Monday, December 22, 2008

Morgan Stanley's 08 Internet and Economy report (click here)

Mary Meeker, et al, recently published their year-end report for the state of the Internet...and the economy. Over the years, I have looked forward to reviewing the report as the data and perspective have been invaluable. Often, they showed a perspective that was unpopular, and right on. It's a long document and, surprisingly, I have not been able to find any real nuggets of gold that would add to or modify my venture investment thoughts...yet.

For those that want a guide, suggest you jump to:

p24 for a macro guide to US Advertising spending by Medium. Q2 Internet growth slowed to 10%, but was nicely ahead of all other major arenas which dipped into negative territory.

p26 highlights a regression analysis showing the 3x correlation of Ad spending growith to real GDP growth (not a good sign in a recession).

p38-43 is a major theme of the report. Relative to time on site, video and social are way undermonetized. Many slides highlight the value for users, no mention of the value for advertisers (who are the real customers).

p69 shows the growth of advertising inventory, and the slowing CPM's as inventory is greater than supply. They call this a short term issue...until the pace of new inventory slows dramatically, or engagement with viewers rapidly improves, I doubt they are right.

p78 details Mobile Internet growth (smart phones). With 5B page views, it's a dynamic 325+% growth rate! Expecting 3G critical mass in '10 (p81)

p93 presents the global trends for internet usage; 10 largest emerging markets surpass 10 largest developed markets in terms of number of users....not revenue.

p 105 their closing thoughts "Companies with cogent business models that provide
consumer value should survive / thrive – consumers need
value more than they have needed it in a long time"...as do the shareholders for many of these consumer facing companies.

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