With 3 billion-plus active subscriptions in Asia, mobile’s massive reach is attracting plenty of interest from investors and entrepreneurs.
This headline-grabbing number however spans two quite different worlds: a relatively affluent domain of feature-rich smartphones, with access to a diverse spread of content and services, plus a much larger mass market, made up of more limited feature phones and basic phones used by most people living in South and Southeast Asia.
Navigating between the two can be hazardous.
Singapore-based mobile startup Bubbly – a voice-based Twitter style microblog which counts India, Indonesia, Thailand, the Philippines and Japan as its top five markets – makes around US$1.25 on average from feature phone owners, compared with just 2 cents from people with smartphones.
“While there is a much higher ability to pay, there is a much higher unwillingness to pay on the other hand,” Thomas Clayton, the company’s founder and CEO, ruefully remarked at this year’s Social Media Matters, held earlier this month in Hong Kong.
While feature phones offer less functionality, the environment tends to be more tightly controlled by operators, helping keep disruptive services at bay.
Smartphones are more open, though this turns them into fiercely competitive free-for-alls where consumers are spoilt for choice.
Either way, mobile startups will need plenty of patience and money if they want to succeed in Asia.
Multi-market monetization models are especially tricky to pin down, Clayton warned.
China, India and Japan each exert a mighty gravitational pull, fostering the growth of distinct, insular mobile ecosystems due to their sheer scale.
By contrast, mobile marketplaces in most other Asian countries – with the possible exception of Korea and Indonesia – are relatively small and immature.
“Trying to do a scalable model with the right level of localization is a very difficult balance,” Clayton observed.
Low credit card penetration, combined with the lack of alternative payment systems, also makes direct to consumer models tough to implement in large growth markets.
At the same time, mobile ad budgets across the region are usually too small to sustain ad-based businesses, particularly with Google vacuuming up around half of mobile spend in the region, encouraging firms to explore other ways to make money from this increasingly ubiquitous device.
Perhaps the most successful mobile startups so far are homegrown and fast evolving instant messaging apps, such as WeChat from China, Kakao from Korea and Line from Japan.
Currently, they are spending hundreds of millions of dollars in marketing blitzes to win over consumers in Southeast Asia.
These aspiring mobile platforms are experimenting with a variety of different ways to monetize their vast user bases, from paid accounts for brands and celebrities to selling virtual items to mobile users.
Their business models are showing promise back home, but the companies will have to strike deals with gatekeeper network operators if they want to tap consumer wallets in new markets such as Thailand or Indonesia.
“Once they draw the lines to carrier billing, the model they’re using will be quite effective in Southeast Asia as well,” Clayton predicted.
However, there are other ways to monetize marketer interest in the mass connectivity mobile phones provide, suggested Nathan Eagle, speaking on the same panel at this year’s Social Media Matters.
Eagle is co-founder and CEO of Jana, a company that surveys emerging consumers via their mobile phones in exchange for free airtime, focusing on growth markets where there is little conventional research.
Insights into the emerging middle class could prove more valuable to marketers than just using mobile for advertising.
“When we talk to the big brands, that last person we want to talk to is the individual who controls the mobile advertising budget,” Eagle said.
“That budget is peanuts. We’re going after the billboard budget, and radio and television.”
Jana has built up a promising footprint, tying up with more than 200 mobile operators around the world and working with some of the world’s biggest advertisers such as Nestlé, P&G and Unilever.
Once again however, mobile monetization is not for the faint of heart.
“It’s really, really hard – far harder than I thought it would be when we started this thing,” Eagle observed.
“Campaigns we’re running in the Philippines look radically different to campaigns we’re running Pakistan. The thing that really resonates with a consumer in Vietnam won’t resonate with a Nigerian.”
Creativity and execution
Ideas transplanted from Western markets often fail because marketers and entrepreneurs have little understanding of mobile lifestyles beyond their own experience, proposed Esther Dyson, chairman of investment boutique EDVentures and an investor in Jana, speaking alongside Eagle and Clayton.
“The role of mobile is different here," she said. "In the West, it’s a toy, a plaything, a supplement to the computer or something you already have.
“Here, in many cases, it’s capital equipment, it’s how you earn your living… It’s a much more important part of your life, and it represents you.”
In these markets, both creativity and execution are essential. “Building a company out of an idea is the tough part,” Dyson stressed.
“Doing it in more than one market, managing people, having the ability to leverage, to scale. That’s what I look for.”