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Map the Mobile Opportunity For many people in the world today, a mobile device will provide their fi rst digital experience. For them, their mobile device is the Web. By eMarketer estimates, 3.9 billion—yes, billion—people will own a mobile phone in 1 ■ 2012, so the mobile opportunity is clearly MAP THE MOBILE OPPORTUNITY signifi cant. The best way to get started in mobile marketing is by understanding the current landscape, which dictates whom you can reach now and how to do so effectively. In this chapter, we’ll walk you through the key market data and landscape insights you’ll need to understand in order to successfully capitalize 1 on this mobile opportunity. COPYRIGHTEDChapter Contents MATERIAL Market size and growth potential The global rise of smart devices Key mobile activities How mobile is changing the face of … everything Market Size and Growth Potential When leaving the house, most of us carry a few basic essentials: wallet, keys, and a mobile phone. In time, as the mobile phone becomes more sophisticated and enables you to unlock your home and car and pay for essentials through the magic of near-fi eld communications (NFC), it may end up being the only thing you need when you leave the house. Before long, average consumers will be connected 24/7, sending and receiving a constant stream of data from all the objects that surround them, from sales tags in stores to the refrigerators in their kitchens. The future this heralds is the “internet of things,” or as The Economistt termed it in an article, “the internet of everything” (December 9, 2010). For now, mobile phones are the one connected device most people carry with them at all times, which makes them both highly personal and ubiquitous. Being more connected has changed the ways consumers use their mobile devices. 2 The fact that mobile phones can make calls is increasingly less relevant. Instead, con- u TY sumers now expect to network, share experiences, browse, and shop via a wide range NI of platforms, from smartphones to tablets to new and increasingly complex-connected TU R O devices of all kinds. From home appliances to utility meters to Internet-enabled cars, PP O the growing proliferation—and sophistication—of smart devices that can communicate BILE with each other (commonly referred to as machine-to-machine or M2M communica- O tions) will only accelerate this trend. HE M HE T P As mobile phones have become more universal, their appeal as a marketing A M : vehicle has grown commensurately. Simply put: if your audience is mobile (and we 1 guarantee you that it is), your marketing has to be, too. Yet it is a diverse audience, and we’ve found that that diversity—often referred to as fragmentation—is the number-one HAPTER C reason that most marketers have shied away from using mobile. So, helping you make sense of the mobile user base is our fi rst goal. In this chapter, we’ll share our own expertise as well as what we learned from talking with the following experts: x Joy Liuzzo, former vice president of mobile at market research and data analytics provider InsightExpress (www.insightexpress.com) x Greg Sterling, founding principal of Sterling Market Intelligence and contrib- uting editor for the online publication Search Engine Landd (www.searchen gineland.com) You’ll hear from Joy and Greg throughout this chapter. The easiest way to make sense of the mobile user base is to illustrate the landscape in relation to ownership of the key device type (smartphones) and the key activity (mobile web usage) as we’ve done in the pyramid in Figure 1.1. At the base are all mobile users, which includes anyone who owns any kind of mobile phone. Mobile Web Users Smartphone Users All Mobile Users Figure 1.1 Mobile usage can be viewed as a pyramid. You will often hear older or less-sophisticated mobile devices referred to as feature phones, although the defi nition of a feature phone is somewhat loose. It’s generally 3 u accepted that the feature phone category includes everything from early devices that MARKET SIZE AND GROWTH POTENTIAL were capable of nothing but voice and text all the way up to today’s more advanced models that support primitive mobile applications and rudimentary browsers; some, including the so-called quick-messaging phones, even have full QWERTY keyboards and touchscreen displays. The smartphone category is also diverse, including earlier devices with full browsers but no touchscreen or rich-media capabilities, as well as the more recent (and more sophisticated) multitouch handsets on the market, exemplifi ed by the iPhone. Although some feature phones are equipped with browsers and some feature phone owners do surf the Web, their numbers are dwindling, and with the current rate of handset replacement and the falling cost of smartphones, less-sophisticated devices are fast becoming a thing of the past in developed markets. Feature phones will not disappear overnight, of course, particularly in developing economies. According to eMarketer projections, the share of the U.S. market will be cut in half between 2012 and 2016, falling from 52 percent to 26 percent of the mobile user base. Alll smartphones are capable of accessing the mobile web, and most (but not all) smartphone users do so. This makes smartphone users a subset of all mobile users, and mobile web users are a further subset. And while not all mobile web users own smartphones, in the most-developed markets like the United States and Western Europe, where a signifi cant portion of the user population owns a smartphone, most mobile web users own smartphones. Let’s start with the base of the pyramid. As you might expect, the user demo- graphics of mobile are eye-popping: according to eMarketer, 3.9 billion—well over half the world’s population—will own a mobile phone in 2012. But it’s worth noting that these users are far from evenly distributed. As listed in Table 1.1, over half can be found in the Asia-Pacifi c region, nearly one-third in EMEA (Europe, Middle East, and Africa) and the remainder in the Americas. The fi ve largest single markets from a mobile-user perspective are, in descending order, China, India, the United States, Brazil, and Russia. I Table 1.1 Asia-Pacifi c is home to more than half of the world’s mobile users. (2012) Region Users (Millions) Asia-Pacifi c 2,152.5 Europe 640.3 Middle East and Africa 484.9 Latin America 389.9 North America 265.6 Worldwide 3,933.3 Source: eMarketer, April 2012 4 u Y NIT U RT Big Numbers: Subscribers versus Users O PP O Any data related to mobile is inevitably going to lead to some big numbers, so when BILE O you’re looking at mobile population bases, it’s important to distinguish in particular between mobile subscribers and mobile users. The two terms are sometimes used interchangeably, but they actually represent diff erent groups. MAP THE M : 1 The number of mobile subscribers is the number of active mobile subscriptions, and that tends to be the bigger number simply because a single person can have more than one HAPTER phone (one for home and one for work, for example), meaning that one person gets C counted as two subscribers. This explains why mobile subscriber penetration in many countries can exceed 100 percent, even when it is obvious that not every person has a mobile subscription. Mobile users, on the other hand, signify one user/one phone. As a result, the number of mobile users tends to be signifi cantly smaller—and a generally more accurate measure of mobile penetration—than that of mobile subscribers or subscriptions. The size of the mobile user population is important, but you need to look past sheer numbers and consider the percentage of the total population that owns a mobile phone. That is a key metric for assessing a market’s overall development. See Table 1.2 for a quick reference guide to mobile user penetration rates. They are in the 75 to 85 percent range in North America, across much of Western Europe, and in Japan and South Korea, making these markets the world’s most developed. I Table 1.2 Mobile user penetration varies widely by region and country (2012). Country or Region Mobile User Penetration South Korea 85.0% Japan 84.0% United Kingdom 82.8% Germany 80.7% Western Europe 79.6% Australia 79.5% Italy 79.0% Argentina 79.0% Spain 77.9% United States 76.8% France 76.5% 5 North America 75.8% u MARKET SIZE AND GROWTH POTENTIAL Russia 74.0% Eastern Europe 73.2% Canada 66.6% China 65.5% Latin America 65.1% Indonesia 60.0% Brazil 58.0% Worldwide 56.0% Asia-Pacifi c 55.1% Mexico 55.0% Middle East/Africa 36.5% Source: eMarketer, April 2012 High penetration rates also indicate that these markets have either reached or are approaching saturation, so growth in new users has slowed to a trickle. The real action in these countries is coming from users upgrading their devices and engaging in higher-value activities. We’ll get to that in a bit. Of course, the sheer scale of China and India’s populations make for massive mobile user bases. See Figure 1.2 for details. China’s estimated 880.4 million mobile users exceed the total populations of the United States and Western Europe combined! India is not far behind, and other populous Asia-Pacifi c countries like Indonesia, Pakistan, and the Philippines also boast sizable and growing mobile user populations.

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