Three ways to hack into Asia’s new social boom

Just last month, Facebook hit the 800 million-user mark. It is foreseeable that in the not-so-distant future, Facebook will become the first service in history to reach 1 billion users – a truly unfathomable number just a decade ago. Social networks like Facebook are reaching unprecedented numbers of users, due to the proliferation of the Internet and mobile devices across the globe. Still, social networks have the potential to reach so many more.

For many, Asia is the key to reaching a global audience of massive scale. The vast region that makes up East, South, and Southeast Asia is quickly developing into a mobile social powerhouse due to its enormous (and increasingly developed) population. Although Internet and smartphone penetration are lagging far behind North America and Europe, the market opportunity there is truly massive; even with a much smaller smartphone penetration percentage, China is now the second-largest app market in the world, with 20% growth month over month.

However, taking advantage of Asia’s scale is a complex undertaking. The disparity in wealth, language, and culture across countries raises a number of hurdles. As always, the first step to overcoming these hurdles is to understand the market.

Below are the three most important lessons on Asia’s social and mobile frontier.


Price Your Product By Country, Not By Region:

Asian users are six times less likely than North American and European consumers to download the paid version of an app compared to a free one. Aside from Japan and South Korea, price sensitivity coupled with lower purchasing power means that free alternatives will always prevail. This is especially true in countries like India and China, where “free” is abused.  So for most markets, the model of choice should gravitate towardsfreemium: the service is free to download, while add-ons and premium services are paid.

In parallel, lower credit card penetration makes it even more difficult for paid apps to take off, and also stifles in-app purchases. So even as the smartphone marketgrows, app spending lags.

Due to price sensitivity, monetization in Asia is much more challenging. Unlike in the U.S. and Europe, it is extremely difficult to build an ad-based business in Asia, where digital ad-spend is still in its infancy. Mobile companies cannot rely on ad-based monetization just yet, although it is increasing as smartphone penetration picks up as well. For the larger countries, like China and India, where smartphone penetration percentage remains in the teens, it will take even longer to catch on.

Don’t Be Afraid to Partner With Mobile Operators:

In Asia, feature phone usage far outstrips Internet usage and the only players who can reach feature phone users are the mobile operators. They are key to mass distribution of any service that aims to reach billions.

In the West, operator networks are often referred to as “dumb pipes,” but with intelligent engineering, powerful voice and text services can be built into non-data-based mobile networks.

Most importantly, operators can charge users with micro transactions, even without credit cards. This makes them hugely useful in monetizing services – a great alternative to ads. Operators are currently clamoring for value added services to their network in order to monetize their enormous subscriber base and set up ad opportunities for brands.

Most U.S. companies will not want to deal with mobile operators, which can be very challenging. Carriers tend to be large and bureaucratic, with regional branches granted greater autonomy to make decision. Working with one carrier might be more like working with 10 – one for each region the operator is deployed in. In addition, mobile operators will also demand extreme localization – make sure to push back and keep it to what is only absolutely necessary.

Give Local Consumers More of What They Want:

Finally, it’s important to identify the most recent social trends to leverage pre-existing use cases.

Japan, with its extremely high mobile and Internet penetration rate, is the most advanced mobile market globally. Japanese users are also far less price sensitive than other users – they are willing to spend money on services such as virtual goods. They also prefer local networks to global ones: Facebook has stagnated in Japan, while gaming and blogging services provided by the likes of DeNa, GREE and Mixi continue to dominate. Paid service add-ons and partnering with a local company do a long way.

Social networking is already large in Japan, but it has plenty of room for growth. 90% of mobile users will access the Web on their phones this year – a massive number – and, surprisingly, the most prevalent reason for users accessing the mobile Web has been for blogging. Blogging and micro blogging is a huge phenomenon in Japan. This is another reason that foreign services like Facebook have stagnated or failed to take off in Japan, while Twitter has seen strong growth. Tap into the Japanese blogging phenomenon and you have much higher chances of success.

Meanwhile, Indonesia is a social media phenomenon. Indonesian users have adopted and repurposed social networks at lightning speed – just 18 months ago, Facebook was barely used, in favor of other networks. Now, Indonesia is Facebook’s second largest market and Twitter’s third largest market (accounting for 15% of tweets globally). Engagement is not just high in the more urban areas, but all throughout the country.

Finally, India is a true mobile-first country: there are 9 times as many mobile users as there are Internet users. Seven immense mobile carriers split 90% of the market share, with the final 10% split among six others.

In India, social networks are more of a popular way to share content, rather than communicate. For that, text and voice SMS is the preferred method. Lastly, micro blogging is growing quickly in popularity, both via text and voice.A celebrity culture also lends itself to creating megastars like Bollywood actors and cricket players. So the trick in India is to build a feature phone friendly service that acts as a value add to Indian operators and bring in celebrities for marketing purposes.

Image Credit: Fabian Reus / CC