The Arab region accounts for 6% of the world’s mobile connections. This may not sound like much, but dig a little deeper and you can see that the region has had a remarkable mobile decade – with connections growing at more than 32% a year for the past 10 years.

Research by Deloitte for the GSMA has revealed that by the end of 2012 there were 391 million mobile connections across the Arab states. Just ten years ago that figure stood at 19 million. The only region where mobile connections have grown at a faster rate during that period is sub-Saharan Africa.

Looking ahead, these trends are expected to continue, not least because two-thirds of the MENA population is under the age of 30. Young and increasingly tech savvy, the Arab Digital Generation may be leading the way, but take up of mobile technology is starting to cut across all demographics.

The good news for media organisations is that “news and feeds” apps are popular amongst the region’s mobile smartphone users, but it is essential for news organisations to understand that there is no one-size-fits-all solution in developing a mobile strategy, as use varies widely not just across this diverse region but also within countries.

One region, many markets

Like other developing markets, although the MENA region has experienced dramatic mobile growth in the past decade, the picture is more complex than headline statistics suggest. Not only are there huge variations between urban and rural populations within countries, on a regional level large, wealthy countries’ usage distorts the region’s mobile figures.

Much of this complexity stems from the fact that, despite many shared linguistic and religious characteristics, the Arab world is far from homogenous. In particular, there are considerable socio-economic differences between the Gulf countries in the Middle East and the Arabic (and French) speaking nations of North Africa.

These differences – which include household incomes and employment levels – also manifest themselves very clearly in the adoption of new technology. The region is polarised between countries such as Saudi Arabia which enjoys a mobile penetration rate of 209% – and a smartphone penetration level of 54% – and South Sudan where mobile penetration is just 22%.

Recognising that the Middle East is not a single market but many different markets is an important starting point for news outlets. What works in one country, may not work in another for a number of reasons including connectivity, competition and context.

Another factor which can skew our understanding of the region is the dominance of Egypt and Saudi Arabia.

Collectively they account for 40% of all mobile connections in the Arab world, as well as some of the region’s largest online and offline populations. Egypt alone represents 20% of the MENA population, whilst Saudi Arabia  – with an internet population of 8.5m – has an internet universe 17 times larger than that of nearby Oman.

Given this, it is not surprising that these two countries heavily influence markets for content consumption and social media activity.

In the social sphere, as the Dubai School of Government’s 5th Arab Social Media Report  showed, usage of Twitter in the Middle East is dominated by Saudi Arabia. With 1.9 million active users in March 2013, it dwarfs its nearest rival (Egypt, with 519,000 active Twitter users).

Conversely, Egypt dominates MENA’s usage of Facebook.  Of the 54.5 million active Facebook users in the region, over a quarter are in Egypt. With just 16% of Egypt’s population on Facebook, there is plenty of room for growth too.

For news organisations looking to develop mobile strategies, they will want to make sure not to rely on regional statistics but the most up-to-date information about their own countries.

Deciphering mobile behaviours

Although there is an increasingly rich seam of data about mobile take-up in the Middle East, understanding what users do with this technology is harder to ascertain. Nonetheless, we can establish some characteristics about mobile behaviours in the region. The most striking of which is the volume of mobile usage.

Research by Northwestern University in Qatar concluded that MENA residents are online for 17 hours a week  through wireless devices.  How this time is spent is unknown, but anecdotally chat apps, social networking and gaming are all popular pastimes. Given that users spend 2-4 hours a day on social networks, it is likely that much of this activity is undertaken on mobile devices.

Q: How much time per week do you use the Internet through wireless handheld device(s)?
BASE: Internet and Wireless Hand-held Device Users
Base with selected filters: 5177

Much of this activity is on Facebook, which is used by 94% of social network users. This is followed by 51% on Twitter and 45% on Google+. These findings offer further clues for news providers about where they should focus their social presence and the extent of the potential social opportunity.

Alongside Northwestern’s study, new data from Ipsos MORI offers further insights into the online habits of users across 6 MENA countries (Saudi Arabia, Egypt, Jordan, UAE, Lebanon and Kuwait).

Of particular interest to news businesses is the finding that amongst smartphone users, “news and feeds” is the top category for app downloads across four of the six countries they surveyed (see slide 22).

This is good news for providers such as LBCI News, Alarabiya and BBC Arabic – all of whom have produced a range of mobile apps – although these figures do need to be treated with some caution, as downloaded apps do not necessarily translate into use and some of these smartphone markets are still quite small.  In Egypt, for example, just 5% of the total population own a smartphone, against overall mobile penetration of 105%, and in Jordan this figure is 19%, compared to 143% total mobile penetration.  Nonetheless, it will be interesting to see whether “news and feeds” remains the top download category in these countries as smartphone adoption grows.

A further encouraging statistic from Ipsos lies in the role played by the web as the primary platform for daily news consumption amongst internet users. This finding was reinforced by Northwestern’s study, which reported that 49% of internet users in the region used the web daily for local, national or international news.

As with social networking activity, it is not clear how much of this daily news consumption is undertaken using mobile devices. However, given the high levels of mobile web browsing in the region, it is likely that much is through wireless devices.

The GSMA notes:

Due to the limited coverage of fixed-line networks and the associated cost of computers, mobiles are quickly becoming the main platform for internet browsing. Eleven countries in the region rank above the world average in mobile web browsing.

In countries such as Sudan, mobile browsing accounts for 45% all internet activity, followed by Libya, Oman and Kuwait at around 25%. This is compared with a global average of 10%.

Of course, as we noted with desktop digital media, consumers are often ahead of advertisers. You will need to evaluate not only the consumer appetite but also the business opportunity as you determine how to stage your strategy.

Further Implications

Whilst we need to undertake further research into what content mobile users are consuming, these statistics should provide encouragement for news providers. On the horizon, content providers should also consider these three developments which may shape their editorial vision and portfolio:

4G and Video

4G is a reality in some Middle East countries and about 167 m videos are viewed every day on YouTube across the region. As with Twitter this is a network where Saudi Arabia leads the way. With 90 m video views every day, Saudi Arabia enjoys the highest number of YouTube views in the world per internet user. And although most YouTube consumption is typically through a desktop, this is not the case in Saudi Arabia where 50% of these views are on mobile devices.

Across the region mobile video consumption is only likely to increase, particularly as LTE networks expand. Cisco’s Global Mobile Data Traffic Forecast, argues that the Middle East and Africa will be the fastest growing region for mobile data, with a growth rate of 77% CAGR between 2012 and 2017. Globally, Cisco estimates that by 2017 video will account for two-thirds of the world’s mobile data.

Managing technological divides

Alongside the roll-out of 4G networks and an increased penetration of smartphones, content providers must continue to be mindful of digital divides. Outside of cities, for example, fixed line connectivity is often quite low. Mobile broadband may therefore be the only way for some rural audiences to enjoy online content.

For feature phone users, SMS based news and information may remain popular for some time, especially if smartphone adoption in the region fails to exceed 40-50% in the next five years as Ericsson’s 2013 mobility report  suggests.

What’s interesting about this prediction is that some MENA countries already exceed this level of adoption.  Nielsen  noted in 2012 that Qatar has a 75% penetration of smartphones, a figure higher than the total mobile penetration of some Arab countries.

As Northwestern University in Qatar recently noted across the region there is:

…a genuine digital divide, between the four wealthy Gulf states – Bahrain, Qatar, Saudi Arabia and UAE – and those that do not share such abundance – Egypt, Jordan, Lebanon and Tunisia. The digital divide demarcates technological abilities in the Arab world about as starkly as anywhere on earth.

Content providers therefore may wish to consider repurposing their output to reflect these technological realities. Basic technologies such as SMS and FM radio continue to sit alongside more sophisticated mobile technology such as 4G, and to reach the largest possible audience, news organisations will want to serve both high-tech and lower-tech audiences. Ideas submitted to the annual Knight News Challenge offer some suggested ways forward, as do some of the strategies employed by Al Jazeera. The network simulcast their English service on FM radio in Doha, and to reach US audiences which might not be able to watch Al Jazeera English on cable or satellite networks due to lack of carriage, the channel offers US audiences a telephone number they can call so that they can listen to it on their phone.

Media literacy

Finally news providers also have a role in promoting participation in news discourse and its consumption. With the technology increasingly in place across the region for audiences to consume content via a mobile device, publishers may need to encourage this adoption by educating audiences on how to do this. Western broadcasters such as the BBC have used promotional campaigns and presenter endorsements to promote Video on Demand and other online services for some time.  As with some of the other ideas in this article this is arguably something Middle Eastern media could do more of.

The good news for news providers is that high mobile penetration levels, coupled with a strong interest in news  – as well as the popularity of mobile browsing and social networking – mean that the building blocks to create a mobile audience are already in place. By harnessing the creative potential of these platforms and promoting their services to a wider range of users, then digital news in the Middle East can move forward to the next stage in its evolution.

Source: Copyright © 2013 by Kleiner Perkins

It is not surprising that internet use continues to grow and that emerging markets are largely driving this growth. However, dig a little deeper into famed internet analyst Mary Meeker’s latest annual report on the state of the internet, and you’ll find several important insights for news organisations as they navigate the digital transition.

Internet tipping point in major emerging markets

While some say that Meeker is merely restating conventional wisdom, if you look closely at the data she provides, she is doing more than stating the obvious.

It is widely understood that emerging markets are powering continued global growth in internet use. However, some of this growth is coming from unlikely countries, such as a 205 percent year-over-year internet growth in Iran, 58 percent growth in Indonesia, 57 percent growth in Argentina and 39 percent growth in Colombia.

Of course, high growth figures can simply indicate growth from a low base, but the other thing you notice in the International Telecommunications Union data that Meeker highlights is that the majority – or nearly a majority – of the population in major emerging markets now have access to the internet.  Now, 49 percent of the Russian population have access to the internet. In Turkey, 47 percent of the population have access and 45 percent of the population of Brazil now have internet access. The explosive growth in internet access in Argentina, now means that 68 percent of the population has internet access.

We don’t have a sense of the speed of these internet connections, but the fact still stands that in many emerging markets significant parts of the population now have access to the internet.

In another recently released report, US computer networking giant Cisco said that by 2017 half of the world would have internet access. To put that in context, in 2012 only 32 percent of the world’s population was connected. The report also predicted that the average broadband speed would more than triple from 2012 to 2017.

The key take-away is that in many emerging markets, internet access is reaching a tipping point, and this will lead to a tipping point in digital media access.

Mobile and tablet growth is booming

Source: Copyright © 2013 by Kleiner Perkins

Mobile internet access continues to grow, now accounting for 15 percent of all global internet traffic. If the current trend continues, mobile internet traffic will soon rise to 30 percent of all global traffic.

Source: Copyright © 2013 by Kleiner Perkins

Mobile internet growth isn’t a recent phenomenon, but Morgan Stanley data showed that smartphone subscribers will grow 31 percent this year. The percentage of smartphones as a part of the total mobile subscriptions varies widely from market to market. Indonesia and Russia only have low double-digit smartphone use as a part of mobile subscriptions, 11 and 12 percent respectively. However, other emerging markets already have much higher smartphone use. For instance, Malaysia, at 35 percent, has a higher level of smartphone use as a percentage of total mobile subscriptions than Germany or Italy, at 29 and 23 percent.

However, the shift to mobile is about much more than the increased use of smartphones. Tablets, most of them based on Apple’s iOS and Google’s Android, have remade the digital landscape in a short time. Android and iOS, whether on smartphones or tablets, have ended Microsoft’s dominance in terms of personal computing.

Source: Copyright © 2013 by Kleiner Perkins

iPad sales grew three times faster than the iPhone, Meeker said, and while that might seem more relevant to wealthy, developed markets, dramatically less expensive tablets based on Android are being developed for emerging markets. Acer has been developing a $99 tablet for the Indian market.

Of course, the line between smartphones and tablets is beginning to blur as so-called phablets win over consumers who don’t want to have multiple devices. Phablets are large screen smartphones such as the Samsung Galaxy Note or the Asus Fonepad, with its 7-inch screen. Analysts say that phablets are set to sell well not only in the Asian giants of China and India but also in the social-media capitals of Indonesia and Malaysia.

For news organisations, the growth of tablets and large-screen smartphones means that in the future it is more likely that your readers will be using a tablet or large smartphone rather than a traditional computer to read your stories, listen to your audio or view your video.

Publishers and broadcasters will want to make sure that their digital content is optimised for these platforms.

Is mobile growth translating into mobile revenue?

Source: Copyright © 2013 by Kleiner Perkins

Last year, Meeker highlighted how advertising on mobile lagged far behind the amount of time that people spent with their mobile devices. However, as she showed this year, not all of the time that people spend with their mobile devices is spent consuming content. In fact, of the 150 times a day that smartphone owners reach for their handsets each day, news, alerts and the web account for only 10 times they check their phones. Attention is very fragmented on mobile devices.

Meeker still sees a tremendous opportunity for mobile advertising. In the US, people spend 12 percent of their time consuming media on a mobile device but only 3 percent of advertising is spent on mobile.

Source: Copyright © 2013 by Kleiner Perkins

This year, she pointed to Facebook’s success in offsetting declining advertising revenue from its desktop users with rising revenue from mobile advertising. This shows both that it is possible to earn revenue from mobile audiences and that the social network will present fierce competition to news organisations for mobile advertising.

The report highlights not only how the digital transition is accelerating in many major emerging markets, it also shows while the future holds incredible promise for mobile media, opportunities already exist. News organisations must now think about mobile when they think of digital.

Russia has seen some of the fastest growth in digital advertising in recent years. Even though the torrid rate of growth proved to be unsustainable last year, digital advertising is capturing more advertising revenue, and the opportunity has attracted international investment in the classified advertising market.

News organisations, both print and broadcast, will need to monitor these fast-moving developments to develop an effective strategy to compete for digital advertising revenue with a range of new competitors.

Digital growth outpaces other media

Advertising continued to grow across most media in Russia in 2012, but while the rate of digital growth slowed, its impressive 35 percent rise year-on-year outpaced other media, according to the Russian Association of Communication Agencies.

Both print and television advertising continued to grow in 2012, but their respective growth rates of 2 and 9 percent was dwarfed by the growth in internet advertising, according to a report in East-West Digital News.

Internet display advertising only grew 17 percent. The real growth in digital advertising was driven by contextual advertising, which includes search advertising. It grew an impressive 45 percent.

In three to four years, it is predicted that digital advertising will capture a third of the advertising spend in Russia, according to a report in Vedomosti.ru. The rise of digital advertising comes at a cost for other forms of advertising. It is predicted that television’s share of advertising will decline from 48 percent to 46.4 percent this year, and print advertising will decline from 13.9 percent to 12.6 percent, according to the Vedomosti report.

Print advertising growth declined from 6 percent in 2011 to only 2 percent, but much of the coverage of the report focused on how internet advertising was cutting into television revenue.

Stanislav Povolotsky, RBC media holding’s commercial director, said that advertisers that had traditionally used television to reach consumers were now shifting to internet advertising, according to East-West Digital News.

In a widely reported sign of the shift from television to the internet, search engine Yandex almost overtook state-owned TV station Channel One in advertising revenue. In 2012, Yandex brought in 28.1 bn rubles, while Channel One earned 28.2 bn in advertising earnings, according to the Wall Street Journal. Of course, Yandex earns one out of every two rubles spent on online advertising in Russia, according to Immanuel Simonsen.

New advertising technologies such as real-time bidding are helping to fuel internet advertising growth in Russia, according to Michael Voschinsky, the managing director of Aegis Media.

Rise in digital ads attracts investment

With Russia offering such promising growth opportunities in terms of digital advertising, the market is attracting foreign investment.

In March, South African media house Naspers, struck a $570m deal to merge two Russian classified sites it owns, Slando.ru and OLX.ru, with their larger competitor, Avito.ru.

According to the Financial Times, the deal would create the fifth most popular website in Russia, with more than 100m page views per day, and the third largest classified advertising site in the world.

The move was seen as the beginning of consolidation in Russia’s online classified market, according to Ventures Africa.

Russia continues to experience rapid internet growth, with the number of internet users growing by a third every year, and the market is developing very rapidly. News organisations, especially print groups, will need to develop strategies to compete for internet advertising revenue or they may face stagnating revenues at best.

News groups will need to invest in audience intelligence in order to deliver better targeted advertising to compete with the contextual offerings of Yandex and the major social networks. Yandex poses a particular challenge to regional and local media as many of its advertisers are small and medium businesses rather than large national or international advertisers, and consolidation in online classified companies will put pressure on local media by chipping away at this lucrative source of revenue.

While search engines and online classified companies might not seem like competitors to news organisations, they will compete head-on with news groups for internet advertising revenue. News groups will need to develop strategies to face these new and growing sources of competition.

This raises questions for how traditional media should respond and position themselves to serve audiences that are increasingly looking for not only content, but also conversation online.

To help us understand not only the growth of the RuNet, but also the impact that this is having on media and government regulation, we spoke to Sam Greene, the director of the Centre for New Media and Society at the New Economic School in Moscow. At the centre, “we are trying to understand how new media is changing the way we live, the way relate to each other, politics and the economy,” Greene said. The centre is connected with similar efforts across Russia and around the world, with partners in the US, UK, India, China, Hong Kong and South Africa to try to understand how the internet and new media is changing our societies.

“It is not possible to ignore the internet as a source of information anymore,” Greene said. It has moved beyond being a specialist media or a media for the elites, with between 30 to 40 percent of Russians now using the internet as an important source of information, he added.

It’s not just that more people have access to the internet, but as broadband access rapidly expands around the country, more people can consume and create video, audio and other media. “It gives (the internet) the immediacy that radio and television have and the same emotional connection you get from radio and television,” he added.

With this growth of RuNet as an important source of information, it is also having an impact on those who do not use it. The internet is not yet on par with television in terms of agenda setting, but it’s getting there, Greene said. News is more than just what we watch on television, hear on the radio or read in the press, news also informs our everyday conversations. “Even if your babushka, your grandmother, is not on the internet, their views are being shaped by what they hear from their grandchildren,” Greene added.

Cross-platform experimentation

With this rapid growth in internet use being a relatively recent phenomenon, the advertising market in Russia remains relatively strong when compared with other parts of the world, which means that it is still possible to make a lot of money in print media, local newspapers and television in Russia, Greene said.

Despite the current strength in the traditional advertising-supported media model in Russia, there is already a realisation that newspaper and television audiences in 10 years won’t be as high as they are now. That is leading to a lot of cross-platform media development as people are increasingly keen to bring their message to audiences online, Greene added.

And readers are responding. Russian readers have always been keen to let editors know what they think, but the internet has added to this interactivity.

“It makes it more difficult for those who want to control the information space, it makes their job much harder because the reaction space on the internet is much faster,” Greene said.

Digital technology has also added an important element of citizen reporting in Russia. The most dramatic example of this was during the flooding this summer in Krymsk, which killed more than 170 people. The region wasn’t a place where most major news organisations would have a bureau or staff, but people told their own story using photos taken on their mobile phones.

“A lot of journalists are now finding that it is their job to consume and filter what readers are sending in and translate that into verified and trustworthy news,” Greene said.

Government moves to control the internet

While these changes make the internet harder to control, the government has changed its stance on the level of control that it wants to exert over the internet. He said:

Early on in Medvedev’s presidency, now we’re talking five or six years, when people were criticising the lack of independent television and lack of diversity in mainstream media, Medvedev and the government were perfectly happy to point to the internet as the place where you could have pluralism. … There was a feeling, ‘well, we’ll let the internet do what it wants to do, and we’ll let people do there what they want to do.

Now they don’t feel that they can look on it as benignly, with as much distance, as in the past.

Despite this shift, Greene doesn’t believe that the government will move to a systematic form of control like China. Not only would it be expensive to develop such a system of control, but the government also realises that there is a risk in rolling out a state system of control. While it’s not possible to tie denial of service attacks against the sites like the popular Live Journal blogging platform, everyone assumed that the government was involved and reacted angrily.

How should news organisations respond?

With the internet growing rapidly and government policy changing, it poses challenges for news organisations in deciding how they should respond to these developments.

Greene said:

The first thing is to get the journalism right. Good journalism is good journalism whether it is online or offline. (The audience) might come because you built nice bells and whistles, but they are going to stay with you because you are bringing them a service.

But at the same time, he also said that news organisations need to realise that the internet is more than just a place for people to read what you have written or watched what you have recorded. The internet is an interactive space, and it can create a new, positive, more engaged relationship between journalists and their audiences.

To realise the internet’s full potential for journalism, he encouraged journalists not to be scared of technology. So much can be done without a lot of investment thanks to a range of new, low-cost and no-cost tools and services.

Success is not about building expensive websites but about “getting conversations started and participating in those conversations”.

More than half of Asia’s internet users are in China, which has an online population of 513 million. Yet the internet penetration rate is not that high, only 38.3% at the end of last year. Compare that to 78% on average in western European countries. The necessary internet infrastructure is not yet in place in many areas of rural China. China is not alone in Asia when it comes to relatively low rates of internet use. Many other countries – such as India and Indonesia – also struggling with low internet penetration. Yet in all these developing markets mobile is on the rise, as it offers an affordable way to access the internet, especially in markets where desktops are often priced out of reach. With mobile use growing so fast across the region, it’s no wonder that businesses are following. By 2015, the Asia-Pacific region is expected to account for a third of all global mobile ad spend, $6.92 billion.

Another interesting phenomenon is that Asian users are more likely to use banking services and to shop online with their mobile devices. 62% of users check their bank balances on their mobile phones, and 41% use them to make online purchases, significantly higher numbers than in the US and Europe. Asian mobile users downloaded some 5 bn apps in 2011, generating $871m in revenue. Mobile is also closing the information gap between urban and rural consumers, connecting rural users to services like bill payments for the first time.

Moreover, Asian online advertising spend reached US$24.8 billion in 2011, second only to the US with $34.5 million. China’s internet advertising is expected to have an annual growth of 32.1 percent in the next five years. In terms of advertising and marketing, the impact of social networks is also noticeable. Asians are already highly engaged in social networks and as this trend intensifies, social media is likely to become the primary way for companies to engage with customers. But brands need to think carefully and define their strategies before engaging in social networking. ADMA cautions that: “Although 60 percent of social networkers say that social networks are a good place to learn about brands, 50 percent also say they don’t want to be bothered by brands.” ADMA also cautioned readers to note the fragmentation of online activities between different nations.

With the trend towards mobile gathering pace, mobile and social media are important elements in any Asian news business’s digital strategy.

More than half of Russians access the internet everyday, according to Sergei Plugotarenko, the director of the Russian Association of Electronic Communications. Even though that is below the European average of 78%, Russia still has the world’s sixth largest internet market, and he believes that the RuNet will continue to grow at a rapid pace. By 2014, he projects, more than 70% of all Russians will access the internet, meaning that the country will have some 80m users.

The growth of RuNet and its role in the flow of news has not escaped the notice of international media. In a profile of “media provacateur”, Ksenia Sobchak, who was described by the New York Times as the “Stiletto in Putin’s Side”, the role and reach of the internet in Russian society and media was explained:

An estimated 66 million Russians use the Web every day — the largest such national population on the European continent and one of the fastest-growing in the world. Russians have adopted the Web not only as a public sphere for debate but also as a refuge of last resort, a citizens’ court to vent anger at and post evidence of official malfeasance. Videos depicting supposed police abuse, state theft and even car accidents go viral in minutes.

Economically, internet advertising is growing rapidly in Russia – seeing a growth of 55% in 2011 to €1.12 billion, according to the Interactive Advertising Bureau. This growth was attributed to small and medium businesses gaining experience with the internet and using it to attract customers through the growth of e-commerce, according to Leonid Delitsyn with the brokerage FINAM. With the Russian internet audience now the largest in Europe, he also said that major advertisers have increased their spending on online advertising.

For news organisations, the growth presents both opportunities and challenges. The market is growing quickly, but in terms of advertising, between 2010 and 2011 Europe-wide, search advertising revenue grew, while display and classified and directory advertising fell. That means that search engines such as Google and Yandex are capturing a higher percentage of that growth. With the growth in online advertising, news groups only need to capture a bit of that ad growth to fuel future endeavours, but the challenge is to prove to advertisers that your relationship with your audience matters and delivers results.

Emerging markets continue to power global internet growth with Asian-giants China and India leading the way. China alone added 215m new internet users in the last year. That’s not terribly surprising considering the two countries’ economic growth rates. Rounding out the top five in terms of new internet users were Indonesia, the Philippines and Nigeria. The Philippines increased its internet population by 44%, which means that 35% of the population now has access to the internet.

Mobile: Explosive growth

More interesting is the growth of 3G wireless data access. The BRICs – Brazil, Russia, India and China – had incredible year-over-year growth rates in terms of 3G usage, but much of that is down to the growth starting from a low base. For instance, 3G users might have increased by 45% last year in Russia, but that still means that only 8% of mobile phone subscribers have 3G access. In India, which has seen its mobile telecom sector rocked by scandal, 3G subscriber growth might have increased by 841% but that is still only 4% of users. The mobile data revolution is obviously picking up pace, but it still has a lot of room to grow before it becomes common, much less ubiquitous.

Mobile, including data, smartphones and tablets, has been one of the hottest trends in the last few years to the extent that tablets are now seen to be cutting into PC sales, denting the prospects of major computer manufacturers such as Dell and HP. However, Meeker says that based on Morgan Stanley research only 16% of global mobile users have smartphones. Optimistically, she sees a huge opportunities for growth, but the reality is that smartphones still represent a fraction of global mobile users. Mobile strategies, especially in developing or emerging markets, still need to account for the huge use of feature phones – phones that might have some web browsing abilities but aren’t as capable as smartphones.

Mobile: Challenges for business models

With all of the buzz around mobile, it is important to remember that it’s still very early days, not only in terms of mobile content distribution but also in terms of developing the business to support it. Globally, mobile app plus advertising revenue has grown from $0.7b in 2008 to $12b in 2011.

It’s important to note that app revenue far outpaces mobile ad revenue. In one slide that was widely commented on by journalists, Meeker pointed out that while Americans spend 7% of their media-time reading newspapers and magazines, print still commanded 25% of advertising spending.  On the other hand, mobile advertising only made up a tiny 1% of all advertising spending in the US despite Americans spending 10% of their media-time consuming mobile media. Mobile growth, with the rise of smartphones and tablets in the US has led to a rapid, dramatic increase in the time that Americans spend with mobile content. It often takes time for advertising spending to catch up with such rapid movements in media consumption.

Again, Meeker played up the huge potential for an increase in mobile advertising, but at the moment, mobile advertising still returns very limited revenue. Moreover, she pointed out that mobile ad rates were five times less than desktop internet ad rates. Realistically, the potential for mobile is huge but it has yet to realised. Meeker said that the desktop internet proved that “advertising dollars follow eyeballs” but “it just takes time”.

Other takes on Meeker’s presentation:

• Everyone has a mobile problem: not just Facebook – GigaOm
• Mary Meeker’s 2012 Trends Take-Away: Get Ready to Re-Imagine Business – Forbes
• Mary Meeker Explains the Mobile Monetization Challenge – AllThingsD
• Meeker: People are flocking to mobile, but where’s the money? – CNET

The full presentation is below:

KPCB Internet Trends 2012