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Half the world without Internet: How brands can boost access to data on mobile phones

Author: Castelo, Marcelo

Abstract

This paper explores ways that brands can help expand Internet use worldwide. Less than half the world’s households are now connected to the Internet, in large measure because of costs. Consumers increasingly go online through phones instead of computers. Yet many people cannot afford enough data on their phones to use the Internet extensively. This paper looks at two case studies in Brazil, where clients of mobile marketing agency MUV used innovative strategies to expand data access for mobile phone users. In the first case, e-commerce company Netshoes paid major telecom carriers upfront so that consumers would get free and unlimited access to Netshoes’ mobile site and mobile app from their phones. Netshoes’ business soared. In the second case, Unilever’s Dove brand offered consumers who had run out of phone data a chance to win extra data for their phones. A Dove video was available on a captive portal for people who had used up their phone data and who correctly answered questions about the ad. Clicks and brand awareness jumped. Both cases show the power of brands to help boost Internet use.

 

Keywords

mobile marketing, mobile advertising, captive portal, Internet use, data costs, affordable Internet, Brazil, Netshoes, Unilever, sponsored data, data rewards

 

Introduction

In the United States, it is a cinch to hang out and buy online — even on the go. The majority of adults have smartphones.(1) Wi-fi is widely available in homes, restaurant chains and public places. Many people have phone subscriptions that provide plenty of data at high speeds and allow them to pay after use. Plus, data is relatively cheap, so it is no big deal to shop and make a purchase over the phone even in a car.

But that is not the case in many other countries, especially developing nations. In Brazil, for example, smartphones are not ubiquitous. Wi-fi is not widely available. Most people prepay mobile phones monthly and receive little data in their plans. And, with telecom services being expensive, they are more likely to use limited data to connect with friends on social media rather than to log on for e-commerce.

The Internet clearly empowers people and helps global development. Yet more than half the world — or roughly four billion people — still is not connected. An important barrier is cost.(2) The United Nations has set a goal for universal and affordable Internet access in the world’s least developed countries by 2020. But progress is slow. On current schedules, the Alliance for Affordable Internet predicts the world will not reach the UN goal until 22 years late — in 2042. Without urgent reforms, just 16 percent of households in the world’s poorest countries and 53 per cent in the world overall will be connected to the Internet by 2020, according to the Alliance. (3)

Brands can help governments and others expand Internet access and use. Indeed, brands may need to fund access to mobile data through advertising and other programmes, if they want more consumers to engage with their content online.

This paper looks at two case studies in Brazil where mobile marketing agency MUV helped brands find new ways to reach consumers with limited data on their phones. The first case involves Netshoes, an e-commerce company specialized in sporting goods. Netshoes pays Brazilian telecom companies upfront so that consumers can get free and unlimited access to the company’s mobile site and app on their phones. Netshoes’ online sales have soared. The second case involves Unilever’s Dove brand. Dove offers consumers visiting a free phone company portal the chance to win free data for their smartphones, if they watch a Dove video online and correctly answer questions about the ad. Clicks and awareness have jumped. Other brands and the ad industry are watching the developments.

 

BRAZIL AS THE SETTING FOR INNOVATION

Consider Brazil, the country the size of continental United States, with more than 200 million people. The South American giant ranks as the world’s fifth largest nation by area and population. Even with its current financial problems, the nation boasts the world’s ninth largest economy. Yet just 48 per cent of Brazilian households had Internet connections in 2015, according to the latest annual report from the UN’s telecom agency International Telecommunications Union (ITU).

Problems abound for e-commerce and mobile marketing. Telecom costs in Brazil are relatively high, partly because of high taxes on telecom companies, ITU reports show. But per capita income is relatively low — No. 77 worldwide in 2015, according to the International Monetary Fund. The upshot: Some 80 percent of mobile phone customers opt for more affordable, prepaid plans that often limit their data to 10 MB per day. (In contrast, US plans tend to offer at least 2 GB a month — or seven times more — and at higher speeds.) Even the more affluent Brazilians with generous plans find they often run out of data for their phones each month.

 

CASE STUDY: NETSHOES AND FREE MOBILE ACCESS

Mobile access was a headache for Netshoes, which launched in Brazil in 2000 and now bills itself as Latin America’s largest e-commerce firm in sporting goods. Netshoes offers more than 40,000 products online, but as of 2014, just 10 percent of its visits were coming through mobile devices. With a surge in smartphone sales and new data plans, that number jumped to 46 percent of visits in 2015.

But the company found that few mobile visitors were buying on its site or its mobile app. Consumers would visit to see if Netshoes had a specific product, but they would not spend time shopping or completing an online purchase, worried that they would use up too much of the data on their phone plans. Brazilians preferred to use their limited data for social media instead. The country ranks among the world’s top three markets for Facebook and WhatsApp, because Brazilians love to talk and stay in touch with friends and family.

The solution for Netshoes: Offer consumers free and unlimited access to its mobile site and app, becoming the first e-commerce company in the world to do so. The idea came from MUV, a mobile marketing company that has long worked with telecom operators in Brazil. MUV helped Netshoes negotiate one-year contracts with four of Brazil’s major telecom companies. Netshoes prepaid for access, so that phone users could navigate its site and app for free as long as they wanted — while still keeping their paid data for other uses such as Facebook.

Netshoes launched its free mobile access on 1st November, 2015, together with a campaign touting the programme. Mobile statistics changed dramatically over the next four months, compared to the previous four: Average navigation time rose 80 per cent. Conversion rates jumped 60 per cent. Revenue grew 54 per cent. Transactions increased 60 per cent. What is more, visits from mobile devices came to exceed visits from desktop computers for the first time.

The innovative effort pushed gross revenue for Netshoes close to $1bn in 2015. The mobile advertising industry took notice in Brazil and beyond. Netshoes was among four companies worldwide to be shortlisted for the mobile commerce award at the Internet Retailer Conference in Chicago in June 2016. Netshoes just extended its annual contracts with the four Brazilian telecom carriers to offer free, unlimited access to its mobile site and mobile app. It also is encouraging Brazilian banks and other enterprises to follow its lead. Netshoes also is looking to start similar programmes prepaying telecom companies in Mexico and other countries in Latin America where it operates, hoping the effort can give it an edge over competitors there.

 

CASE STUDY: DOVE AND A CHANCE TO WIN FREE DATA

It is one thing for an e-commerce site to offer free access to its mobile site and app, but how does a brand that sells its goods in supermarkets and corner stores help consumers eager for more phone data?

MUV came up with a plan for consumer goods company Unilever and its Dove brand. The programme recognizes that millions of users of Vivo’s telecom network in Brazil run out of data for their phones at least once a month. Vivo pushes those customers to a free, captive portal to see if they would like to buy more megabytes. Why not, Unilever asked, offer those Vivo consumers a chance to win some data if they watch a Dove video on the portal and correctly answer a question about the ad? Those consumers have little to lose by watching and trying to win. They do not use up any data watching the video or answering questions on the captive telecom site. In contrast, consumers watching a Dove ad before a video on YouTube or other sites would use their phone data — without a chance to win free megabytes.

Unilever launched the programme on 13th June, 2016. The 30-second video for the Dove offer targets women aged 25 to 45, but Unilever aims to expand to other groups of women and to men with different videos and more brands. The opening promotion offers 10 MB of data available for use in one day. Requiring the viewer to answer a question helps reinforce the brand message.

MUV developed the programmes building on close relationships both with telecom companies and advertisers. Phone companies considered the agency’s proposals as a way to earn extra revenue and set a precedent for other brands. MUV also offered technical assistance to help execute and track the projects. Brands, in turn, saw a chance to boost sales and name recognition at reasonable costs.

 

CONCLUSION

The Internet has enormous potential to empower people and boost global development. But just 46 per cent of homes worldwide now are online. That includes 81.3 percent in the developed world, 34.1 percent in the developing world and just 6.7 per cent in the 48 countries that the United Nations calls least developed, according to the UN’s ITU telecom agency.(4)

The problem for access is not hardware. Increasingly, people go online with mobile phones, not home computers. The price of Android smartphones has plunged, and refurbished ones now cost as little as $30 in Brazil and other countries. More than 95 per cent of the world’s population now is covered by mobile cellular services. In all, the number of mobile broadband subscriptions rose more than fourfold from 2010 to an estimated 3.5 billion in 2015, according to the ITU.(5)

The challenge for extensive Internet use is the cost of connections. It is vital to reduce the price of data on mobile phones, especially for the world’s poor. The UN has set a target for the cost of 500 MB of broadband per month to be no more than 5 per cent of monthly average income. Prices are falling in many countries, but they still exceed 20 per cent of per capita income in nearly two dozen developing nations and remain unaffordable in the least developed nations, according to the ITU. Within individual nations, the price also remains out of reach for the poorest even in many middle-income and high-income nations.

Television has become a force worldwide, largely because viewing is free. The poor can enjoy soccer, news and other entertainment at no added cost beyond electricity, because brands help foot the television bill through ads and sponsorships. The Internet holds the potential to provide education, entertainment and e-commerce for the world, if governments and others — especially brands — find ways to reduce the cost of access and use. Netshoes and Unilever in Brazil offer two pioneering examples of how brands can help broaden data access.

 

References and Notes

(1) Technology Device Ownership: 2015, Pew Research Center. A total 68 per cent of adults in the United States had smartphones in 2015, up from 35 per cent in 2011. http://www.pewinternet.org/2015/10/29/technology-device-ownership-2015/ (accessed 19th December, 2016)

(2) Why are 4 billion people without the Internet?, Strategy + Business. Assuming that Internet usage means consuming 500 megabytes of data per month at current prices, only 17 percent of people in South Asia and 11 percent of people in sub-Saharan Africa can afford to use the Internet. http://www.strategy-business.com/article/Why-Are-4-Billion-People-without-the-Internet?gko=cd483 (accessed 19th December, 2016)

(3) Alliance for Affordable Internet. http://a4ai.org/affordability-report/ (accessed 19th December, 2016)

(4) International Telecommunications Union, http://www.itu.int/net/pressoffice/press_releases/2015/57.aspx#.V4Q3z4-cHD5 (accessed 19th December, 2016)

(5) U.S. Smartphone Use in 2015, Pew Research Center. Seven percent of the U.S. smartphone users say they do not have broadband access at home and also have relatively few options for getting online other than their cell phone. Of those, nearly half said they’ve had to cancel or shut off their phones for a period because the cost was a financial hardship. In addition, 30 percent say they frequently reach the maximum data allowed in their plans and 51 percent said they occasionally reach that maximum. http://www.pewinternet.org/2015/04/01/us-smartphone-use-in-2015/ (accessed 19th December, 2016)

 

 

 

01 June 2017