educational

On Mobile: Emerging Markets

Christian Kruel

In my last article I wrote about “The Mobile Business in Europe.” Today I’d like to provide you with some facts about Emerging Markets and why you shouldn’t ignore them for your mobile strategy.

Asia, Africa, Eastern Europe and South America are massive markets and offer a huge potential for the global economy in the future. For the mobile business these markets are already today very important.

Mobile payments are very popular in these countries due to the lack of bank accounts and credit/debit cards.

Due to facts such as the size of a country, the disposable income demographics and several other aspects, these countries have a very low PC penetration compared to welldeveloped countries. First of all, these countries don’t have a good broadband or landline infrastructure. Their territories are too large, so it would be very expensive for companies to establish a good cable infrastructure for Internet and telephone. Further, these companies have to generate profit, and the question remains as to whether people in these regions would use an Internet or telephone connection. From the providers’ perspective there is great potential financial risk involved in investing in and building this infrastructure.

Accepting the premise that the cable infrastructure would be too expensive to create, we have to consider that Personal Computers are also a very expensive component, and most people in these regions could not afford a PC either. There were a lot of initiatives to provide laptops to socio-economically challenged populations around the world —the $100 laptop was one of them.

More interesting is the fact that we have today a bit more than 1 billion PCs worldwide, compared to over 5 billion mobile subscribers —and that ratio is growing every day! Lastly, it means that people in emerging markets are able to afford a mobile phone.

It is certainly easier and cheaper to establish a wireless infrastructure compared to a cable infrastructure.

The logical consequence of all this is that the majority of the world’s population is accessing the World Wide Web from a mobile device and not from a PC. In the very early days of the mobile Internet, traffic from countries including India, Indonesia and South Africa was the highest.

One of the reasons was that the carriers there were not charging the users for browsing the web. Of course these numbers are changing dramatically as Smartphones and cheap data tariff plans are becoming more and more popular in industrial countries. However, the traffic from emerging markets is still huge!

The question is always, how can this traffic be monetized?

There are four aspects you must consider before you can start earning money in these regions.

1. Use mobile billing and forget the credit card.

The majority of people in these markets don’t have a bank account. So they don’t have a credit card either! Further, many credit card companies block these countries due to fraud issues. So, the only chance you have to collect money is to use mobile billing!

Mobile payments are very popular in these countries due to the lack of bank accounts and credit/debit cards. A whole new mobile banking industry arises by reason of the fact mentioned above. During the Mobile World Congress (the largest mobile event in the world) in Barcelona last February a lot of promising companies presented their solutions for mobile banking. From my point of view mobile banking will just be important in markets like these, as all other countries have well established banking infrastructures.

So mobile payment is the only sure way to generate revenue in these emerging markets!

2. Price accordingly.

If you’re in the lucky position that your credit card provider doesn’t block one of these countries and you generate one or two transactions per month - you may ask yourself why this is possible! I would bet your pricing is way too expensive. You can’t offer the same price you would offer in your home market. As mentioned before, the income earnings situation will be very different for these regions, and you’ll want to provide as many people as possible the opportunity to afford your products or service. So price your content accordingly.

A good indicator for conceiving your price points is the local “beer index.” Find out how much a local (not imported) beer costs, and orient and adjust your pricing accordingly.

3. Quantity is what counts.

You’ll be surprised when you’re checking the local “beer-index” that beer might be very cheap for certain countries and people can always afford it. When they can afford local beer, they are also able to consume digital content on mobile phones for the same price.

Once you have the infrastructure (mobile billing) and the right pricing you’ll be surprised how your transactions will increase. A factor of 20-50 is easily possible. And now imagine how many transactions you could do in countries like India or Indonesia with a very large population!

4. Forget smartphones for now.

People are not able to purchase computers, as they are too expensive. They also cannot afford mobile content when it is overpriced.

So, do you really think really they’re able to purchase Smartphones? I don’t think so. Nokia is still the largest handset manufacturer in the world, especially within the low-cost segment. You should ensure to support a wide range of non-Smartphones to monetize this traffic.

SexGoesMobile can help you to monetize this traffic, as we support 8,000-plus handsets and provide mobile billing in 50-plus countries. For further information about non-Smartphones and mobile billing you should check my recent articles where I provide more information on targeting users across the handset spectrum.

I hope you’ve enjoyed my first article series covering the mobile adult business, and that you’ve learned something useful as you read. I know there are a lot more topics to cover, and if you have something you’d like me to investigate, please send me any questions, feedback or ideas for other articles. Don’t hesitate to contact me via ck@sexgoesmobile.com or my XBIZ.net profile http://www.xbiz.net/SGMChris.

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