Mobile in Emerging Markets 2017: APAC
Stellar APAC mobile growth is reaching for the stars, and it just might get there.
APAC consumers used their mobile devices 31 percent more than any other region to make purchases, while 10 percent of those surveyed indicated they purchased an item daily using a smartphone, according to this report from the Interactive Advertising Bureau (IAB).
In this blog post, we will talk about the astounding growth in the APAC region, where 75% of mobile internet users have made a purchase using a mobile device within the last six months, how mobile users are getting comfortable with making purchases with their mobile devices, and the opportunities that exist for advertisers looking to get a foothold in this region.
Later on, we will talk about how Mobile Network Operators (MNOs) continue to build new infrastructure into rural areas and how that will open up new opportunities for advertisers interested in getting into mobile ads.
In these rural areas, a mobile device is the only means users have of connecting to the internet.
Mobile in APAC 2017
By the end of 2015, 62 percent of the people in APAC subscribed to mobile services, according to this report from Hootsuite and We Are Social. During 2016, APAC mobile traffic totaled 4.12 billion GB — nearly the same level of mobile traffic as the 4.88 billion GB of data from all other global regions combined.
Nicole Liebmann, Head of Mobile, APAC and South Africa for Exponential, says “Advertisers are tapping into that [mobile] offering, as a result we are seeing a lot of advertisers take risks in the market when it comes to mobile, as well as a lot more vendors being introduced to the market as well.”
Ronen Mense agrees, adding “Advertisers are paying attention to the increased preference and demand by consumers to access social networks and regional web portals on their mobile devices. Spending of marketing budgets continues to shift towards mobile-focused social advertising.”
Social media uptake in APAC is high, with 1.5 billion active social media users, 95 percent of them accessing social media through mobile devices.
Roger Graham, Hootsuite’s APAC Director, says “Social media not only enables organizations to amplify [their] brand, but also build trust, credibility, and human relationships at scale.”
Instant messaging platforms such as WeChat are highly popular among APAC mobile users, with a total user base of 3.44 billion at the end of 2015. This translates to messaging as the primary channel for user engagement.
At over 50 percent of total mobile data, video is the second key channel for user engagement.
While YouTube and Facebook have a substantial presence, there are a number of local and regional providers offering video content, with a mix of free, ad supported video, freemium, and paid subscription video services.
Netflix is getting in on the game, although there are multiple local players with a presence in local APAC markets.
Some MNOs are benefitting from the demand for video by offering bundled third-party video content provided by leaders such as Netflix and Hulu, while others are creating their own video content services based on freemium and paid subscription models.
Factors Driving APAC Mobile Market Growth
The mobile ecosystem is made up of infrastructure and support services, MNOs, smartphone manufacturers, distributors and retailers, and mobile-related services, such as content creation and application development.
The combined total of contribution was $1.32 trillion, or about 5.4 percent of APAC GDP.
This contribution is projected to increase to $1.7 trillion by 2020. As household income grows throughout the APAC, more people will seek out and purchase mobile devices.
Infrastructure and Support Services
Mobile network infrastructure expansion generates construction and support jobs as carriers expand into new markets. These markets create unique opportunities for advertisers to engage people who are not only part of a new market, but also new to the mobile experience and the internet in general.
Mobile Network Operators
MNOs provide the networks mobile users rely on for communications, productivity, entertainment, and payments. Innovation in mobile network technology includes the development of 5G, a wireless technology that will have high speed that is aiming for 20gbps, high data capacity, and latency under 1 millisecond.
One of the major advantages of this technology will be to provide secure, high-speed connections on mobile networks with low enough latency to use augmented reality and VR on smartphones. These new channels will provide unique opportunities for advertisers looking to enter into the burgeoning augmented reality and VR spaces.
Smartphone manufacturers are stimulating the economic growth of emerging APAC markets through increasing production at existing locations and building new manufacturing facilities that are strategically placed throughout APAC.
Smartphone manufacturers preload their own apps and services during manufacturing, along with other preloaded apps and services provided by third-party vendors and partnerships, including MNO apps and services. This includes apps for instant messaging, email, productivity, and games.
Advertisers that learn which preloaded apps are the most popular can create campaigns that are deployed across those apps to generate brand interest and cultivate user relationships through targeted ads and content.
Distributors and Retailers
For advertisers, mobile carriers, MNOs, and retail merchants play a key role. They provide consumers the means to purchase access to mobile networks, acquire smartphones, and purchase other items using their phones.
This part of the mobile ecosystem is made up of app developers and mobile content creators.
App developers design and build apps that provide services such as instant messaging, collaborative communication, productivity, and entertainment.
Mobile content creators make the content found inside of these apps and content found on mobile websites.
Advertisers who partner with app developers and content creators will create unique opportunities to deploy carefully crafted campaigns that target users from within the app to cultivate personal relationships with users.
Mobile may be expanding in APAC, but there are still significant challenges that impede growth. These issues break down into two major categories, with the first being focused on the necessary information and skills that people in these areas lack, while the second category has to do with factors that relate directly to digital inclusion in rural areas.
Formal Identification and Illiteracy
People in rural population areas rarely have any kind of formal identification, making it impossible for them to access mobile communications or the internet. MNOs are addressing this particular challenge through requiring new customers to register with them.
New customer names and related personal information are stored in a database. While not a substitute for official identification issued by a government entity, this approach allows new customers to sign up for mobile services, purchase a phone, and gain access to other mobile services.
Digital inclusion is the moniker given to the work underway that ultimately will provide internet access to everyone on the planet.
Key barriers to universal digital inclusion include illiteracy, a lack of digital literacy and skills, lack of network coverage, affordability, and a lack of cultural awareness by the mobile providers.
Advertisers could potentially have a role to play in helping improve literacy and digital competency while learning about local culture in order to help shape content and services to truly serve rural ethnic populations all throughout APAC. These could take the form of literacy and digital competency initiatives that partner with local government to provide educational services that teach these basic skills to local populations.
These initiatives could form the foundation of an effort to learn about local culture, its customs, beliefs, and values while giving something of great value back to the local population. Advertisers taking advantage of this approach would benefit from it by getting a street-level, direct experience of those cultures which would yield a cultural understanding that could be translated into content tailored for each local culture.
The mobile industry will continue to be a significant contributor to the growth of emerging economies in APAC. Based on past performance, it is expected to contribute roughly $400 million, for an estimated total contribution of $1.7 trillion by 2020.
India will likely continue to lead APAC growth, while China’s mobile growth will continue at a much slower pace as it reaches market saturation. Japan’s growth has already slowed for similar reasons.
4G adoption in Thailand, Malaysia, Indonesia, and the Philippines will drive mobile growth as consumers in those countries transition from feature phones to smartphones, opening up opportunities for advertisers to access consumers on devices that deliver a much improved experience when compared with feature phones.
Robust APAC mobile growth will continue as mobile networks expand into populations that currently have no internet access. While this growth has already slowed in China and India, other countries such as Malaysia and Indonesia will see rapid growth.
The digital inclusion imperatives will help to propel mobile expansion forward through policies created by leadership in each APAC country. Mobile carriers and operators will continue to partner with governments to help meet the primary objective of digital inclusion, which is to provide internet access to everyone in the world.
Carriers and mobile operators will seek out partnerships with organizations that are willing to get their hands dirty addressing and overcoming the significant challenges faced in rural areas. Advertisers can seize this opportunity by providing services that teach local populations how to read and use the internet – while learning about the cultures, beliefs, and values of the populations in rural areas.
As carriers build out mobile infrastructure in areas that aren’t currently served, locals will be hired for construction and support positions. This will help boost local, rural economies throughout the APAC region, spurring economic growth and connecting local people to the internet.
Advertisers in APAC that identify and understand the complex mobile usage behaviors and patterns and have the flexibility to adapt will gain the most from taking the risks necessary to enter new markets with diverse cultures and consumer needs.