The latest drivers of mobile advertising in emerging markets.

Balloons, voice-based apps & smartphones for <$100.
Joseph pulls out his smartphone, an Infinix Hot 2, to check out the recent homework update from his teacher. While seemingly advanced compared to the usual approach to homework, it’s only half the story. Joseph lives in Lagos, Nigeria, and while his smartphone may have a racy name, it’s a product of the Android One program; which aims to provide low-cost smartphones in the developing world. What’s more, the educational app he’s using is from Sterio.me and is specially designed to work without internet access. This is the reality we’re facing in emerging economies around the world, all of which are driving growth in the smartphone market and simultaneously demanding new capabilities from it. But what exactly are the enablers of this mobile growth?
Examples of Android One smartphones
        [Source: technewstoday.com]

Low-cost Smartphones & Improved Connectivity

“Smartphone sales in emerging markets rose to 259.7 million in the third quarter of 2015 — an 18.4 percent growth over the third quarter of 2014 — while sales in mature markets saw growth of just 8.2 percent over the same period.” ~Anshul Gupta, research director at Gartner.

It’s no secret that emerging markets are the promised land for smartphone sales, particularly ones that are designed to be in reach of low-income consumers. Google’s Android One is a prime example of this, centred around creating low-cost smartphones with simple software and none of the usual knick-knacks that equate to higher prices. The initiative boasts a target price of $100 or less which, in 2014, resulted in low-cost models hitting the shelves firstly in India, and a year later across South-East Asian and further afield in Pakistan, Turkey, and numerous African nations.

“But a cheap phone is just half the answer. The key in all this is making sure our data charges are affordable too. A smartphone without data is like a car without an engine.”
~Mario Zanotti of Millicom International Cellular SA, which operates in Africa and Latin America.

Here Zanotti highlights the critical interdependence of connectivity and cost. In a study of 8,000 people from both developed and emerging markets, an overwhelming 70% of the latter group stated that high prices are the principal reason for limiting their use of mobile data, followed by network speed and network quality.

So how do we overcome this?

While the monopolisation of local data providers is decidedly responsible for these issues, soon they won’t be the only players in the field. For instance, one of Google’s ventures, Loon, is currently testing balloons that utilise a wireless communications technology (called LTE) to provide connectivity to a ground area approximately 80km in diameter, all while smoothly sailing through the stratosphere.

Both these improvements in connectivity and the emergence of affordable smartphones as a user’s ‘first-screen’, create an enormous demand for apps in emerging markets – so it should come as no surprise that we’re seeing innovators making waves in these fields.

Google's Loon Balloon Flying over alps
    Google’s Loon in action [Source: tested.com]

Targeted App Offerings

Over three-quarters of the world’s illiterate adults, totaling almost 800 million, are found in developing nations in South Asia, West Asia, and sub-Saharan Africa.

How to tackle this issue with technology?

Start by designing a voice-based app. A superb example is the Ghanaian developer that created Voto, a voice-based app used by NGOs to survey rural populations, as well as deliver the government’s messages directly to the people. Apart from increasing efficiency, the new system allowed locals to convey more information than they could through a simple SMS, which was a win for both sides.

Or we could consider Vodafone’s ECOTAB app, developed for tea farmers in Turkey. It uses real-time data to streamline the usual day-long soil audit, resulting in lowers costs. Apart from noting Vodafone’s new approach to philanthropy, mobile tech clearly has a lot of value to offer in the developing world.

One of the key verticals where apps have taken off (and possibly surpassed usage in many developed countries) is in the realm of mobile payments. In the past three years there has been a boom in mobile-money initiatives in developing markets; with over a hundred companies attempting to overcome the limitations of banking systems globally. M-Pesa did an exceptional job of creating a mobile money system in Kenya and managed to address the issue of finding “a simple, safe, low-cost way to transfer money”.

Yet despite the level of innovation we’re currently seeing, it’s still a challenge for developers to make money in these economies.

“Emerging markets are very price-sensitive,” ~ Stephen Kennedy of Magpie, an app developer targeting users in China, Mexico and India.

From Brazil to Thailand, a growing number of developers earn a living by placing ads into their app, while continuing to offer it for free to the end-user. Yet how can this revenue stream be maximised? By improving the quality and localisation of ads to suit the local market, a point we’ll delve into next.

Advancing Ad Formats

In Asian-Pacific nations, it’s estimated that 43% of the population will have a smartphone by the end of this year, with that number rising to over 50% by 2019.

And who better to take advantage of this substantial rise than Facebook. To improve the performance of their clients’ ads, they recently launched a pilot program in APAC called Canvas, which showcases full-screen ads within the Facebook app. Plus, to compete with traditional TV placements in nations such as Indonesia and the Philippines, they now provide advertisers with metrics (called target-rating points) that allow them to directly compare the performance of traditional TV ads with video ads on Facebook.Initiatives like this are essential for ensuring ‘old-school’ advertisers can recognise the value of mobile performance-based campaigns.

Ad localisation is another area seeing its fair share of attention. While it’s logical that ads in a local language perform better than a generic English version, at least one study supported this with real data. It showed that 86% of the localised campaign creatives outperformed English campaigns in both click-throughs and conversions. The average rate for conversions was 7.47% in the case of the English ads, and a significantly higher 9.08% for the local ones.

In general, the culprits of unlocalised ad campaigns are larger players such as Candy Crush, which never reached the Top 10 Charts in Russia (a lapse many attributed to a lack of localisation). While paying someone to translate a campaign may cost only five euros on a platform like Fiverr, there are also skilled players such as Universally Apps who support companies with every element of localisation.

The moral of the story? As developing nations gain momentum in the mobile advertising world, the last thing we should do is take an imperialistic approach.

On the whole, emerging markets possess their own unique array of challenges and opportunities. The developments in these nations will often shape advertising in the developed world, a process coined reverse innovation by General Electric’s CEO Jeffrey Immelt. Yet by keeping our finger on the pulse, we can only hope to support these app developers in improving their mobile offerings and perhaps even bring some of their unique ideas into play in developed nations.

Note: This IconPeak article first appeared on Medium.

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