Becoming More Socially Networked in Emerging Markets

I still remember sitting on my grandfather’s lap when I was a little girl, carefully listening to his fascinating stories from his childhood back in Poland. “You know, we didn’t have TV sets, CDs or even radios at home growing up. We would go to the house of the richest man in town, and he would put his radio outside the balcony, so we could listen…”

Amazing, I thought, there’s life without Mickey Mouse on TV!

He added: “I had the fortune to have witnessed many of the most incredible developments in human history. Plenty has happened during my lifetime.” My grandfather was right. He has since passed away, but I know he’d be stunned by the speed of change these days, which no longer takes place in a matter of decades, but years, months, or… even days?

Now, there’s the Internet, smartphones and social media. These three elements will soon unleash the next wave of fundamental change. And perhaps because of my Latin American upbringing, I strongly believe that in an increasingly globalized society, technology is not about who invented it first, but who uses it best or puts it to good use.

The New Wealthy Majority Can Be Anywhere and Can Happen Anytime
By 2012, there will be 4.275 billion mobile phone subscribers worldwide, out of which 1.228 billion will be mobile Internet users and 803 million will be participating in social networks via their mobile phones, which represents one out of every five mobile phone subscribers (eMarketer). The global mobile social networking user population could rise to as much as 873.1 million or 22 percent of the total mobile subscriber base, in the high-growth scenario outlined by Informa.

Most of the increase will come from Brazil, China, India and Russia (BRICs), which collectively will have 2.577 billion mobile phone subscribers by 2014 (Source: eMarketer). What this means is that the majority of the world’s mobile users and the fastest growing one are in emerging markets. But we’ve covered that in previous columns.

The new focus I’d like to introduce is that the largest interest for data services over mobile handsets will come from emerging markets too, and not just communications, but banking, entertainment, commerce and more. They may consume (or want to consume) more data, but as much as these markets are evolving quite fast, they still can’t afford advanced products and services at the same level as the U.S. or Western Europe, or so we think.

Let’s try a different perspective. According to a recent paper by Wharton School Publishing, 14 percent of the world’s more than 6 billion people live in countries with a per capita GNP larger than US$10,000. The rest, that is, 86 percent of the global population, is poor. But these markets include entire developed segments within their societies, and there may soon be wealthier people in the 86 percent markets than in the 14 percent markets (the richest man in the world, Carlos Slim, is not in the developed world, but Mexico). For example, “if just a little less than 6 percent of the developing world achieved the $10,000 per capita GNP mark, this would represent a population of more than 350 million, greater than the size of the entire U.S.”

You may think that this will take a while to reflect in the communications industry, but in fact it’s already happening.

Here’s the Secret: Emerging Markets Are Already Far Ahead in Social Media
Emerging markets will have the majority of mobile phones, and they are taking over social media too. In effect, statistics show that consumers in these markets are more likely to write blogs, watch videos on mobile phones, share photos, watch mobile television, contribute to online communities and connect with people on social networks.

For example, according to a recent Twitter report that analyzed its entire usage between mid-October to mid-December 2009 and considering the country of origin, found a surge of usage coming from Brazil and Indonesia, among other emerging markets. At the same time, the number of unique U.S. users was 50.8 percent, a significant drop from the 62.1 percent seen back in June. “This suggests that the use of Twitter outside the U.S. has experienced significant growth over the past six months.”

According to Facebook, the top 30 countries with the highest number of users included many emerging markets showing amazing growth figures in 2009: the Philippines (2,046.8 percent), Brazil (1,052.4 percent), Argentina (227.5 percent), Mexico (351.5 percent), India (403.8 percent), Malaysia (367.5 percent) and Egypt (184.7 percent), among others.

But there are other local social networks in emerging markets that attract users too. For example, QQis China’s largest social network; V Kontakte is the most popular in Russia; Orkut is strong in India and Brazil; Hi5 leads in Peru, Colombia, Ecuador, Mongolia and Romania; Odnoklassniki is strong in some former territories of the Soviet Union; and Maktoob is the most important in the Arab world.

Even within developed markets, the biggest social networking majority has a minority origin. A report published by the Center for Hispanic Marketing Communications at Florida State University last year (The Multicultural World of Social Media Marketing), concluded that “ethnic minorities visit social networking sites more frequently than non-Hispanic Whites.

“Demographically, ethnic minorities are younger than non-Hispanic Whites. It’s no secret that younger people in general are more likely to adopt new technologies, particularly technologies that enable communication and provide social connectivity. This age gap between minorities and non-Hispanics only partially explains the gap in social media involvement” (this same comment is also valid for countries like China or India, where there are younger populations than in developed markets).

The report also examined the usage of social networking sites among those 36 and older, and they found that that “older Hispanics, regardless of language preference are more active especially when compared non-Hispanic Whites within the same age group.”

Why is that?

Culturally, “ethnic minorities tend to be drawn to collectivistic values and often look to one another to help guide decisions and opinions.” In addition, ethnic minorities are typically immigrants or have relatives abroad, so they use social networks to communicate with those who are geographically distant.

The Connected Global Economy is Here 
The increasing significance of mobile social networking will continue to increase over the next three to five years, which will enable the creation of a much larger, distinct industry. But companies interested in tapping this market need to know that what happens in developed markets can’t be carbon copied in emerging markets. There are fundamental differences in terms of consumer expectations and behavioral patterns, and success won’t be achieved by simply offering updated and economical versions of existing products or services.

Here’s what mobile service providers in emerging markets may be thinking about. Mobile social networking represents an incredible chance to drive mobile Internet usage. So, if operators carefully opt for suppliers and pricing strategies that are attractive for consumers, they can see fast take-up, enable sizeable and diversified revenue streams and stop or reduce churn by connecting users to appealing mass-market products and services. Also important is the fact that social networks are significant arsenals of personal information, and that information can be put to good use.

These new type of services will increase the pressure on further investments on technology and infrastructure to sustain the massive amount of new data traffic that will inevitably develop as a result of this new era of mobile social networking services. Hence, becoming leaner and not wasteful has never been more essential. If the optimization of processes and support systems was an important aspect of a mobile service provider’s existence, then this new exceptional pressure will, once and for all, put the back-office up front and center. It will finally become a fundamental differentiator for survival.

By Monica Zlotogorski, Editor of TM Forum’s Inside Latin America and Vice Chair of TM Forum’s Latin America Advisory Board