Digital Super highway: The New Marketing Distruptors

ENGAGING WITH THE NEXT BILLION LEVERAGE THE POWER OF THE MOBILE PHONE IN EMERGING MARKETS Spending on goods and services in emerging markets is increasing by $1.7 trillion every year. Also skyrocketing is advertising spending, as advertisers are eager to reach this fervent consumer base. Most advertising dollars are spent in TV, radio, print, and Internet, despite low digital penetration in emerging markets. Although mobile penetration in some of these emerging countries is over 100 percent, global advertisers have yet to make the connection. Take a look below to better understand why advertisers should explore the mobile marketing opportunity. The Emerging Market Opportunity By conservative estimates, emerging markets are projected to account for two-thirds of the world's output by 2030. The four most populous emerging markets today-China, India, Indonesia, and Brazil-will make up two-fifths of global GDP. 10 GDP PER PERSON 2010, PPP $1,000 GDP Growth 2001-2011, EMERGING WORLD DEVELOPED WORLD % 2011 Forecast <5 5-10 10-16 30-35 35-40 >40 CENTRAL & E. EUROPE 4.7 RUSSIA CANADA BRITAIN 6.8 2.0 1.3 EURO AREA 1.1 CIS 4.3 10.6 1.8 UNITED STATES JAPAN 2.2 8.0 4.9 CHINA MIDDLE EAST & N. AFRICA MEXICO INDIA INDONESIA BRAZIL 5.5 5.8 3.9 SUB-SAHARAN AFRICA LATIN AMERICA & CARIBBEAN 4.6 3.1 AUSTRALIA The Ultimate Buyers The growth of these emerging economies is fueling the expansion of the middle class. The growth of the middle class facilitates increased consumer spend on goods and services. In fact, the rise in consumption is so dramatic that the consumer spend by the middle class is projected to surpass markets' spend in ecoming decades. Growth of Global Middle-Class Consumption 2000-2050 100% Future Forecast 90% - Others 80% - 70% - EU 60% - United States 50% - Japan 40% - 30% Other Asia 20% - India 10% - China 0% I|||||||||| | ||||| | |||||| |||||| ||||| IILL|L|LLLL |||| Globally, the size of the middle class could increase from 1.8 billion people to 3.2 billion by 2020 and to 4.9 billion by 2030. Nearly 85 percent of this growth will come from Asia. Dollars and Sense Global brands are eager to capture a share of this booming middle-class spend. They are investing in traditional and digital media, despite low Internet penetration rates in these emerging markets. Traditional and Internet Advertising $3.2 billion $17.1 billion I Latin America I Middle East & Africa 1 Central & Eastern Europe I Western Europe I Asia Pacific I Australia $18.7 billion $91,2 billion $29.3 billion $149.4 billion $0.5 billion $14.8 billion Internet Advertising $12.2 billion $117.2 billion Traditional Advertising $2.5 billion $27.2 billion $2.4 billion $9.3 billion *Traditional advertising includes direct mail, magazines, newspapers, outdoor, radio, TV, and yellow pages. **Internet advertising includes banner ads, search, rich media, video, classifieds, sponsorships, lead generation and email; excludes mobile ad spending. India China $5.3 billion $20.2 billion China India $35.4 million $223.2 million Traditional Advertising Spend Mobile Advertising Spend *Mobile advertising includes display, search, and messaging-based advertising. The New Medium While digital ad spending is growing faster than any other medium at an average annual rate of 14 percent, Internet penetration in emerging markets remains quite low. Percent of Population with Internet Access United Kingdom 82% United States 78% Colombia 49% C+ Turkey 45% Russia 43% Brazil 38% China 34% Vietnam 30% Egypt 30% Nigeria 29% Mexico 29% South Africa 14% Indonesia In India, 59 percent of mobile web users are mobile-only, meaning they only use their phones to access the web. Mobile-only penetration is 70 percent in Egypt, 57 percent in South Africa, 50 percent in Ghana, and 44 percent in Indonesia. 12% India 8% High-Tech Society Globally, there are over 5.3 billion mobile subscriptions-a penetration rate of 77 percent of the world's population. Of these 5.3 billion, 73 percent, or 3.8 billion, are based in emerging markets. Percent of Mobile Penetration by Country Percentage of Mobile Penetration Russia 164% United Kingdom 130% United States 90% Turkey 84.9% China 67% Egypt 91.32% Mexico India Vietnam 80.55% 70.89% Nigeria 55% 175.3% Colombia Indonesia 93.76% Brazil 91.72% 109.32% South Africa 100.48% Pay to Play In emerging markets, over 80 percent of mobile phone consumers are prepaid users. And mobile phone minutes are not just used for talk time. Mobile airtime has emerged as an incentive to reward consumers in emerging markets for completing surveys or purchasing products. Percentage of Mobiles That Are Prepaid 92% 85% Egypt Colombia 90% 82% Vietnam Brazil 90% 82% Nigeria India 90% 80% Mexico Russia 90% 72% Indonesia Turkey *: 87% 55% China United Kingdom 86% m» 20% South Africa United States In Brazil, where a cellular call can cost $0.77 a minute, 74 percent of mobile users thought positively of receiving advertisements through their devices in exchange e minutes. Catching Up The emerging market advertising landscape is rapidly changing, and advertisers are still figuring out how to deliver relevant, measurable advertising to their "next billion" consumers. Perhaps they should take the cue from one high-growth market: China. In the next four years, China is projected to become a billion dollar mobile advertising market. With mobile users welcoming relevant advertisements in exchange for free airtime, and as ad dollars shift from mass billboards into the wallets of consumers, both parties may end up winning. J A NA SOURCES: THE ECONOMIST, OECD, EMARKETER, INTERNET WORLD STATS, ITU, ACISION 0007 2003 2006 6007 2012 2015 2018 2021 2024 2027 2030 2033 2036 2039 -