TRENDS & PREDICTIONS

Transcription

1 TRENDS & PREDICTIONS in Data, Apps and IoT brought to you by

2 Dear Reader, Welcome to the 2015 Year End Report on Data, Apps and IoT brought to you by Personagraph. Table of Contents We are pleased to be an industry leader in data platforms combining the need for scale with data automation and advertising. We work with enterprise companies, data partners, telecom operators, and supply and demand partners to deliver first party data which is consumable, and easy to interpret, at scale. Mobile Data Grows 50x Over 15 Years...1 On the surface, we know mobile data has grown 50x over the past 15 years, and IP connections will be 3x the global population by For discerning companies and products looking to capture this growth, messaging features are a top bid for mobile, as well as M-commerce (with China leading the way), plus tablets for video. The Internet of Things saw major contributions from wearables, smart homes and smart autos in 2015, all of which is covered in this report. Lastly, savvy advertisers are allocating budgets towards video, programmatic, and optimized creatives. Our report covers these future trends in detail and provides analysis on how your business can leverage the next wave of growth in Data Usage APAC Leads M-Commerce...2 IP Networks to be 3x Global Population...3 Consumer Apps Downloads on Google Play 90% Higher, Meanwhile Revenue 80 Percent Higher on ios...4 Apps...5 WhatsApp Passes Facebook; Skype, Viber Lead Messaging in Revenue..7 Device Trends Data Traffic Exploding from Video and Tablets...9 Advertising Video Advertising Fastest Growing Digital Format The Rise of Mobile Programmatic Optimized Creatives, Could Reach 400 Permutations Beth Kindig Product Evangelist, Personagraph IoT IoT to Reach 20.8 Billion Connections by Wearables to Grow Five-Fold, Plus Smart Home and Smart Autos... 16

3 Mobile Data Grows 50x Over 15 Years Macro Mobile Usage Trends Mobile devices are the most important device for roughly half of the world s population, and its share of data usage continues to grow steadily. Mobile data traffic will continue its trajectory at a compound annual growth rate of 57 percent from 2016 to Last year s mobile data traffic of 50.4 exabytes was 50x the usage we saw in the year And, according to Ericsson, the average smartphone user consumes 1.4 gigabytes of data every month, or when added together, more than 1,700 gigabytes every second. The Era of the Zettabyte Annual global IP traffic will surpass the zettabyte threshold in 2016, and the two zettabyte threshold in Global IP traffic will reach 1.1 zettabytes per year or 88.4 exabytes per month in Global Mobile Data Growth Total monthly global mobile data traffic (upload & download) in petabytes (millions of gigabytes) 4,500 4,000 3,500 Average monthly mobile data per smartphone connection: 1.4 GB 3,000 2,500 2,000 1,500 1, Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Source: We Are Social / Ericsson on Mobility Report Q

4 APAC Leads M-Commerce Global Trends: M-Commerce M-commerce is exploding in South Korea where 43 percent of residents made an online purchase in the past month. China also saw huge gains on Singles Day in November 2015 with TaoBao stating that 69 percent of its $14.3 billion in transactions came from a mobile device. The approximately $10 billion figure is more than double the online sales the United States saw on Black Friday. Much of this increase, and the global increases outlined, are a result of to stronger broadband connections. We ve seen the global average for mobile broadband connectivity double to 46 percent this year. Exabytes per month Asia Pacific (39.1%) North America (15.7%) Western Europe (9.9%) Centeral and Eastern Europe (14.4%) Middle East and Africa (12.5%) Latin America (8.4%) 57% CAGR EMEA to Lead in Mobile Data Growth The Middle East and Africa are forecasted to have the strongest growth in mobile data usage over the next five years increasing 15-fold with a 72 percent compounded annual growth rate. Second most growth will be seen by Central and Eastern Europe at 71 percent and Latin America at 59 percent. Asia-Pacific and North America will produce the most mobile data in 2019, equaling 39.1 percent and 15.7 percent respectively Source: Cisco 2

5 IP Networks to be 3x Global Population Device Trends Text messaging, multimedia messaging and handset video are among the more popular uses for mobile phones. Eighty-five percent of Facebook s audience now connects via mobile phones, with 83 percent accessing via smartphones, and 2 percent via feature phones a significant shift compared to the 26 percent who were using feature phones only nine months ago. The number of devices connected to IP networks is expected to be more than 3x the global population by There will be more than three networked devices per capita by 2019, up from nearly two networked devices per capita in Similar to mobile networks, video devices can have a multiplier effect on traffic. With the growth of video viewing on tablets, traffic from tablets will account for 24 percent of total global Internet traffic by 2019, up from 6 percent in Share of Web Traffic by Device Based on each device s share of total web pages served Share of web page views: Laptops & Desktops Mobile Phones Tablets Other Devices 56% 39% 5% 0.1% YEAR-ON-YEAR: YEAR-ON-YEAR: YEAR-ON-YEAR: YEAR-ON-YEAR: -9% +21% -21% -10% Main figures show the share of total web page requests from each type of device. Sources: StatCounter, Q / We Are Social 3

6 Downloads on Google Play 90 Percent Higher, Meanwhile Revenue 80 Percent Higher on ios Consumer Apps Apps are increasingly where consumers spend more and more of their time, not to mention their money. Although mobile web can be a backup for publishers who have not built an app, we are seeing consumers spend anywhere from 70 to 86 percent of their time in-app, creating a compelling case to go this route. In Q3 of 2015, global downloads were 90 percent higher on Google Play compared to the ios App Store. Contributing to this growth are emerging markets such as India, Indonesia and Vietnam, where cheaper smartphones are hitting massive populations. India especially is contributing to the growth at only 10 to 15 percent penetration. The ios App Store, however, reigns with revenues 80 percent higher than Google Play in Q3, up from 70 percent in Q2. The increase is notably due to China, which surpassed the U.S. in downloads earlier this year. The growth of ios revenue in China is being driven by social video apps and games, with Tencent s The Legend of Mir 2 and The King of Fighters 98 both performing well. To date, China still trails both the U.S. and Japan in gaming revenue. Indexed Downloads Worldwide App Downloads by Store Q % ios App Store Asia Fuels the ios-google Play Dichotomy Indexed Revenue Worldwide App Revenue by Store Q % 0 Google Play ios App Store Google Play Source: App Annie 4

7 Apps Gaming Top Category for Revenue Gaming continues to steadily lead mobile app revenue, claiming 90 percent of Google Play revenue and 75 percentt of ios App Store revenue. During 2015, game revenue was more dispersed with less concentration among the top game publishers. Even with these gains, gaming is still projected to go through some major shifts for an increase in popularity, including the introduction of new mobile Graphics Processing Units (GPUs) and processers, which allow developers to create games with immersive gameplay and graphics, especially boosting the gaming category in South Korea and China. Cloud Gaming: An Emerging Trend Gaming is also the more crucial category to migrate from offline to online (cloud). Gaming on demand and streaming gaming platforms have seen many new release in 2013 and 2014; however, the graphical processing has been performed locally on the gamer s computer or console. What cloud gaming proposes is to produce the game graphics on a remote server. This would greatly increase Internet traffic in this category. Music Streaming Apps go Global Music streaming services saw an uptick in 2015 with Spotify winning as the global favorite. Meanwhile, Pandora Radio led in the U.S., with Deezer doing well in France, Saavn in India and QQ Music in China. According to App Annie, Japan is expected to help shape music streaming revenue as we move forward into Overall, for music streaming apps, region-specific licensing and cultural preferences are expected to keep the market somewhat fragmented as we saw in

8 Instagram, QZone and VKontakte Global Favorites It s no surprise that Facebook is the dominant global social platform with more than 1.5 billion active accounts, but messaging including Facebook s WhatsApp may soon take over as the most used app on mobile. This year s other break-out social stories came from Tumblr and Instagram, with Instagram s 400 million users said to be highly addicted to the single-use photo app. Tencent also continues to extend its dominance of Chinese-language social networks, including Qzone s 700 million+ active accounts. In nearby Russia, VKontakte is a leading social media platform with estimates of 100 million monthly active users (MAUs). Social Claims 3 Hours Per Day Per User Globally, research conducted by GlobalWebIndex reports the average user is spending 2 hours and 53 minutes on social media per day, with some countries such as Argentina and the Philippines exceeding 4 hours per day. That s why advertisers spent an estimated $23.68 in 2015 for a 33.5 percent increase and are expected to reach $35.98 billion, or 16 percent of all digital ad spending by It is important to note Facebook does not have a presence in China, the third largest worldwide market for social network ad spend, meanwhile still claims 65 percent of all ad spend. Argentina Philippines Mexico Brazil Thailand UAE Malaysia South Africa Vietnam Saudi Arabia Turkey Indonesia USA Russia India Italy Singapore AVERAGE UK Poland Canada Australia Germany France Spain Netherlands Hong Kong China 4.3 South Korea 4.3 Japan Time Spent on Social Media Average number of hours that social media users spend using social media technology 3.2 Note that average times are based solely on people who use social media, and do not factor non-users Sources: GlobalWebIndex, Q Based on a survey of internet users aged / We Are Social 6

9 WhatsApp Passes Facebook; Skype, Viber Lead Messaging in Revenue WhatsApp grew 50 percent in the past year and is expected to pass the 1 billion user mark sometime in early Data from GlobalWebIndex indicates WhatsApp is leading Facebook in a number of markets, and this is expected to occur on a more frequent basis through Facebook Messenger also continues to grow, with the app surpassing 800 million active users in Q However, MAU is very different from revenue. Both Skype and Viber have viable business models for charging from desktop and mobile, and therefore, according to AppAnnie, these apps were the top revenue-generating messaging apps in many markets where Facebook and Facebook Messenger led by MAUs. Top Messaging Apps by Q Monthly Active User iphone and Android Phone WhatsApp Facebook Messenger KakaoTalk WeChat Line Source: AppAnnie 7

10 LINE, WeChat and KakaoTalk Lead APAC In Asia, many messaging apps offer full-featured platforms, which create new revenue streams such as mobile payments, media content and even gaming. LINE, which is popular in Japan, leads messaging apps in the ios App Store and is the second highest-grossing ios app of all time (outside the gaming category). In addition to LINE game offerings, WeChat in China and KakaoTalk in South Korea do the same. In fact, WeChat has seen early success in m-commerce by offering users the ability to purchase movie tickets, taxis and other municipal services. Apps for Cord-Cutters Outperform The combination of cord-cutting trends and improvements in mobile hardware, along with cheaper data plans, has created an ideal environment for mobile video streaming and more importantly, paid subscriptions. In what has been a relatively tough market for subscriptions, both HBO Now and Showtime introduced mobile apps without requiring a paid cable service and have done well. Also, Netflix introduced in-app subscription purchases on ios in late September 2015, while YouTube launched YouTube Red 1. In China, video streaming services Youku, Tencent Video and iqiyi did well in terms of revenue. 1 YouTube Red is a monthly-paid subscription service by YouTube, exclusively for users in the United States. It provides advertising-free streaming of videos hosted by the service, offline and background playback of videos on mobile devices, and access to advertising-free music streaming. Source: Wikipedia 8

11 Data Traffic Exploding from Video and Tablets Mobile video traffic now accounts for more than half of all mobile data traffic at 55 percent in The top 20 percent of power users generated 59 percent of mobile data traffic. The key driver will be mobile apps that cater to the strong consumer demand for video on the go. Similar to mobile networks, video devices can have a multiplier effect on traffic. Tablets, in particular, are contributing to the growth in video with traffic from tablets estimated to account for 24 percent of total global Internet traffic in 2019, up from 6 percent in On that note, in 2015, the number of mobile-connected tablets increased to 133 million (pale in comparison to 2 billion smartphones globally), yet each tablet generated 2.8x more traffic than the average smartphone likely because of video. In 2015, the per tablet data traffic was 2.6 gigabytes per month compared to 929 megabytes per smartphone. Exabytes per month Mobile Video Will Generate Three-Quarters of Mobile Data Traffic by 2020 Mobile File Sharing (1%, 2%)* 53% CAGR Mobile Audo (8%, 6%)* Mobile Web/Data/VoIP (36%, 17%)* Mobile Video (55%, 75%)* *2015 and 2020 traffic share Source: Cisco VNI Mobile,

12 Dramatic Shift in Video Caused by 4K The impact of 4K, or ultra-high definition (UHD), is set to cause a dramatic shift in the level of video traffic across devices. The bit rate of 4K is at 18 Mbps or double the HD video bit rate and 9x more than standard-definition video bit rate. Cisco predicts that by 2019, 31 percent of installed flat-panel TV sets will be UHD, up from 2.7 percent in In addition, popular on-demand video apps will contribute to an increase in traffic despite the total time watching video remaining the same. Users and Subscriptions (M) 3,000 2,000 1,000 Online Video (7.3% CAGR) Digital TV HH (4.9% CAGR) Mobile Video (21.0% CAGR) Source: Cisco VNI Mobile,

13 Video Advertising Fastest Growing Digital Format Advertising With data usage at almost 400-million-fold over the past 15 years, plus 4G now exceeding 3G, it is no surprise that mobile video advertising is growing faster than any other digital format with estimates of ad spend reaching $8.6 billion globally by According to Google s Rich Media Gallery, mobile video ads perform better, as well, with yielded click-through rates (CTRs) that were 18x higher than HTML5 banner ad units, as measured in February of The tech giants have taken note. Facebook, Instagram and Twitter all introduced new digital-video ad products in We also saw some serious mergers and acquisitions (M&A) with Yahoo buying BrightRoll for $640 million, Verizon buying AOL in a $4.4 billion mobile video strategy, and Millennial partnering with Rentrak. This trend has continued into early 2016 with Opera MediaWorks garnering a rumored $1.2 billion from Chinese firms. Because of Measurement Concerns, Social Still Leads Mobile Advertising There is still plenty of room for newcomers to iterate within mobile video advertising, especially in how to reach audiences effectively, how to intelligently target and also how to measure ROI for campaigns. The current methods of measurement, such as Cost per Install (CPI) has created ad fatigue, where the same video ad is shown to the same viewer multiple times because of a lack of audience intelligence. Brands are also not able to measure effectiveness as CPI was first introduced for app publishers who sought to drive app installs rather than brand campaigns on mobile. CPCV, or Cost Per Completed View, is more favorable as it minimizes risk between CPI and CPM(V), or Cost Per Thousand Views, which may or may not include exposure to the entire message. Social is the ideal environment for many brand advertisers today as social platforms are positioned well for leveraging advanced data. In the future, we will see programmatic expand offerings and data management platform (DMP) ingestion to rival social networks. For instance, by combining device ID and latitude/longitude data plus additional audience data, advertisers will be able to meet clear KPIs. Today, many publishers find real-time bidding unfavorable for video as it creates a race to the bottom, resulting in low prices. 11

14 The Rise of Mobile Programmatic Mobile Programmatic Brands who embrace mobile, and recognize its strength for speed and targeting accuracy, will be able to harness the power of programmatic. Imagine a CPG company delivering a coupon to a customer while they re standing directly in front of the product at the grocery store. Because this is not obtainable on social, many brand advertisers will have to consider programmatic. To accomplish this, however, data must be introduced at campaign inception. With the introduction of a data programmatic platform, buying systems can access millions of data points across fragmented, yet valuable and relevant inventory to meet campaign KPIs. The ability to aggregate these high-value customers at mass scale in real time is a huge advantage to data powered programmatic. Audience-Targeted Mobile Programmatic Benchmark 1 Who is Buying Audience-Targeted Mobile Programmatic? Beauty 2% Health Most Popular Mobile Programmatic Audience Segments (3%) Income (3%) Gender (2%) Sports Enthusiasts Auto Intenders Consumer Packaged Goods (CPG) Quick Services Restaurants (QSR) 11% 12% 8% 49% Auto Fast Food Consumers 12% 7% 48% Tech Enthusiasts 18% 25% Big Box Retailer Ethnicity Automotive brands were the greatest early adopters of audience-targeted mobile programmatic ads, making up 49% of total ad impressions. Almost half of audience segments targeted by mobile programmatic campaigns were tech enthusiasts (48%) Advertisers were more than 8x as likely to target audiences based on ethnicity (25%) than income (3%) or gender (3%) in their mobile programmatic ads. Source: 1NinthDecimal

15 Programmatic Spending to Double Over Two Years Forty-one percent of marketers agree mobile programmatic will help them reach target audiences. In fact, mobile programmatic was cited as the number one area of opportunity, ahead of mobile video. According to the IAB, however, only a small percentage buy mobile inventory programmatically today: 18 percent on private exchanges and 17 percent on open exchanges. The two main methods of programmatic buying are real-time bidding (RTB) and programmatic direct. The auction-based approach of RTB is very dominant, accounting for over $9 billion of the $10 billion spent on programmatic in This trend is expected to change on mobile, with programmatic direct expected to reach 42 percent or 8.57 billion in 2016 (compared to only 8 percent last year). In 2016, programmatic spending will reach $20 billion, double what it was two years prior. US Programmatic Digital Display Ad Spending by Device, Billions, % change and % of total programmatic digital display ad spending Desktop/laptop % change % of total programmatic digital display ad spending Mobile % change % of total programmatic digital display ad spending $2.92 $5.62 $6.52 $ % 15.9% -3.9% 68.7% 55.9% 43.8% 30.7% $1.33 $4.44 $8.36 $ % 88.4% 69.2% 31.3% 44.1% 56.2% 69.3% *ad spending on tablets is included. Note: Digital display ads transacted via an API, including everything from publisher-erected APIs to more standardized RTB technology Source: 1 emarketer, Oct

16 Optimized Creatives, Could Reach 400 Permutations The Evolution of Ad Creatives With the rise of ad blocking, the demise of the desktop banner, and the growth of mobile video, all eyes will be on mobile creatives in Once programmatic data is mastered, it will be used to inform the proper execution of real-time ad creatives. Examples of core signals for contextualized messaging are platform, device type, time, location, weather and publisher. If the core signals do not meet certain conditions based on the advertiser s desired outcome, then the default ad type is shown. When used with accurate segments, some have experienced outstanding results from optimized creative, reporting high click-through rates. From a technology standpoint, the ad is broken apart into individual segments. Each dynamic element can be tailored with one of the signals passed by the DSP through a query string. Some predictions say we will see up to 400 permutations of an ad for very narrow targeting. 14

17 IoT to Reach 20.8 Billion Connections by 2020 The Internet of Things (IoT) proposes new ways to track and analyze data unlike anything we ve seen before. The IoT movement will be transformative with predictions by Gartner analysts forecasting 6.4 billion connected things worldwide in 2016, up 30 percentt from 2015, with this number reaching 20.8 billion by And there is plenty of spending along with these connections. Estimates of total services spending is at $235 billion in 2016, up from 22 percent from Meanwhile, IDC estimates that global spending on IoT devices and services will rise to $1.7 trillion, commanding quite a bit of attention from investors and stock analysts. Machine-to-machine (M2M) connections including home and office security automation, smart metering and utilities, automotive, health care and consumer electronics to name a few, are used across multiple industries including consumer segments. The connections, which Cisco places at 3.1 billion by 2020 with a growth rate of 38% CAGR, are experiencing a similar evolution as mobile from 2G to 4G technologies. Leading the way, China is betting heavily on the IoT by committing to spend $603 billion for M2M connections prior to According to a report by GSMA, China has 27 percent of M2M connections, Europe with 29 percent and the USA with 19 percent. General Electric estimates the Industrial Internet market, which refers to connected machinery, will add $10 to $15 trillion to global GDP over the next 20 years. By comparison, the GDP of China is just over $10 trillion while the U.S. GDP is at $17 trillion. 15

18 Wearables to Grow Five-Fold, Plus Smart Home and Smart Autos Wearables are an important contributor to the IoT/IoE (Internet of Everything) movement adding 601 million IoT devices by 2020, growing five-fold from 97 million in 2015 at a CAGR of 44 percent. These devices, which include smart watches, smart glasses, heads-up displays, health and fitness trackers, etc. have been fueled by the compression of computing, making these devices light enough to be worn. They ve also benefited from advancements in location and augmented reality. Notable is the current $79 billion smart-home industry, also contributing to the aforementioned growth, as well as the automotive industry where 90 percent of cars are expected to be online by 2020 compared to just 2 percent in With the IoT, perhaps more than any other sector, there are heightened privacy concerns with 69 percent of the U.S. consumers believing they should own personal data on all Internet-connected devices they own. 16

19 Conclusion We are pleased to be an industry leader in data platforms combining the need for scale with data automation and advertising. We work with enterprise companies, data partners, telecom operators, and supply and demand partners to deliver first party data which is consumable, and easy to interpret, at scale. Media Contact Beth Kindig (415) was an exponential year, surpassing aggressive growth on all fronts of data usage. This was primarily fueled by mobile, especially consumer apps, plus device trends and the Internet of Things. With this level of growth, a data platform is essential for your company to succeed. If you would like to learn more, please contact us: team@personagraph.com Personagraph USA Headquarters 920 Stewart Drive, Suite 100, Sunnyvale, CA (408) info@personagraph.com support@personagraph.com sales@personagraph.com