Mary Meeker, Internet guru and managing partner at Kleiner Perkins, is a master at focusing attention on the most significant trends by pulling together enough of the right data points in an annual sweeping slide show.
This time, Meeker's effort at the recent D10 conference could not be more timely or insightful, underscoring the frantic scramble to monetize rampant mobile adoption and social applications -- even as Facebook and other players seek to build their public value on on-the-go interactivity. The $24 billion in value Facebook (NASDAQ:FB) has lost in the commotion over going public demonstrates the destructive power of uncertainty on innovation's slippery slope.
With just the right selections of charts and graphs, the former Morgan Stanley analyst drives home the point that while we are racing into a mobile world, we are far from cracking the code for making money from mobile social connections.
It raises the sobering question: As mobile adoption reaches global mass penetration, will the biggest and brightest players be ready to leverage what they do to create new revenue streams by learning to think and play by changed rules?
Meeker's state-of-the-state assessment offers no assurances.
Her monetization review is rife with tradeoffs. Global mobile traffic is rapidly growing to 10% of all Internet traffic, and mobile is helping to accelerate digital sales at 8% of all domestic ecommerce. But the way mobile devices and platforms are monetized leans more toward the use of APPS (at 71%) as a shortcut to where consumers want to be and what they want to do, rather than advertising -- only about 29% of all mobile monetization.
Meeker forecasts material upside for mobile ad spending, and a $20 billion-plus opportunity to close the gap domestically between $30 billion in Internet advertising and $1.6 billion in mobile advertising spend. But what new forms of interactive advertising, marketing and commerce will that require? A new Reuters online poll suggests one-third of Facebook users are using the social network less than they did six months ago, partly an adverse response to advertising.
While mobile growth helps to boost clicks on Google, it reduces the cost per click and constrains revenue growth. On Facebook, mobile growth helps to drive users but contains the average revenue growth per user, limiting overall revenue growth. Although Facebook's open graphic has attracted 17 million new users in a single week, and the Apple APP store can drive 46 million downloads per day, there are no clear paths to generating meaningful revenues from mobile social commerce.
Meeker argues that mobile monetization is already ahead of where desktop Internet adoption and ad spending were at the same stage of development. Some ultra-useful APPs have become lucrative "essential utilities." Although 56% of all APPs are paid, the average is only $3.77. Highly engaged consumers and advertisers using social and curation tools on smart phones and tablets are pushing into the next frontier of consumer Internet "white spaces" in vehicles and on televisions.
While we are on the way to "reimagining nearly everything," we are desperate to define and develop the new interactive economy. Meeker takes heart in a visual inventory of profound change in behavior, expectation and values powered by new devices and connectivity.
Her 112-slide presentation highlights 125 years of landline domination ended by mobile phones in 2002; the Encyclopedia Britannica capitulating to the free collaborative Wikipedia; Internet advertising surpassing newspaper ad revenues in 2010; and cloud-driven tablets and smart phones poised to surpass desktop and even notebook computer usage this decade.
Physical photo albums replaced by personalized Facebook picture collages, commercial news reports replaced by citizen reporting in Twitter feeds, pen and notepads replaced by Evernote. Yellow Pages are being replaced by Yelp (NYSE:YELP); cash registers by credit card swipe-touch sign-email receipt tablets, and hardbound books and magazines are morphing to Kindle (NASDAQ:AMZN) and Nook (NYSE:BKS).
New business models are all around. The distribution and monetization of "talent" is epitomized by Glen Beck being booted off Fox News only to show up on GBTV online with lower production costs and 300,000 initial subscribers. Work collaboration is now virtual, supported by cloud-based services such as Skype, Voxer, Salesforce.com (NYSE:CRM) and Yammer. Entire industries are being transformed, from education and communications to retail.
But the revenues and profits generated by these new digital applications and pursuits remain sparse and elusive. The best minds at the largest, most enterprising companies do not appear to know how to mine emerging social mobile commerce dynamics, even though Meeker estimates the addressable market for "re-imagination" is an aggregate $36 trillion-plus market cap of global public companies, from Apple (OTC:APPL), Google (NASDAQ:GOOG), IBM (NYSE:IBM) and Microsoft (NASDAQ:MSFT) to Pfizer (NYSE:PFE), General Electric (NYSE:GE) and Siemens.
Ironside Capital analyst Eric Jackson says within five years, Facebook will be more like Yahoo (NASDAQ:YHOO): a mere shadow of itself due to its inability to evolve and adapt to rapid change. Amazon (AMZN) ultimately will best other interactive darlings of the moment --from Groupon (NYSE:GPN) to Glam -- at their own game.
That could be because the future Meeker envisions requires a radical shift not only in mind-set but in our complete existence and orientation. And that's something individual consumers appear to be better at than companies.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.