Why Meeker sees e-commerce, digital ad revenues slowing down

New data from famed internet analyst Mary Meeker suggests online advertising and e-commerce growth may be slowing, but that doesn’t make these channels any less important for marketers to maximize.

Online Advertising

Although digital ad spend increased 1% over last year, the revenues are slowing down – dropping by 9% between the end of 2018 and the first quarter of 2019, according to the report.

Mary Meeker Internet Trends Report | Source: Company public releases & Morgan Stanley estimates

Google still reigns supreme in terms of ad platform revenue, with Facebook following behind it. However, platforms like Amazon, Twitter, Snap and Pinterest are gaining share, showing an average ad revenue growth rate of 2.6% over the last three years (compared to Google’s 1.4% increase and Facebook’s 1.9% increase).

Programmatic ad buying has seen a 42% increase from 2012, which Meeker says is having a negative impact on ad inventory pricing across the board.

But despite the relative slowdown, Meeker pointed to key factors that will continue propelling ad share forward, including improved targeting capabilities, better creative and machine learning technology.

E-Commerce

Although e-commerce sales now account for 15% of all retail purchases, Meeker reported that the growth rate is slowing down when stacked against previous years. E-commerce as a whole saw revenue growth barely inching up year-over-year, with the first quarter of 2019 showing a 12.4% growth rate – as opposed to the 12.1% growth rate of last year.

Even with the slowdown, e-commerce revenues still exceed brick-and-mortar revenues, which grew only 2% in the first quarter.

Direct -to-consumer brands are capitalizing on rich consumer data with deeper personalization, resulting in more innovative strategies and a higher consumer satisfaction than ever before. But even so, the cost of customer acquisition is climbing to unsustainable levels.

Still crucial, despite slowing down

Despite flattening trends in ad spend and revenue growth, make no mistake: e-commerce (and digital advertising, by extension) will still remain a crucial factor in the marketing mix for online brands. In our connected digital ecosystem, new technologies, innovative media, and the rise in global internet adoption means more fragmentation across the consumer spectrum, which ultimately amounts to less concentrated growth.

Audiences and business goals vary from brand to brand, but e-commerce marketers and advertisers should still be looking at long-term strategies through the lens of the online trends as a whole.