It's all fun and games until someone trips over 5 million subscribers

If MobiThinking's "Insider's Guide to mobile Web marketing in India" is accurate, 90% of the country's mobile subscribers have voted for a reality show-based contest via SMS. Half of them subscribe to regular SMS jokes, and nearly as many use their phones to get astrology or sports information. This is pretty remarkable in a country where many development organizations are struggling to achieve scale for their mobile-based health, agriculture, and education programs.

Writing for the GSMA recently, Kristen Roggeman pointed out that there is an obvious demand for entertainment among mobile users in both rural and urban India. She describes an innovative marketing effort by Hindustan Unilever (HUL), whereby mobile phone users make a missed call and receive an automatic call-back with 15 minutes of radio programming. The service now has 5 million subscribers and sends out 25,000 hours of programming every day. HUL has now dropped traditional radio marketing from its advertising mix. The hunger for entertainment is not unique to India. In Brazil, The most popular apps are for music, entertainment and navigation, followed by photo, video and social networking. In Nigeria, the national brewery ran a spectacularly successful SMS marketing campaign inviting 18- to 25-year-old men to attend music concerts. The ads had a response rate of more than 30% and a click-through rate of almost 9%. And in the US, drug makers and insurance companies are developing game-like apps that give points and gifts for sticking to drug regimens. (Failing to follow drug prescriptions is estimated to cost US employers, insurance companies and health providers around $200 billion a year.)

Development organizations might take note: even for the poor, entertainment is a central aspect of mobile phone usage. Mobile devices are quickly supplanting radio and television as the main conduit for personal entertainment in developing countries. Integrating entertainment - music, games, sports, movies, and contests - into dry but useful information campaigns is a viable way of extending the reach and impact of programs. Also, strategic partnerships (e.g., with sports, music, or media groups) could help defray the cost of promotion and generate buzz. Development organizations hoping to capitalize on soaring mobile penetration rates frequently devise SMS-based outreach programs. Making them more fun will require a little "outside the box" thinking, but it could be rewarded by increased awareness, adoption, and effectiveness. 

Trust and Verify

Two seemingly unrelated announcements were made by a pair of tech industry heavyweights - Apple and (eBay's) PayPal. Apple extended two-step verification - where a code sent to an old device must be used to change an account or buy something on a new device - to 49 countries, including China, India, Brazil and dozens of other developing nations. Nigeria was not on the list. This is noteworthy because PayPal announced that tens of thousands of Nigerians signed up for PayPal in the first week of operations there. PayPal and its partners (a prominent local lending partner, suppliers in Dubai and China, and fast-growing online retailer Jumia) claim that e-commerce in Nigeria has officially arrived.

Of course, for consumers, signing up for PayPal or verifying a new iPhone is only the beginning of the online buying experience. The bloom will quickly fade from the e-commerce rose if buyers fail to receive an order or fall victim to identity theft. The trust barrier is considerably higher for emerging-market consumers than it is for their mature-market counterparts. In many developing countries, people generally mistrust banks, operators, mail delivery organizations, foreign companies, and the legal system's capacity to prosecute fraud or theft. It will take a concerted effort to build trust and educate new smartphone users about risk, data protection and privacy.

As smartphones and wearables are used for more and more functions, trust and education will determine the growth rate for online purchasing. Device makers, app developers, and service providers (including back-end hosts) all have tremendous opportunities up and down the e-commerce value chain. Multinational companies that build reliable public - and private-sector partnerships (particularly with delivery services) and implement strong, user-friendly security measures will foster trust. To be truly effective, these efforts should accompany early and continued investment in brand marketing via localized content and messaging that reinforces security features. Providing a platform for user reviews and focusing on early adopters and influencers through social media can also validate the online buying experience and address the trust issues of willing but wary buyers. 

Closing the IT Infrastructure Gap, Opening Doors to Rural Markets

Rural areas in China, which have fallen further behind major cities during the country's long economic boom, are set to receive a major upgrade to their information technology infrastructure. The Ministry of Commerce, the Agricultural Bank of China and China Mobile recently announced a cooperation agreement to install and develop new platforms to help modernize rural areas by increasing businesses' and residents' access to information networks and boosting the appeal of these areas for outside investment.  The news comes as other developing country governments announce initiatives aimed at helping rural areas close the economic and infrastructure gap with their urban counterparts. For instance, India's budget for 2011-2012 included a $12.8 billion allocation to improve telecommunications and broadband in rural areas. South Africa has earmarked $65 million to expand rural broadband infrastructure and services. 

These investments underscore governments' realization that their large rural populations have been economically underdeveloped and socially disadvantaged by their lack of information technology infrastructure. Roughly half of the global population lives in rural areas, including 56% of China's population and 70% of India's population. Telecommunications investment has been overwhelmingly concentrated in urban areas due to their high levels of wealth and inhabitants, while rural areas have been left behind. This focus has constrained companies' access to rural markets, in addition to reducing access to products and services for people who live there. In Nigeria, even with significant foreign direct investment in the telecommunications sector, data access penetration has remained low, and the Nigerian government is being blamed for the lack of investment in broadband. Ultimately, national governments will have to take the lead in investing in and creating policies to support the expansion of broadband and other IT infrastructure to rural areas.

Companies looking to break into untapped rural markets would do well to pay attention to these governmental infrastructure investments, and the grant making trends of the regional development banks that often fund them. By understanding where and when they will be completed, they can position themselves to enter rural markets on the heels of these projects. In many cases, new rural infrastructure is built using the latest technology, providing opportunities to create next generation products specifically to meet the needs of rural consumers instead of recycling technology previously developed for urban markets. The rise of rural technology investment allows companies a unique opportunity to not only reach rural markets, but also leapfrog existing technology to develop innovative products for them.

Africa Says "Call Me Back"

Reporting in their “oddly enough” section recently, Reuters noted that one-third of all cell phone calls made in Africa are “missed.” While odd to Reuters, “missed” calls are a generally accepted method of communicating in Africa. The practice of “beeping,” which involves phoning someone and hanging up so the burden of the return call cost is on the receiver, was created by cost-conscious users. (In most markets outside the U.S., cell phones charges are billed only to the calling party.) Frustrated local phone operators, whose lines are tied up with non-income generating exchanges, are actively seeking methods to generate nominal revenue from this practice including offering a limited number of “call me back” text messages for free with accompanying fees for increased use.

“Beeping,” while unanticipated by wireless operators, is a smart adaptation of technology to better suit user needs and is currently under study by Microsoft Research. Cash-strapped users can continue to use their phones to communicate with friends and family as long as someone else foots the bill. This practice comes with a host of etiquette rules like not beeping a romantic interest and the one with more wealth pays. While such rules help to make “beeping” more socially acceptable, it is still considered nominally intrusive by receivers and demonstrates the degree to which users are willing to inconvenience or be inconvenienced in order to communicate with one another via cell phone.

Wireless operators have the opportunity to benefit from users' willingness to suffer minor inconveniences in return for service. With emerging advertising models, operators allow users to make a phone call for free or at subsidized rates in return for viewing (or listening to) a short ad. Operators can sell ad space to corporations interested in reaching the emerging mass markets of developing countries. Skeptics may question whether cash-strapped cell phone users are an interesting target market for advertisers. Vital Wave Consulting research demonstrates that cell phone users, even those earning less than subsistence-level income ($2 per day), have funds available for the purchase of goods and services. For instance, in Nigeria alone, individuals earning less than $2 per day represented a $40 billion market last year. Add this to other large markets and the African continent begins to represent a significant growth opportunity for consumer companies that face saturated or low-growth markets in developed countries. With advertising in exchange for free or lower-cost phone calls, former “beepers” could be the next billion pairs of eyes and ears to corporations seeking such growth opportunities in emerging markets.

Also in the news:

• India's broadband connectivity numbers are falling
• CDMA still kicking in Africa
• International remittances equal to a Fortune 500 company