When observers talk about developing markets, they generally reserve their most breathless excitement for India, China, Brazil and Russia.
Maybe they should add South Africa to the list. It’s easily the most advanced mobile territory in Africa, and it possesses the two magic factors that make any evolving market particularly exciting – European-style infrastructure and consumers whose first introduction to telecoms and the web comes from mobile.
When service providers develop solutions that meet these market conditions, extraordinary things happen. A case in point is the ‘Please Call Me’ service that has become famous around the world as an example of South African innovation. It evolved from the practice of ‘beeping’ – calling someone and then hanging up as a signal for the recipient to call back.
It was estimated that 20 to 30 per cent of calls made were beeps in 2006, so the operators looked for a means to monetise these apparently ‘wasted’ calls. Vodacom came up with ‘Please Call Me’, a free text service that displays the phone number of the caller, alongside space for an advertising message.
It’s been a tremendous success for all parties. In one high profile campaign ‘Please Call Me’ was used by Socialtxt to advertise the AIDS helpline number, and in 20 days, 20 million texts with the helpline number were sent and received. As a result, call volumes to the helpline increased by 350 per cent.
The case study illustrates the centrality of mobile to the daily lives of South Africans. It connects a population that has little access to landlines, and even less exposure to broadband. According to Research and Markets, there are 42.4 million mobile subscribers in South Africa – that’s 88 per cent penetration.
Meanwhile, around 40 per cent of the population has access to the mobile web compared with just ten per cent for fixed line. This makes South Africa an attractive region for service providers from all over the world. UK transactions specialist Bango, for example, says South Africa accounts for eight per cent of all its web sessions.
There are regrettable socio-economic reasons for the lack of fixed broadband. Tim Legg, MD of Oxygen8 (formerly Opera Telecom) South Africa, says: “It’s hard to get wired broadband established when the cables are routinely stolen from the roads.”
But there are also more encouraging factors behind mobile data’s stratospheric growth, namely the laudable commitment of the operators to the cause. Three years ago both MTN and Vodacom slashed data charges by 90 per cent. Suddenly the standard rate for a megabyte was two rands (around 25 US cents). That’s around 25 times less than the standard UK fee today. Sobering, eh?
The result was an explosion in content and web-related services. Mobile banking has proliferated. The Wizzit service was created to serve the 16 million South Africans who do not have bank accounts. It lets users check balances, transfer funds, purchase airtime and pay utility bills from the handset, and has 300,000 customers.
Unsurprisingly, perhaps, advertising has been another boom area. The Singapore-based BuzzCity may be best known for its myGamma social network in the rest of the world, but in South Africa it focuses more on running a self-service ad network that lets brands get in front of mobile users. In 2Q 2008 alone BuzzCity recorded 578 million ad page views by South African users.
Wandrille Pruvot, VP of sales and marketing for BuzzCity, says: “The channel is so well-developed here that some brands are willing to spend 70 per cent of their budget on mobile advertising. It’s the only market we’re active in where mobile content companies are not the main clients. Instead, they’re banks, real estate agents and so on.”
Obviously in a market comprising so many low income consumers, ad funded content is very attractive. But mobile has one more key advantage. South Africa has 11 official languages. This makes mass-market marketing tricky, and mobile campaigns very alluring – as long as they’re targeted.
Hence Ad-Me, a push advertising service for which a subscriber provides a profile, and then receives targeted ad messages in return for treats. It launched in early-2008, and has over 100,000 opt-ins already. No wonder, Vodacom says the South African mobile advertising space could generate R1.5 billion by 2011 and that SMS and MMS already contributes over half of the country’s direct marketing spend.
But perhaps the most vibrant South African content sector of all is social media. This is almost entirely due to one wildly successful service. MXit is a free mobile IM and sharing app along the lines of services being run by Zed, Buongiorno and Dada in the ‘first world’. It has become astonishingly popular, with over 8.6 million users sending over 250 million messages a day.
Although MXit’s IM messaging is free, it does generate data revenue for operators. And users also pay money for premium services like skins, content, greeting cards and so on. They do this by buying ‘Moola’ via PSMS – another handy form of revenue for operators. The cash explains why Vodacom and MTN tolerate what could be seen as a cannibalising service.
Oxygen8 is one of MXit’s content partners, and Tim Legg says: “The operators tolerate it because it’s so popular with users and these ‘moola’ payments are generating quite a bit of revenue for them now.”
It hasn’t stopped them trying to launch against it, though. Vodacom acquired a 40 per cent stake in local social media startup Zoopy, which lets users share videos, photos, podcasts and blogs. Meanwhile, MTN hired Movius to build the IM app ‘noknok’ as a riposte to MXit.
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