In 2016, there will be less new people coming online than in 2015 or in the years before that. Almost everyone in Europe and North America is already online and there’s simply not much room to grow.
For digital service companies that’s bad news. Getting attention is becoming more expensive as there are less new users to acquire and everyone else is targeting them as well. According to VentureBeat user acquisition costs jumped from $2 in December 2014 to $4 in December 2015. In a shrinking mobile economy, growing your audience is difficult. But fortunately, the economy is not shrinking everywhere.
India’s internet adoption is accelerating. Last year it was 40%, compared to the global average of 10%. India and other emerging markets still have room to grow. Smartphone penetration in countries like India, Nigeria and Russia is around 30% today. According to GSMA Intelligence, that number will grow to 70% by 2020. China and India are already ahead of the US by the number of smartphone owners.
Growth in these markets is beginning to ramp up because people’s income is low and smartphones have been expensive. But cheap smartphones are changing this. Globally, the price of an iPhone is around $700 while the price of an Android phone is around $200. There are even cheaper phones available at sub $100 prices and these will be driving growth of the mobile ecosystem in the few next years.
If you need proof on the importance of emerging markets, take a look at what companies like Apple, Facebook, Google, Spotify, Netflix and Uber have been doing recently. Entering emerging markets should be a key priority for all digital content merchants.
If you don’t launch early enough, someone else will. Facebook initially focused on growth in Western markets and in the meantime VK became dominant in the Russian market. Similar examples are found in several other industry segments. Netflix competes with iFlix in Asia, Spotify has local competitors in China (QQ Music), Japan and Taiwan (KKBox). Uber is facing competition in China (Didi Kuaidi), India (Ola), and South-East Asia (GrabTaxi).
When entering emerging markets, localization should be a key priority. The same strategies that have been in use for Western audiences will most likely not work there. Facebook was available in Russia from the beginning but VK knew the local users better and won the market. So what are aspects of your service that you should localize?
Most people in the world don’t speak English. There are 230 languages in Europe but more than 2200 in Asia. A majority of consumers will not understand a digital service that is only available in English. The cost of translating a few pages into another language is only a few hundred dollars while being the most efficient marketing initiative out there.
Spotify has understood this and translated their Indonesian homepage into the local language. This makes sense, because only 15% of people in the country speak English. Another example is Netflix in Japan. If you look at their local landing page, you will see content translated into Japanese. This gives audience the understanding that they don’t need to speak English to enjoy shows and movies:
Even a slight touch of localization on the landing page will help make a better connection with the local audience. If your service is built on content aggregation and you are able to deliver local content, that’s even better.
The Big Mac Index is published by The Economist as a method of measuring purchasing power parity between two currencies. By looking at how much burgers cost in different countries, we can evaluate how big are the users’ spending capabilities. Burgers are cheaper in India than in the US because in India people’s income is significantly smaller. If a burger costs a different price globally, does it make sense to have blanket pricing for digital content?
Avast is one of the biggest anti-virus providers globally. Their local pricing (the same products are 2x cheaper in India compared to Europe) is due to an understanding that optimized pricing for emerging markets helps sell more products. A lower price helps you sell more because more people are willing to buy from you as the price they are paying is similar to what they are paying for other things online.
In addition to pricing services differently, differences in user’s purchasing behavior can be accounted for as well. Fortumo’s internal payments data shows that even if users end up spending the same amount of money during a month, the average transaction size can vary 2-3x times between countries.
This means that pricing for each transaction can be localized as well. In some markets you might see that users are not willing to pay at all, so an ad-based revenue strategy would the best way to go. In another market, it might make sense to offer a subscription service. In a third market, you may have to add a free trial to get users to pay. Measuring and analyzing payment data, keeping in mind that people’s spending habits are different and tweaking pricing helps make more money.
People also have different access to payment methods. In Western Europe and North America, almost everyone has a bank card; most people also have a credit card. But not all of them want to pay online. The fear of getting your credit data stolen online in the US is bigger than the fear of getting mugged on the street. In emerging markets, most people don’t have the luxury of having such a fear as they don’t own a credit card.
There is a stronger tendency towards informal, cash-based economies and people do not need bank cards to live their everyday lives. Since income is lower, banks cannot issue cards to people and the banking infrastructure in these countries is lagging behind compared to the growth of the internet ecosystem. So what are the alternative options for people in case they do not have or do not want to pay with a credit card?
Fortunately there is a vast amount of alternative payment methods out there. Riot Games develops a game called League of Legends. League of Legends is the #1 grossing F2P MMO across the world so they are pretty certain to know what they are doing in terms of local payment methods:
The list of local payment methods is entirely dependent on the country that is being targeted but as we can see, for Brazil and Turkey several local payment methods are present alongside bank-based payments.
Not everyone in the world has a Facebook account. The Chinese social network Qzone has almost 600 million users; the Russian social network VK has almost 400 million accounts. While these social networks are smaller than Facebook with 1.6 billion monthly active users, they are dominant in their respective regions. Many other regional social networks exist as well, for example Renren, Mixi and WeChat.
When entering emerging markets, being present in these social networks and running ads there instead of Facebook is key to growing your community. In China, Facebook is banned and can only be accessed through VPN. Fan pages and advertising can be done on alternative networks instead.
Not everyone has the latest, greatest smartphone. While the average price of an iPhone is around $700, an Android phone costs on average $200. Android has globally 80% market share and $200 devices will have less technical capability. For emerging markets, digital service providers should consider the following:
- Is there enough room on smartphones to install their app?
- Is the phone powerful enough to display high-quality graphics?
- On smaller resolutions and screen sizes, is the service still usable?
- Can the service support older versions of operating systems?
Beside lower technological capability of cheaper phones, mobile data is not as widespread as it is for someone in Europe or the US. In India only 15% and in Nigeria 24% of people have mobile broadband access. People in these countries turn off mobile data and use Wi-Fi whenever possible. That means that if possible, services should also be accessible when users are offline.
Timing of promotional campaigns
From the marketing side, every online merchant wants to run their campaigns when people are already more likely to be seeking for things to buy. Generally, this happens around major holidays. Major holidays do not take place at the same time everywhere and we recently published a blog post highlighting the key differences geographically.
The best place to start when starting localization is by looking at your existing traffic. What markets are your users coming from? How well do people in those countries speak English? Can you localize your service, digital assets and campaigns for those countries?
The second step is to take a look at pricing. The simplest approach to pricing localization is to divide the items you sell into various tiers, e.g. one for high-income, one for mid-income and one for low-income economies. For each country based on its purchasing power, display the appropriate pricing tier.
With 10 times more languages being spoken in Asia than Europe, with a 25x income gap between US and India, with 9x less credit cards in India than China, using the same strategy for emerging markets as for Western markets is ineffective. Local customer research and understanding payment behavior significantly increases likelihood of success in emerging markets.
In the beginning of the year, we published a white paper describing the future of carrier billing. The audience in emerging markets now makes up a majority of the digital population. Most of them don’t have access to bank-based payments, meaning online companies need to adopt carrier billing to collect payments from them.
Gaming, social networking and streaming merchants are already doing this. But improvements in commercial terms and technical conditions will allow new segments to adopt carrier billing. In the next few years, we for example might see ridesharing companies and mobile commerce businesses start collecting payments through the mobile operators’ infrastructure.
This presents an interesting co-operation opportunity to mobile operators (who have the audience in emerging markets) and financial technology companies (who are currently serving companies with bank-based payments in Western markets). How come?
Fortumo’s CEO Martin Koppel recently took the stage at Money20/20 Europe and explained how financial technology companies and mobile operators could work together to solve the emerging markets payments challenge.
Check out the video of the presentation below:
Another month has come to an end, so let’s take a look back at the biggest events of the industry. Several major acquisitions took place, so check these and other news stories out below!
- Mobile World Live: Mobile operators “sitting on goldmine” – Baidu head
- TechCrunch: Emerging markets’ challenge to Silicon Valley
- Mashable: 8 biggest digital entertainment trends in 2016 (so far)
- Jollyboss: Smartphone shipments in India grew 15% in Q2
- OperaMediaworks: APAC Mobile First Insights Report
- Medianama: GSMA’s login API will replace passwords with mobile number logins
- PocketGamer: Apple drops to fifth place in China’s mobile market as local competitors thrive
- TechCrunch: Verizon buys Yahoo for $4.83 billion
- The Fast Mode: Digital Content Payments by Carrier Billing to Increase 4 Folds to Reach $47 billion by 2020
- Business Insider: Apple and Google want to control your wallet — but PayPal has a secret weapon
- PYMNTS: MasterCard Powers Vodafone Egypt’s Mobile Wallets
- Mobile World Live: China’s Alipay in talks with Wirecard – report
- Medianama: MasterCard invests in RazorPay ; international expansion in 6-8 months
- Medianama: Xiaomi ties up with MobiKwik to launch instant DTH and mobile recharges
- VentureBeat: Avast acquires rival AVG for $1.3 billion to create a security software giant
- Indian Express: Amazon Prime comes to India: Here is everything you need to know
- Yahoo: iflix aims for international expansion with 3 senior appointments
- WSJ: Apple in Talks to Acquire Jay Z’s Tidal Music Service
- BBC: Ask.fm changes hands once again
- Medianama: Gaana launches its first original audio series; episodes to be aired fortnightly
- Business Insider: Look how many people forgot to cancel Tidal after signing up for the Beyonce free trial
- Reuters: Tencent in deal with China’s leading music streaming firm to combine music services
- DNA India: Wynk Music is the most downloaded Android music app in India
- PocketGamer: India’s paying mobile consumers spend almost as much on IAPs as global average
- Gamasutra: Big discounts on bulk IAP buys in mobile games barely affect earnings
- VentureBeat: China’s Giant leads consortium to buy Playtika for $4.4 billion
Our latest market report gives an overview of the mobile payments landscape of Western Europe. It covers 12 markets where Fortumo has coverage. These markets are Germany, France, United Kingdom, Italy, Spain, Netherlands, Belgium, Greece, Portugal, Austria, Switzerland and Ireland.
Even though Western Europe is a region with high income and good access to bank-based payment services, many people still prefer to use alternative payment methods such as carrier billing. This is illustrated by the fact that carrier billing is among the top 3 payment methods for digital gaming in most of the countries profiled.
Carrier billing is popular in Western Europe primarily due to two reasons. As carrier billing does not require users to sign up for any accounts, payments can be completed with one step. This creates an improved checkout experience over bank-based payment solutions, especially on mobile devices. Furthermore, high awareness of card-not-present fraud has increased the usage of carrier billing as a safe, alternative payment method. This is because with carrier billing, no personal or sensitive data is transmitted during the checkout process.
It’s important to note that Western Europe is a primarily postpaid market, e.g. users have a contract with their mobile operator and pay for items purchased through carrier billing at the end of each month. This creates a higher risk of friendly fraud (chargebacks) compared to emerging markets where most users have a prepaid SIM card. To find out how to mitigate friendly fraud, please read our white paper on risk management with carrier billing.
Fortumo’s Western European market report gives a high-level overview of the biggest markets in the region:
- Demographic data, mobile coverage and banking access of each market
- Carrier billing spend behavior of users in each market (quarterly revenue per paying user, average transaction size)
- Overview of mobile operators and their market shares
- Overview of traffic sources by platform and recommendations for localization
Enter your contact details below, click “Submit” and we will send you a link to the download to your e-mail.
Today we are excited to announce the launch of our revamped Merchants Portal, previously known as Fortumo’s Developers Portal. The new version of the portal includes existing information on the technical integration of Fortumo’s payment products. In addition, we have also added substantial new content on the commercial and operational aspects of carrier billing based on your feedback.
If you are a new merchant evaluating our payment products, we recommend you first start by looking through the updated list of frequently asked questions and the Getting Started page. This will answer most of the questions users have about Fortumo.
In addition to the improved FAQ, Fortumo’s Merchants Portal is now divided into six parts:
- Getting started: a general overview of carrier billing, choosing the right payment product for your business and frequently asked questions about Fortumo
- Integration documents: technical documentation on how to create payment services on Fortumo’s Dashboard and integrating our payment products into your mobile app or website
- Testing payments: information about testing your payment services after you have successfully integrated them, to make sure everything works correctly before you launch payments for your customers
- Compliance information: with carrier billing being regulated on a country and carrier basis, here we have gathered information on compliance rules which help speed up the approval process which precedes the launch of your services
- Commercial terms: information about the payouts of carrier billing, as well as how to configure your Fortumo account to make sure we are able to make payouts to you once you start processing payments
- Post-launch activities: information on how to provide your customers with great end-user support as well as guidance on growing your revenue with the help of payment analysis
We hope you like our new Merchants Portal. Let us know what you think of the new portal by using the feedback buttons at the bottom of each page.
Today we are publishing the updated version of Fortumo’s Emerging Markets Payment Index.
The aim of the index is to provide digital media companies, web and game developers a benchmark for their revenue in markets with high smartphone growth and low credit card penetration.
The countries covered in the index are India, Nigeria, Pakistan, Vietnam, Bangladesh, Brazil, Egypt, Indonesia and Philippines.
Check out how emerging markets performed in Q2 2016 below! If you are interested in more data on carrier billing and the mobile ecosystem of emerging markets, download our other market reports and white papers.
Another month is past us and it’s time to take a look back at the biggest news in the mobile industry. Check out our summary of June below!
- Recode: Mary Meeker’s 2016 internet trends report: All the slides, plus analysis
- TechCrunch: Smartphone sales growth will drop to single digits in 2016, says Gartner
- Recode: Google is offering app developers the same revenue-sharing terms Apple just announced — with one big advantage
- Wall Street Journal: Microsoft to Acquire LinkedIn for $26.2 Billion
- Medianama: 23% of users abandoned an app after single use; iOS retention better
- TechCrunch: Messaging app Line files for IPO on NYSE on July 14, Tokyo July 15, trading as LN, to raise $1B
- Mobile Payments Today: The global ascension of direct carrier billing (Part 1)
- Mobile Payments Today: Direct carrier billing makes the transition from digital content to physical goods (Part 2)
- Nikkei: Tencent pushing mobile payments in Japan
- TechCrunch: Facebook is testing social commerce payments in Southeast Asia
- Ubergizmo: Viber Will Now Allow Users To Send Each Other Money
- Microsoft: Microsoft Wallet with tap to pay is now available for Windows Insiders
- TechCrunch: Amazon will pump $3B more into its Indian marketplace as it competes with Snapdeal and Flipkart
- Digital News Asia: South-East Asia users can now Grab a Lyft in the US
- Vocativ: The Playlist That’s Helping Spotify Win The Streaming Music Battle
- Music Business Worldwide: Amazon is launching a fully-fledged Spotify rival within months
- Recode: Twitter has invested in music streaming service SoundCloud
- YourStory: Netflix bets on ‘Sacred Games’ for its 1st original series from India
- Television Asia: Asian OTT playing fields
- Business Mirror: iflix to launch services in Middle East countries, African continent
- Medianama: Uber users can now stream songs from Gaana during rides
- TechCrunch: Tencent confirms deal to buy majority stake in Supercell from SoftBank for $8.6B
- Business Insider: Sorry Twitch: Facebook is about to become the best place to stream video games
- PocketGamer: Will the introduction of carrier billing unlock paying users’ intent for India?
- Marbridge Consulting: China’s SAPPRFT to Begin Pre-approving Mobile Games Starting July 1
Fortumo develops payment products that help your users across the world make purchases through carrier billing. In addition to that, we want to help grow your business in the smartest possible way. That’s why we run this blog: to provide you with insights and data on the industry.
As we have quite a loyal readership (12% of you visit the blog on a daily basis) we must be doing something right. We hope you find the content here useful and would now like to ask for your help to make it even better.
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For most most online commerce companies, December is the biggest month of the year in terms of revenue. That’s because people are buying gifts for the Christmas season. But not all people in the world celebrate Christmas, nor does the buying spree happen at the same time globally. Below we have listed global and regional events around which digital content merchants can additionally plan campaigns to increase revenue.
Secular and traditional events
During the off-holiday season which comprises most of the year, there are several times of the year when people are more inclined to make online purchases and give gifts to one another. These occasions happen on a global level which merchants can take advantage of:
- Mother’s and Father’s Day: these take place at different times in various countries, which also allows merchants to run a similar, but localized campaign for different markets
- Valentine’s Day: February 14th is the date when most couples show appreciation for each other. In the UK for example, almost half of the population buys something for their loved one on this day
- Back-to-school and graduation periods: The young audience that graduates from (or starts going to) high schools and universities each year is sizeable. As they are the most connected demographic in society, gifts of digital goods and services are usually more than welcome.
- Global sporting events: Recurring events such as the Olympic games, the Cricket World Cup, FIFA World Championship etc. can be leveraged by merchants to drive purchasing of sports-related content.
Today we are excited to publish our carrier billing risk management guide. This guide allows carriers and merchants to get a better understanding on how to monitor payment traffic for fraudulent activity and mitigate risk of bad debt by managing user spend limits while encouraging spending for legitimate users.
Risk management for carrier billing works in the combination of input from carriers, payment service providers like Fortumo and merchants . As a combination of these criteria, individual transactions can be assessed as well as spending limits applied to specific users and user groups.
Managing risk helps avoid a situation where subscribers encounter bill shock (realizing they have made more purchases than they expected). This in turn reduces customer complaints, chargeback request as well as potential issues with regulators.
Having a proper risk management solution in place helps both merchants and carriers increase revenue (enabling higher spending limits and allowing transactions from low-risk, high-spending users) while minimizing revenue losses (reduced amount of fraudulent payments and bad debt).
Download this white paper if you are interested in learning more about:
- Types of fraud and their likelihood with carrier billing
- Attributes that can be used for assessing user and transaction risk with carrier billing
- Mitigating risk through applying (dynamic) spending limits to user groups
- Criteria that should be considered when accepting and rejecting transactions
- Examples of dynamically managing spend limits and assessing transactions
- Suggestions for merchants in order to reduce their fraud risk with carrier billing
Enter your contact details below, click “Submit” and we will send you a link to the download to your e-mail.