While tablets and flagship smartphones might seem developed-world luxuries, mobile broadband and increasingly inexpensive internet-enabled mobile handsets are bringing digital media and communications to all markets. Desktop computer and laptop sales are set to decline in emerging markets, while smartphone and tablet sales expand dramatically, according to figures from research organisation International Data Corporation. As we have noted, for many transitioning countries, mobile is the only way that audiences access the internet.

If you do not deliver a mobile-optimised experience to your mobile audience, you are missing an opportunity to grow audience and grow revenue, as Terence Eden demonstrates in his look at mobile ad networks.

Serving mobile audiences need not be complicated or expensive, and independent news organisations are finding ways to launch mobile strategies despite the press of other priorities and lack of dedicated mobile resources.

Assess the opportunity

The first step in your mobile, or in fact, any strategy is to understand the opportunity, both editorial and commercial.

As Premesh Chandran, the CEO and co-founder of Malaysiakini.com, says, he views everything in terms of return-on-investment and opportunity costs. He outlined some of the thinking that went into assessing their mobile options:

Really, are we going to make money (advertising, subscription) with a mobile app versus a mobile site? What kind of resources will I have to put in? How do we sustain the development?

Malaysiakini, Malaysia’s largest independent news website, had plenty of other challenges and opportunities in the past few years, including defending itself against cyber-attacks that attempted to make the site inaccessible to its millions of monthly visitors.

Chandran had to determine whether the mobile opportunity was valuable enough to dedicate time and resources to when weighed against other demands.

Mobile market statistics for your country are one place to look. For Malaysia, the opportunity is clear. Mobile subscribers have expanded from 6 m in 2000 to 37 m in 2012, according to market research firm BuddeComm. “After starting off slowly, broadband internet has been expanding strongly in recent years and coming into 2012 had reached a remarkable 63% household penetration,” the group added.

Beyond relying on market statistics, you also have a rich source of information already in your own site data. By looking at your site analytics, you’ll be able to see who is coming to your site via mobile devices and also some basic information about the type of devices. This can help you develop a profile of your mobile audience. You can see if they are using smartphones, such as Android, Blackberry or Apple smartphones, or whether many are using more basic internet-enabled handsets, including Nokia’s Asha line of handsets, which target developing markets.

With more sophisticated analysis, you can determine whether mobile visitors are coming to your site and leaving quickly by analysing your bounce rate and seeing whether mobile visitors are a higher proportion of those leaving quickly. The article linked here highlights the three mobile statistics to focus on in Google Analytics and how to find them. The article says the three figures are:

• How many people are visiting your website on mobile.
• How your mobile bounce rate compares to your desktop bounce rate.
• Which devices your mobile visitors are using.

If mobile visitors are contributing more to your bounce rate than desktop visitors, it might indicate that they are leaving in frustration as your site fails to load quickly and eats into their data use. For many emerging market mobile data users, they are price sensitive and will not want to download large pages. It is not uncommon for modern pages with non-mobile optimised images to be a megabyte or more. On more basic internet-enabled mobile phones, these large pages will be almost unusable.

Mobile site, app or both?

Delivering a good mobile experience for your audience need not be difficult or expensive. After assessing the opportunity, Chandran was able to deliver a range of mobile options for Malaysiakini readers. He said:

We ended up with a mobile site (m.malaysiakini.com) an Android app (because one of our developers was keen to do it) and a iOS mobile app (because an external developer was willing to do it for free). The iOS mobile app, also had a tablet version (one app, two layouts).

Regardless of the project, this shows the value of hiring not just good, but passionate, developers, whether on staff or via contract. Good developers want to take on new projects and develop new skills.

Most publishers will want to start small, which means delivering a mobile site. Chandran said:

We think that for news sites, mobile browsing is easier and more cost effective to manage than apps. Apps need to be consistently updated with every OS version, which is costly.

Many content-management systems can automatically detect whether a visitor to your site is coming from a computer or from a mobile or tablet device and deliver the appropriate template. However, to take advantage of this, you’ll need to have a good mobile template, which includes:

• A basic fast-loading design modified for smaller screens.
• Mobile optimised search and navigation.
• Mobile optimised images that load more quickly over slower mobile connections.
• Mobile advertising options.
• If necessary, integration with your paid content system.

Achieving these goals are much easier than they were a few years ago. With growing mobile audiences, content-management systems have added mobile features, and for popular open-source CMSs such as WordPress and Drupal, mobile templates are common.

With the proliferation of devices and screen sizes, some news groups have turned to responsive design. Kayla Knight has a concise but comprehensive overview of responsive design in Smashing Magazine. In it, she writes:

Responsive Web design is the approach that suggests that design and development should respond to the user’s behavior and environment based on screen size, platform and orientation.

Malaysiakini does not use responsive design, and it is still very rare amongst news websites. As your mobile strategy and the revenue from it develops, you might want to consider it in the future. For those publishers who use WordPress, fortunately there are several very good free and premium themes that are responsively designed.

Revenue options

Of course, part of assessing the opportunity includes trying to estimate the commercial opportunity. As with your standard website, you can easily start to generate some revenue using mobile ad networks. As you develop your strategy, you will want to make sure that the ad network you choose meets the needs of your strategy, such as supporting not only a mobile website but also any apps that you might considering developing.

Ad networks can allow you to start earning revenue, but you will also want to make sure that selling your own mobile advertising is part of your revenue strategy. Malaysiakini does not have any advertising staff dedicated to mobile, but they are using both ad networks and in-house sales to support their mobile strategy, Chandran said.

However, one of the key things that many sites are finding is that advertising is only one revenue option in terms of mobile. As we saw in our recent article looking at paid content strategies in Latin America, mobile and tablet apps can be an important part of a paid content strategy. Smartphone and tablet owners are often more affluent than the general population, even in developed markets, and have shown a greater willingness to pay for content.

Mobile must be a part of your digital strategy or you risk artificially limiting your audience and missing the opportunity to establish yourself early in the mobile advertising market. Fortunately, delivering your content to mobile audiences is getting easier, and you shouldn’t wait to start taking a few simple steps to inexpensively serve mobile users in your audience.

No other company is even close to Google. The survey saw Facebook take second place, having captured 13 percent of worldwide mobile ad revenue in the two years since it began running mobile ads. That means that these two companies alone capture just shy of 70 percent of all mobile ad revenue.

In countries like Bangladesh, Senegal, South Africa, Ghana and Indonesia, a report last year by mobile browser maker Opera found for a majority of internet users in those countries that mobile is the only way people access the internet. Smartphones and simpler mobile phones with internet access might be the primary way that your audience is accessing your website, which is something easily confirmed by looking at your digital statistics packages.

Also statistics show that mobile audiences are younger audiences, and this is just another example of how digital platforms allow you to reach different demographics, rather than simply shifting your current audiences.

Initially, the opportunity to earn revenue from mobile advertising seemed even less than internet advertising, which has seen rates plummet over the past few years. However, as we have seen with the desktop internet, major players have been earning vast sums of money. The challenge for news organisations is that they haven’t enjoyed the same dominance in digital that they enjoyed in print and still in enjoy in broadcasting.

The major internet players are already aggressively growing their mobile advertising revenue and news organisations cannot afford to wait to pursue their own mobile revenue strategies.

Building a staged strategy

The first step is to make sure that you are doing your best to serve mobile audiences. Fortunately, making your sites mobile friendly is now easier than ever with mobile themes and plug-ins for popular platforms such as WordPress and many development frameworks that allow you to create mobile and tablet editions for your sites.

In terms of monetising mobile audiences, while eMarketer looked at global mobile advertising revenue, most news organisations do not operate globally and must instead focus on their local or regional market. You will want to first evaluate where both your consumers and your advertising markets are in terms of mobile adoption. If your consumers have already flocked to mobile but your advertisers are still reluctant, initially, you’ll need a low-cost solution but one that scales as the opportunity grows.

Start with mobile ad networks  – Just as ad networks can help you get a start in paying for the costs of your initial internet efforts, there are mobile ad networks specifically designed to help you begin monetising your mobile audience. mobiThinking has an up-to-date guide to ad networks and a guide on how to choose an ad network, including a list of ad networks by region and country. One key thing they note is that no one mobile network is dominant.

Just as with your traditional internet advertising, you’ll want to develop premium advertising options as quickly as possible. Ad networks can help you with that and as the digital advertising network matures it is rapidly developing premium options and strategies across all forms of digital advertising including mobile.

When you’re developing your mobile site, you’ll want to make sure that you can easily integrate ad networks and standard mobile ad formats.

Explore local advertising opportunities – For local media, there are unique opportunities. Google has found that about 50 percent of all mobile search is local, and that means that often your audience is looking for nearby businesses or services. Local media already have the sales relationships with local businesses, and this can be a great competitive advantage. You’ll want to explore what options mobile allows for targeted local advertising.

With the rapid rise of mobile, advertisers and marketers see a huge opportunity, which means that there is a lot of money pouring into innovation in this space. For instance, in Malaysia, telecommunications provider Maxis has launched a mobile deals service targeted at 15 shopping destinations that will send subscribers to their myDeal service offers when they are shopping. The service doesn’t require an internet connection but instead relies on determining the location of the customer based on mobile phone masts (cell towers). The deals are delivered by SMS.

Tablets offer unique revenue opportunities – When thinking about mobile content and revenue strategies, it is also important to consider tablets, especially phablets – large screen smartphones – such as Samsung Galaxy Note or Asus FonePad. These devices are competitively priced when compared to smartphones and an absolute steal with compared with laptops or large-screen tablets. For emerging markets, this is the perfect option for someone who doesn’t want or simply doesn’t want to pay for both a smartphone and a laptop.

Tablets or phablets open up all kinds of opportunities if they are popular in your market. For one, numerous studies show that tablet owners engage with content almost as heavily as print readers. That’s definitely something to remember when pitching to advertisers.

Of course, advertising in not the only source of revenue to consider. As we noted in our April Digital Briefing, Folha in Brazil introduced a paid-content strategy that charged for tablet and mobile app access. In most markets, tablets are initially bought by affluent members of your audience, and this type of strategy allows you to add a new revenue stream from those who can afford to pay for your content. Note that less than six months after Folha started charging for their tablet and mobile apps, they also added a metered paywall for their website.

Launch a mobile division – As your mobile market grows and the commercial opportunity will support it, larger organisations should consider launching a mobile division to create mobile products and generate mobile sales. The Media Briefing in the UK recently profiled how Norwegian publisher VG has done just that and is on track to dramatically increase the group’s mobile revenue. Norway is a very advanced digital market, but in major emerging markets, mobile use may quickly catch up with developed markets in ways that the traditional internet won’t for years to come.

This staged strategy will help you grow are your market and your organisation develops. However, no matter the size of your organisation or the state of your mobile market, it is an opportunity that news organisations cannot choose to ignore. The major internet players are moving aggressively to dominate in mobile just as they have with the desktop internet, and news organisations must make sure that they do not wait until Google and Facebook come to dominate your mobile market.

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.

Defying the print media crisis in many parts of the world, Latin American newspapers and magazines continue to enjoy rising circulation and advertising revenue due to growing middle classes and economies left largely unscathed by the financial crisis.

However, internet use is growing rapidly in Latin America, and traditional media groups are exploring digital paid content strategies to try to protect and consolidate their dominant position, especially in the face of competition from new digital-only news organisations.

For instance, the Brazilian newspaper Folha continues to enjoy sustained growth in print circulation while also developing a dominant market position online, and it has become the poster child for paywalls in Latin America with the launch of a metered paywall strategy in January 2012.

While metered paywalls, in which users are able to access a certain number of articles before having to pay, are one of the most popular strategies globally, it is just one approach in use in Latin America, a reflection of the diversity in media markets across the region.

Latin American media experiment with different models

Until 2011, digital paid content strategies were the exception not the rule for news websites around the world. In the US and in Western Europe, paid content strategies have been driven by a drop in print advertising and the inability of news organisations to make up for that fall with digital advertising. News groups had to diversify their sources of revenue. The major shift in the industry came after the New York Times rolled out its metered paid content strategy in 2011, signing up 668,000 digital subscribers, according to its most recent quarterly report. Since then, more than 300 newspapers in the US and newspaper groups in the UK and Germany have implemented paid content strategies, and many have followed the lead of the New York Times and rolled out metered paywalls.

This success has given important legitimacy to paid content strategies globally. But for Latin American news groups, the economic imperative to develop paid content strategies is less, as performance in their print business remains strong. As in other regions, digital media market conditions vary widely in Central and South America, and there is no one-size-fits-all paid content model.

In our last look at paid content strategies, we highlighted the wide range of models in use as news organisations move beyond the binary debate of paid versus free and experiment with a wide mix of models. To recap, the major approaches include:

• Hard paywall with no access to digital content to non-paying customers.
• Free online but paid on mobile.
• Hybrid paid and free networks.
• Freemium strategy where general content is free but specialist or premium content requires payment or subscription.
• Long-form magazine or investigative journalism is repackaged and sold on ebooks or tablets.
• All access bundles in which subscribers pay a single price for access in print and digital platforms.
• Metered paywall in which a certain number of pieces of content are free but payment is required above the limit.

Of these strategies, all-access bundles, metered paywalls or a combination of both are proving to be the most popular and the most successful, and often, all-access bundling is part of a metered paywall strategy.

Market conditions help guide the choice of the most appropriate paid content strategy, and with the diversity of markets across Latin America, media companies have implemented a number of different approaches.

All access bundle and metered paywall – Folha (Sao Paulo, Brazil) – Folha was the first newspaper to implement a metered paywall in Brazil in January, 2012. They initially charged only for their tablet and mobile phone apps, but in in June of that same year they included their website.

Folha gained 45,000 new digital subscribers during their first year. Since then, many other newspapers have either followed suit or are studying how to implement a similar strategy.

When Folha launched their paywall, the rules were that each visitor would have 20 free articles per month while the homepage, cultural schedule and a site for children remained free. After reaching the 20 article limit, readers would have to register some information, then they would have an additional 20 articles before they had to pay.

In March 2013, the limit was lowered by half to 10 free and an additional 10 after registering. The ability to change the number of free articles is seen as a strength by proponents of the metered strategy. Unlike the New York Times model, which does not count pages accessed via links from social media towards the monthly limit, Folha does not make this distinction.

Folha offers two types of subscription:

• Those that subscribe to the print edition and have access to the digital products.
• A digital subscription that enables access to the content on any of the platforms.

According to Roberto Dias, Digital Content Director, Folha’s website has 21 million unique visitors per month, with over 270 million pageviews. “Today, every article by Folha is read by a lot more people than 30 years ago. What we really need to do is to look for sustainable models for the journalistic production process, which is expensive.  I think every newspaper is going to find their own; we are looking for ours as well.”

Hard paywall – Reforma (Mexico) – Since 2002, the Grupo Reforma have had a paywall on their websites and charged online subscribers 20% less than a paper subscription.

This was a means of protecting the print business, according to Jorge Meléndez, vice president of new media in an interview with the Knight Center.

After nine years, Reforma has 50,000 online subscribers and its daily circulation reaches 300,000. Currently, they have 5,555 new users per year. However, when they started the paywall, traffic shrunk by 30% and it took one whole year for it to return to its original level.

They currently offer a digital-only subscription that is good for up to four devices and a paper subscription that includes access for up to six devices. Offering bundles that encourage readers to continue to receive the newspaper is common, especially because print advertising still commands a dramatic premium over digital ads.

Digital kiosks – This model, similar to Apple’s Newsstand,  is particularly prominent in Spain, where Orbyt, Vocento and Kiosko y Más are some of the market leaders. In most cases, these kiosks provide access to a PDF version of the publication (similar to the one in print) and people can buy one or more publication from the kiosk at a price that is on average 50% of cover price.

In Latin America, kiosks are a fairly new concept, though one that is being developed.  One of the first to operate in the region is a Colombian kiosk for magazines called Pasalapagina.com; they offer access to 30 Colombian magazines for a monthly subscription fee.  According to a market survey, the amount people are willing to pay at the kiosk in Latin America is about 50% of cover price.

Platform specific strategies in Colombian media –  Semana, a political magazine, is the only Colombian media outlet ever to charge for the content they offer to tablet users.  Initially, the magazine launched a free app that reached over 110,000 users. They then introduced a fee charging for the digital subscription.

El Tiempo and El Colombiano, two of the leading dailies, are also working on paywall projects that they hope to implement in 2014.  Currently, these newspapers have free access to their digital editions and rely on online advertising for revenue.  However, they also offer a product called e-paper (an electronic version of the newspaper) for a discounted price.

In March 2012, El Colombiano, located in Medellin, implemented in its tablet edition a ‘freemium’ model which, after registering, allows the user to download the newspaper in its PDF version and have access to other publications such as smaller neighborhood newspapers and magazines. During the first month they attracted 7,000 users.

Markets in transition

When developing a paid content strategy, publishers and media executives will need to consider the specific conditions in their market to determine whether a paid approach is appropriate and, if so, which strategy to choose.

Determining the market opportunity is key, and it is important to consider the unique market conditions in your country, both in terms of digital consumer adoption and digital market development.

The vast differences across Latin America help explain the wide range of paid content models being used. The overall level of internet penetration is currently at 42 percent in Latin America, but that only tells half of the story. Internet use varies widely, ranging from 66 percent in Argentina and 58 percent in Chile to 16 percent in Honduras and Guatemala, and 14 percent in Nicaragua.

Paid content systems involve costs in terms of development and infrastructure, and if internet penetration is too low, it might be difficult to generate meaningful revenue. There is also the issue that many Latin American consumers are not yet comfortable with sharing credit information online. However, it’s important to note the rapidly changing market. The online population of Latin America grew faster than any other global region in 2011, rising 16 percent to 129 m visitors in December 2011, according to The 2012 Latin America Digital Future in Focus report by comScore.

While Latin American internet users might be fewer in number than in some other regions, the intensity of their use to some extent counterbalances this. As in other parts of the world, social networking is driving much of the growth in internet use. Moreover, Latin America is home to five of the most engaged social networking markets worldwide.

As internet use continues to grow in the region, the digital market opportunity both in terms of paid content and ad-supported strategies will increase for news organisations, but so too will new digital competition.

Mobile segmentation strategies in which users pay for the convenience of accessing content on mobile devices such as smartphones and tablets, while being able to read it for free on laptop and desktop computers, face challenges in Latin America. Tablet use is lower and growth has been slower due to pricing, limiting the immediate opportunity to use tablets as part of a platform segmentation strategy. According to market research company GFK, it is estimated that in Chile there will be 400,000 tablets by the end of 2013, for about a 2 percent market penetration.  In Colombia, 7.4% of the population owns a tablet, but tablets rank first when it comes to desired possessions. In the poll, 20 percent of Colombians indicated they wished to have one, according to an IPSOS-Napoleón Franco poll.

Of course, mobile phone use is high and smartphone use is growing. It is important to remember there are great differences between countries in the region, so fragmentation will be key. In Brazil, there are 27 m smartphone users, and in Mexico there are 23 m smartphone owners. Mobile phone penetration is 55 percent across the region and much higher in individual countries, such as Colombia with 95 percent penetration.

Other challenges exist including limited bandwidth and the broad prepaid user base. In countries such as Guatemala, 94 percent of mobile phone accounts are prepaid, and even in  Brazil, 80 percent of subscribers use prepaid accounts, according to the GSMA, a mobile phone trade group. Prepaid subscribers tend to be more price sensitive

All of these factors need to be considered when building a paid content strategy around mobile phones.

Facing the challenge from digital content start-ups

The diverse market conditions make the challenge facing the industry a complex one.  On one hand, there are the opportunities presented by the increase of the potential audience both for the print edition and its digital counterparts. On the other, there is the risk of squandering them by cannibalizing their own print product. A premature move towards full digitalization at this time may sentence healthy print editions to an untimely death, but failing to develop digital products and revenue streams may cede future digital opportunities to new competitors.

The Colombian experience in this regard is interesting: fast-growing all-digital outlets such as La Silla Vacía and Kién & Ké are gaining ground on their traditional media counterparts, particularly in the younger demographic.

Most current strategies focus on differentiating the various digital products – online, on tablets and on smartphones – in order to serve the needs of the audience, while keeping an eye on the fierce competition from other digital-only media outlets. These digital competitors are probably betting on a faster rate of decline for the traditional model, especially as Latin America moves closer towards its development goals.

Audience measurement key to strategic choices

Many experts agree that traditional print products in Latin America still have a bright future ahead of them. In order to navigate the complex set of strategic choices across the markets of the region, newspapers and magazines have developed or need to develop tracking features to better understand their users and the ways they are consuming information.

For example, a newspaper might be interested in knowing their audience breakdown based on users in cities versus smaller towns, or what percentage of readers are coming from abroad.  Not all users are the same and not all of them are willing to pay the same; similarly, advertisers might favour a certain category of users or a certain pattern of online behaviour.

The next step for traditional media in Latin America is to figure out what kind of digital strategy is best suited for their particular publication. Technology will provide many of the tools to make this assessment and come up with creative ways to court the audience and develop digital products with a range of revenue streams.

The amount of information available and the level of depth of niche-specific content are also important factors when considering a paid content strategy.  For instance, sports content in Latin America is a type for which users have been more willing to pay; on the other hand, music and entertainment news content is rarely purchased.

In the end, innovation and creativity are a must when it comes to designing the models that will govern the region’s paid content strategies.  The question is, in the interim, while traditional newspapers still enjoy healthy circulation and advertising revenues, will they invest in integrating newsrooms and developing radically different models to stay ahead of the digital game, or will their current success lock them in a potentially obsolete way of doing business?

Last year alone mobile data traffic almost doubled, and the volume of mobile data traffic was 61 times larger in 2012 than it was five years earlier, according to a report by US networking company Cisco.

The report is packed with similarly staggering figures that highlight the growth of mobile data, including a prediction that by the end of this year, the number of mobile connected devices will exceed the world’s population.

The report provides not just these-attention grabbing global figures, but also regional and in some cases national figures that will help publishers and editors at news organisations make decisions about how to reach their rapidly expanding mobile audiences.

Explosive growth in the next five years

The report, The Visual Networking Index Global Mobile Forecast (PDF) , gives a sense of just how rapid the growth in mobile data will be over the next five years. It draws on a number of sources including Informa Telecoms and Media, Strategy Analytics, Infonetics, Ovum, Gartner, IDC, Dell’Oro, Synergy, ACG Research, Nielsen, comScore, Arbitron Mobile, Maravedis and the International Telecommunications Union (ITU).

The global figures predict global data usage in 2017 with growth rates so fast that the figures truly are mind boggling:

• Mobile data traffic will grow almost three times faster than fixed line traffic.
• By 2017, global mobile data volume will increase by 771 times from what it was just 10 years before. This means in 2017 mobile data traffic will be the “equivalent of 2,789 million DVDs each month or 30,742 million text messages each second”.
• Data use from Android devices is now higher than that of iPhones.

Diving into the details of the report, there are a few things that are important to note: Cisco includes not only data over traditional mobile networks but also data using WiFi. In fact, the amount of data over WiFi is dramatically higher than that over mobile networks.

Also, the global figures themselves already seem staggering, but when you focus on specific regions or countries, the predictions of growth seem even more astonishing. Some highlights from the the report include:

• Africa and the Middle East will see incredible growth in mobile data between 2007 and 2017, with mobile data traffic growing 3405 times in that decade, the report predicts. By 2017, there will be almost 850 m mobile users in the region, up from 661 m in 2012.
• From Central and Eastern Europe including Russia, mobile data speeds more than tripled last year to 551 kbps.
• “In Latin America, 67.7 million devices were added to the mobile network in 2012,” the report says. However, that is just half of Africa, where 144.7 m devices were added to the network.
• In the Asia-Pacific region, which includes Asian giants India and China, some 385.5 m devices were added to the network, just in 2012.
• For all the talk about smartphones, basic handsets still make up the vast majority of devices on the network, accounting for 82 percent.

The value in this report for news organisations outside of North America and Western Europe is this richness of regional and even major country data. To see highlights for your region, Cisco has created a website that allows you to find the statistics by region as well as by major countries in the regions. I will say this: the major countries in each region do tend to skew the data for these types of reports when it comes to digital media usage.

What does this mean for news organisations?

As a company that sells networking equipment, it’s in Cisco’s interest to make these numbers look large, but the multiple sources of data that Cisco uses are credible. The company estimates that, if anything, its estimates have erred on the conservative side by 2 to 10 percent.

The bigger question is why this information is relevant to news organisations. We all know that the mobile revolution has arrived, and it is sweeping across the globe. Publishers and editors need to know how to respond to the ways their audiences are using mobile devices by understanding:

• What devices are they using? How many are using smartphones? How many are using basic phones?
• Are tablet users a significant part of your audience?
• Are they using WiFi, 3G or 4G?

For example, in Africa, parts of Asia and Latin America, digital means mobile. As we noted last year, in countries like Egypt, Bangladesh, Senegal and Brazil, the majority of internet users are mobile-only internet users.

This will mean that not only will publishers need to understand how to deliver their content to these mobile audiences, but they also will need to develop revenue models that will support this expansion of mobile. Monetising mobile audiences is a key strategic goal for many digital media companies, and, while early in its development, there are mobile advertising strategies such as better targeting – both of the customer and the customer’s location – that are proving successful. In addition to advertising, mobile audiences are more willing to pay for apps and information. Mobile payment systems also make it easier for users to purchase things using mobile devices, opening up opportunities not only for paid content but also m-commerce.

Cisco’s report shows that mobile use has exploded past the elite, early-adopter phase and is rapidly moving into the mainstream. It’s another platform, with its own unique challenges, but also its own unique opportunities. Almost regardless of where you are in the world, if you don’t have a mobile strategy, you’ll want to develop one this year.

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.

Apple recently announced that it will be getting rid of Google Maps starting with its iPhone iOS6 and introducing its own maps service.  With this, Alex Salkever of local journalism business site Street Fight says it opens the door to advertising revenues through hyperlocal ads based on people’s current location and their search history.  And it can succeed in this ad world that has been mainly dominated by Google. Apple has all the technology in place to deliver customised, local ads to people doing searches on their mobile phones, Salkever adds.

Google, meanwhile, has revamped its own map ads in hopes of getting higher click-through rates (CTR) and keeping its share of hyperlocal advertising revenue.

To the surprise of many, Facebook has begun to demonstrate just how lucrative mobile ads can actually be.  “Sponsored stories” on the Facebook mobile app – ads that are integrated into the Facebook newsfeed – are getting 1.93 times higher CTR than sponsored stories on Facebook desktop, and the eCPM (effective cost per thousand impressions) has been 2.65 times higher.  Although some of the ad companies interviewed by Josh Constine of TechCrunch varied in their estimation of the CTR, even the most conservative estimate of 0.8% still saw an average CTR of 2% when smart targeting was taken into account.  According to Tutawa Ahwol writing for Public Media Interactive, the industry standard for click through rates for internet banner advertising is 0.2 to 0.3 percent based on data from 2010. The worry for the industry is that CTRs have been dropping for years, and more recent data from PR and marketing firm Ogilvy say the CTRs for internet banner ads have now fallen to just 0.1 percent.

Therefore, Constine says,

There’s no space for an ads sidebar and if far too many ads are injected into the content feed, users could get angry and stop browsing. But the impressively high CTR and eCPM mean Facebook doesn’t have to show too many Sponsored Stories to make a ton of money off of them.

Given the information Facebook has about its users, it is better poised than any other social networking site to produce extremely targeted advertisements – including hyperlocal ads based on real-time locations.

While these big digital companies are exploding onto the mobile advertising scene, it’s important to note that the biggest growth will be seen outside of North America.  Russia’s mobile penetration is amongst the highest in the world at 159%, 25% of which are smart phones.  Mobile internet penetration is at 20%, and is growing exponentially.  Right now search engine advertising accounts for approximately 53% of the total online advertising in Russia, and Yandex is the leader with a whopping 61% of search revenues.

The challenge is to understand how news organizations can take their share of the mobile advertising market, especially local news companies that can more easily take advantage of hyperlocal ads.  In last year’s Street Fight Summit, Alistair Goodman, CEO of Placecast, said “We’re approaching a time where you’re going to be able to bid on a user on a street corner at a particular point in time in real time.”

If you’re interested in more innovations in the business of hyperlocal, Street Fight is a media and research organization – with a blog – focused on exactly this.

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