-based communication, enabled by computer vision and artificial intelligence, will become increasingly important. This requires brands to develop strong visual vocabularies and design fluency to be effective storytellers online.
Photo: Ales Nesetril via Unsplash