The Emerging Opportunity

Emerging markets have experienced strong economic growth in the recent past, and four of the top five mobile markets are emerging markets, with China in first place, India second, Russia in fourth, and Brazil in fifth. The US is the only developed market to sneak into the top five, at number three.

According to Anatel, the Brazilian regulatory agency that oversees wireless carriers, in Latin America, Brazil leads the way in terms of mobile penetration on 92 per cent, followed by Columbia (88 per cent); Chile (75 per cent); Argentina (72 per cent); and Mexiso (63 per cent).

By the end of 2010, Brazil had 202m mobile phones. Of those, 14.6m were 3G-enabled. Anatel estimates that by the end of 2011, there will 35.2m 3G phones (a 140 per cent increase over the previous year).

One particular aspect of the Brazilian mobile market is that 80 per cent of the phones there are pre-paid. That, however, does not stop the growth of smartphones and mobile internet access. Carriers offer a variety of flexible and affordable data plans for pre-paid phones.

Credit Suisse’s report, Convergence 2010: The Wireless Web World, estimates that in the period 2009-2015, the number of smartphones in Latin America will have increased by more than five fold.

Mobile advertising growth
Double digit growth is expected in all areas of the mobile industry, not only in device sales. Several industry sources in Brazil indicate that in 2010, the monthly average mobile page views reached 250m. By early 2011, the number had doubled to an average of roughly 500m page views per month from mobile devices. Figures should be significantly higher by year’s end.

Until early 2010, the Brazilian mobile market hardware mix was mainly made up of low-end devices with limited resources. The iPhone’s arrival, and the rapid growth of Android-based device sales, has opened up a new stage for mobile marketing in the country. Opportunities abound for marketers, brands and app developers: in 2010, smartphone sales grew 279 per cent compared to 2009 according to a Nielsen survey.

HSBC, Procter & Gamble, Coca-Cola and Mitsubshi are just some of the advertisers who incorporated mobile advertising in their media mix in 2010. And they all have plans to expand their investments. The arrival of the latest handsets will improve access and services. Manufacturers are improving technology, and operators are making data plans more affordable. With increasing demand, the supply of phones and data plans will be improved.

Internet access via 3G modems and 3G smartphones is also on the rise. According to a survey of Telebrasil (the Brazilian Association of Telecommunications), internet connections from mobile devices grew 77.7 per cent in the first quarter of 2011, jumping from 13.7m to 24.4m users.

This market evolution is driving mobile marketing investments. In 2010, Brazil’s largest retail chain, the Pão de Açúcar Group, launched the application Pão de Açúcar Delivery Mobile application for Android, Blackberry, Windows Mobile and iOS devices. With the app, consumers can shop for groceries, schedule a delivery time, and pay using a credit card. The solution was created by MobMidia, a PontoMobi group company. “The mobile market is booming. Brands and advertising agencies know they cannot ignore it” says Leonardo Xavier, director of PontoMobi.

Consumers now have an array of choices they would not have imagined just a year ago. “With the increasing number of smartphones, and improvement in the quality of apps available in the Brazilian market, the user experience has improved significantly. People now have the habit of buying apps” says José Renato Mannis, founding partner of Mobint.

Alexander Momma from TNS Research says: “Even though technology is essential, in order to stand out from the crowd, brands must continue to improve the creative quality of their advertising and content. Yes, there is a heavy reliance on technology, but what is truly important is that companies need to find the best creative way to communicate with their audience via mobile devices.”

The new emerging consumer
As a result of the economic growth in emerging markets, hundreds of millions of consumers have now joined the ranks of the middle class, and they are in the market for a smartphone, many of them for the first time in their lives.

The research institute Ibope revealed that at the end of 2010 Brazil had 73.7m internet users, and for a significant portion of those users, the mobile phone is the most important, and perhaps only, gateway to internet access. 

Of those 73m, 20m are online shoppers, a 40 per cent growth over the previous year. In the first 2 quarters of 2010, B2C ecommerce revenue in Brazil was $4bn (£2.4bn). While still relatively small, eCommerce in Brazil is also seeing double digit growth year over year.

A breakdown of how Brazilians spend their time while online using their mobiles, shows that most of the time is spent on social media platforms, followed by email, search and news. All this growth is reflected in marketing investments: according to eMarketer, in 2011 mobile ad spending in Brazil will reach $175m.

The tablet revolution
Brazilian President Ms. Dilma Rouseef visited China this past April. Among the many cooperation agreements and investment deals was Foxconn’s announcement that it would start manufacturing the Apple iPad in Brazil by Q3, 2011.

As part of the deal with Foxconn, the Brazilian government agreed to lower taxes levied on all tablets manufactured in the country. This will make the Apple iPad more affordable in Brazil by the end of 2011, in time for the holyday sales (an iPad in Brazil is twice as expensive than in the US). By law, the lower taxes must be extended to all tablet manufacturers, making the iPad’s competitors more affordable as well. Several companies have already announced Android tablets available in Brazil in Q3 for less than half the price of an iPad.

Added to this is the fact that Brazil tends to have flexible and relatively affordable 3G options available to consumers. This will allow people to completely bypass the desktop and the notebook. For many Brazilians, their first ‘computer’ will be a 3G tablet, and for the first time, they will have constant, on-demand access to the internet. This is a huge opportunity for advertisers and media companies. They will be able to tap into an enormous mass market that, until recently, could only be reached via TV.

Media concentration is severe in many emerging markets, with a few TV channels, magazines and newspapers dominating 90 per cent of the viewership. Now these players will have a formidable opponent in the tablet, when the middle and lower-middle classes switch from the TV to the small screen of the tablet, with its ease of use, apps universe and free content.

Edvaldo Acir is regional business development manager at Terra Networks. Andre Bodowski is a Brazilian-American online and mobile marketing consultant