Mobile advertising has long been the goose that lay the golden eggs. However, the market is fast becoming crowded – at least in the Western world. With mobile penetration nearing 80% in the US, according to comScore, it’s a good idea to take a closer look at emerging markets.
Among the four largest emerging markets are BRIC countries (Brazil, Russia, India and China), followed by South Korea, Mexico, Indonesia, Turkey and Saudi Arabia. According to MRII, smartphone penetration has skyrocketed in Brazil, India and China over the last four years. Vietnam, Indonesia, Nigeria and Mexico are also notable markets.
Smartphone penetration by country
However, slow networks and pricey mobile internet plans are halting some of the growth. Many phones used in emerging markets are still feature phones.
According to eMarketer, the number of smartphone users in APAC is climbing steadily. In Indonesia, for example, the expansion of smartphones is being driven by a government roll-out of broadband services across over 500 municipals and regions until 2019. The project will see 11,000km of fiber optic cables being placed.
Smartphone users in APAC
Global smartphone usage is forecast to reach 69% in Russia by 2018 and 52% in China. But it’s Indonesia and India, alongside other APAC countries that could drive some of the fastest growth pending available technologies.
Global smartphone usage
Pew Research has also highlighted the countries with the highest internet usage (including smartphone access). Evidently, BRIC countries feature high on the list.
BRIC regions and APAC with higher or emerging internet usage
In countries with a higher smartphone and internet usage brands and marketers have been jumping at the opportunity to unleash their mobile campaigns. Ad spend on mobile devices in China is predicted to near US levels by 2018 at over $40bn. Brazil is set to more than double its ad spend from $1bn this year to $2.6bn by 2018. Likewise, Mexico is forecast to double ad spending. In India spending is going to triple. Indonesia will see some of the strongest growth, jumping from $323m in 2016 to over $1.4bn within just two years.
Mobile internet ad spending to grow fastest in Indonesia
Indeed, ZenithOptimedia confirms the significant growth in mobile ad spending in what it calls Fast-track Asia (China, India, Indonesia, Malaysia, Pakistan, Philippines, Taiwan, Thailand and Vietnam). Though China is driving much of the growth here, other regions are catching up fast and Fast-track Asia is expected to grow 8.9% in 2016 at an average rate of 8.5% between 2015 and 2018.
Fast-track Asia ad spend growing rapidly
So where should advertisers and mobile marketers invest? Ernst & Young highlighted that BRIC countries offer the greatest opportunity and scale. However, challenges and risks posed by fragile economies and political instability, but also measurement and targeting options do persist. Meanwhile, Indonesia, Mexico and Saudi Arabia as well as Argentina feature among the long-term options. These may lack scale for now, but could become attractive options for advertisers fast and shouldn’t be overlooked.
Market benefits vs. market costs
Speaking about the challenges the Brazilian ad market faces, Ana Nubié, Chief Strategy Officer at Moma Propaganda told eMarketer:
“The most decisive variables are the consumers’ age and the type of product. The internet is still seen as something related to the younger audience, and when that’s the case there is a relevant investment in digital, with large migration to mobile as opposed to desktop. If the target is a consumer over 45 years old, the digital ad spending drops dramatically, to about 10% of total ad spending. [Of course], pure ecommerce companies invest most of their ad budgets in digital.”
She adds that many marketers are still in doubt whether digital can be effective compared to TV or radio media. Years of experience in traditional media is still making it difficult to make marketers trust in digital. She adds:
“The great opportunity is the smartphone, because it is in everyone’s hands. Another opportunity is to invest in geolocation, offering the right product to the right person in the right place. A third thing is using third-party or customer data for media optimization results.”
Similarly, whilst TV advertising still holds the largest share of the Indonesian advertising market, a survey by TubeMogul found that video adverts in the country grew by over 600% – faster than any other Southeast Asian country.
In order to overcome some of the challenges such as expensive network rates in emerging markets, start-ups such as Jana are popping up to revolutionise the relationship between internet users and brand advertisers.
Jana has created an Android app called mCent which can be integrated with billing back-ends of mobile carriers. Brands and developers can then make their apps available through mCent and when users download them they receive free data in return. mCent has over 30m users so far and works with brands including Amazon, Flipkart, WeChat and Google.
mCent users can also share their data with other users
How can advertisers access the opportunity emerging markets present?
- Know your mobile infrastructure. Whilst mobile penetration may be high in some emerging markets, that doesn’t necessarily translate into greater reach for marketers. Bear in mind that many connections are still going through WiFi and feature phones are still widely used. SMS, MMS, voice ads and coupon marketing options should not be overlooked and can be valuable tools in reaching consumers in markets such as Indonesia where they are widely employed.
- Tracking may be a problem. Depending on where you want to advertise, independent tags may potentially fail to implement as they are not yet supported by all local platforms. It helps to adjust expectations and rely on platform reports instead.
- Local laws and customs. If you want your mobile campaigns to succeed, make sure you know local regulations and customs. Indeed, a study by Forbes found that 63% of non-Chinese marketers believed they need to change their brand attributes to cater for Chinese consumers. 27% said that regulation within the country is making it harder to invest in marketing there.
- Find local support. A digital lead from an Indian marketing agency can pave the way for your campaign. It pays to let someone who knows the market inside out work for you.
Key barriers for entry to Chinese ad market
Emerging markets present unique opportunities, but also unforeseen challenges. Marketers can work to overcome these by planning their campaigns well and using more innovative solutions. Combining digital channels with traditional advertising options can pay off. Given the huge potential of the market in these countries, a small share of the market can lead to some good results.