Anytime Anyplace Um Global Research Sep 2007

Anytime, Anyplace: Understanding the Connected Generation UM Global Digital Insight - In-depth Study 002

2 The rapid rise of portable technology has forever changed the world The promise for content owners and marketing communications we live in. The mobile phone is the world’s largest Internet, computing is huge but how is this going to be delivered? The gulf between and communications platform with 2.3bn users; Laptops have industry expectations and what consumers are willing to accept is overtaken desktops as the PC of choice; the iPod has sold 100m units currently vast. and a whole wealth of mobile media technologies such as portable To answer these questions, Universal McCann implemented the world’s video players are on the cusp of going mass market. largest survey into portable technology and mobile media platforms The emergence of these portable platforms has happened in tandem as part of its ongoing global digital research programme. The survey with the massive growth in social media, creating a proliferation of covered three key strands of portable technology and mobile media; content such as video clips, digital photos, games, podcasts and platforms, content and advertising and marketing, investigating usage, vodcasts that can be downloaded or transferred to portable devices growth potential, attitudes and demand. and consumed in an out-of-home environment. The research covered 21 markets from five continents and was This growth in portable technology and content has changed completed in July 2007, providing a truly unique global perspective. the society and culture we live in. It has transformed our lives to become increasingly informal, flexible and transient creating massive dependency on this technology. However portable technology marketing, advertising and content still remain in their infancy, always promising “this year’s thing to watch” but never delivering. Investment today is still focused firmly on text-to-win promotions and SMS mobile promotions. WELCOME © Universal McCann 2007. All rights reserved.

3 THE GULF BETWEEN INDUSTRY EXPECTATIONS AND WHAT CONSUMERS ARE WILLING TO ACCEPT IS CURRENTLY VAST. PORTABLE PORTABLE MARKETING MEDIA CONTENT COMMUNICATIONS DEVICES

4 EXECUTIVE SUMMARY “What did we learn?”

5 EXECUTIVE SUMMARY Access is universal world-wide Illegal downloads leading the way • Consumers in the connected world have access to a massive range • Ripping legal CDs to portable devices is the number one source of of portable devices regardless of local market economic, social and content, 38% have done so. This is still ahead of peer-to-peer illegal cultural conditions. downloads, which stands at 36%. Audio devices currently dominate • Both exceed paid-for downloads, which is just 16% despite the fact • 41% have an audio player versus 20% who have a player with that music is the number one form of portable content that users video capacity. would pay for. Mobile phones are evolving from voice to data devices Branded content is the most popular advertising format • The leading markets are driven by messaging and data. In Japan • Branded content is the most popular of all advertising formats with just 24% of mobile usage is phone calls, compared to 65% in 67% finding this acceptable or valuable. the USA. • Opportunity exists in this future media environment to provide 3G phones are the most in demand portable device worldwide consumers with what they want and drive genuine consumer • 3G is the number one in demand portable technology – 43% want to benefit by creating, sponsoring or providing access to content. adopt. This is ahead of all other platforms, including media players, portable gaming and laptops. There is a huge appetite for content on these devices that is not currently being satisfied. • Role for marketers to create, sponsor and provide access to content and services. Portable technology is driving the rise of User-Generated Content (UGC) • Digital cameras are the most popular portable device after mobiles – 81% of our connected sample have one. Camera phones are nearly as popular, 76% have access. Music, films and games are the most valued content • Despite the huge amount being created, UGC is the least popular form of content to consume. • Professional content producers are not about to be superseded on future media platforms.

6 HOW WE DID IT The research was conducted via self completion online surveys All the sample groups were nationally representative to the mobile, by 10,000 16-54 ‘Connected World’ individuals who are Internet internet-connected universe (Figure 1). In many of the more emerging connected mobile phone users. Although there are hundreds of markets this defaults to an urban sample. millions of mobile users without access to the Internet, it was felt that This selection of countries provided a universe of 690m, 30% of the the dynamic between mobile and online was essential to access the global mobile universe. The mix of saturated, maturing and emerging full range of content and understand the relationship between portable markets allowed for in-depth and robust assessment of the current technology and the Internet. and future global position. Almost 500 people were sampled in each of the following markets: France, Germany, Italy, Spain, UK, Greece, Russia, USA, Mexico, Brazil, India, China, South Korea, Japan, Pakistan, India, Thailand, Malaysia, Singapore, Philippines, Taiwan and Australia. Figure 1: Market universe: 690m Universe Size 180 158.3 160 140 126 120 100 80 64.7 60 44.4 28.6 29.7 30.5 38 40 25.3 25.6 11.4 11.5 11.6 12.2 17 17.6 18.2 20 2 7 7.6 3.2 0 ce ia ly a n y re ce an a o il na n a n s lia K SA nd an di si ic pa az re ai ne wa Ita ss U po an ee st i ra ay ex In Ch Sp la U Ko rm Br Ja Ru pi i ki ga Fr Gr st Ta ai al M lli Pa Ge Au h n Th M i ut Si Ph So Source: Internet World Stats, TGI Europa, Simmons & Local market surveys

7 “THE MINIMUM REQUIREMENT TO BE INVOLVED WAS A MOBILE PHONE AND ACCESS TO THE INTERNET.” MARKETS TARGETED IN RESEARCH France, Russia Germany, South Korea USA Greece, Italy, Japan Spain, UK, Pakistan China Mexico India Taiwan Philippines Thailand Malaysia Brazil Singapore . Australia

8 PLATFORMS “What’s in your bag?”

9 WHICH PORTABLE PLATFORMS ARE THE MOST POPULAR? Figure 2: Device ownership global average 90 90 Portable devices have proliferated over the past few years - Figure 2 Fig 2 80 Fig 2 80 % Ownership % Ownership shows the global average for device penetration amongst our sample 70 70 of mobile and internet connected individuals. The ranking of devices 60 60 50 50 is particularly relevant as it demonstrates the entry points for content 40 40 and advertising. 30 30 20 20 The portable device that leads the way is the digital camera, 10 10 0 with 75% currently owning one. This high availability of cameras 0 ay e (a inte ble y) en lavyide aswi ) ce n S n au nt) ud h le) gb dio) ss y) gla o i& p i a y on i-f ia nnut o c o D Ippo N ort err er pl 3G P eP ( gitla ss ilit nl y ita ierrae vi underlines the extent to which photographs are the first point of utth iooo e ) b y) he DS n ack t) ed rstoho ide dio ndo ) rta ) ta s y di re e ab ) ab stao sis-fi /w aua rry el o n am i ap ly ic de es b tio Bl an io l lit vp Imo podi orG eirtal lesls e ud o am ie / d Ch w bi lC a dle ta g ist e g kb o p l / nd reir in content creation bar none. la pa ed ta ys e. s (lae wiw ac lt m & no te idu la e ( as p P3 itawi tio ca gi im opp pod i (v a ga (v u b Bl in Di em (P ic al r M Ditg p ig d P3 howi eo N o e el w .g P dev igit bl od d id p ab tp (e aiyg d The other interesting point is the dominance of the MP3 player over ta La wio le PS ail l d le (v pld bn r t e or I ( tae ic / d e a rp ia PSa em n po ei ev ptL (p w pl the iPod. At a global level this can be attributed to the success of 3 e on ed he he ld I M rp Aop La bl ers m Ot Ot ai le r rta PaD t he e p rta (p em low-cost flash players in the Asian markets. It is also clear how abh m Ot t L rtO Po A e e PD bl bl Po audio-only platforms lead video ones. This is a clear implication on rta Po Po the distribution of portable content. Laptops are now more likely to be wireless and at 31% are an Figure 3: Multiple device ownership global average established platform for out-of-home and significantly lead portable gaming devices. 1 (Just a mobile) 1 (Just a 2 At 31% 3G compares favourably to many other portable media mobile) 3 9% 2 Fig 3 technologies amongst our mobility audience. Dedicated 3 4 9% 29% mobile email devices such as the Blackberry have yet to make an Fig 3 5+ impact with just 6% claiming to use them, showing that they are still 4 29% 18% 5+ firmly business devices. 18% Unsurprisingly multiple device ownership is the norm (Figure 3). A massive 25% have five or more of these devices in their ownership. 19% 25% 19% 25%

10 COUNTRIES COMPARED When looking at adoption by market (Figure 4) the main surprise Figure 4: Device penetration by market is the extent of ownership in supposedly ‘less developed’ markets. This reflects the nature of the connected audience and shows how Portable media player Laptop Digital Camera 100 involved and active this segment of Internet-connected mobile users 90 are, regardless of a low overall penetration within their country. If you 80 are connected you are connected, where ever you are in the world. 70 % Ownership 60 This underlines the divide that exists in emerging markets between the 50 online and the offline audience. 40 30 Looking at specific devices it is clear that the portable media player 20 (music, video and combined players) is the main portable technology 10 0 platform. The majority of these devices are music only and the high Au tan a Gr a Ge ce Ta a M il M ece a Ru s Pa n o e ly es Fr K n a ill US an l R th ny ng a po nd ut ndi li t si re ic or az pa in ai Si ssi U Ita en an in ra a iw ay s ex Ko es aila ap Sp Ch Br e levels of usage in emerging markets can be linked to the popularity Ja rm ki I ip st nd al h Ph So of low cost flash based players such as iRiver and Creativelabs. Al Laptops are the second biggest platform, a real proof of its increasing dominance over desktops in all markets. Portable gaming in many cases is more popular among the connected audience in the emerging markets than the connected audience in supposedly ‘developed markets’.

11 THE IDEA OF CONVERGENCE IN TECHNOLOGY Convergence in portable technology is a theme that rises again and again. The huge number of consumers with multiple devices (Figure 5) shows that it is something that is yet to catch on. Despite this there is a push to provide us with devices that deliver everything – mobile, gaming, music, video and applications all in one. Apple’s launch of the iPhone and the hype that followed epitomises this. Also the growth of mobiles with music facilities as previously demonstrated shows the Figure 5: Percentage Completely Agree with the statement “I like creep of convergent devices. It is also particularly pertinent considering Fig 4 the idea of having one portable device to fulfill all my needs” the large number of portable devices that the mobility audience own. Mexico Malaysia Figure 5 shows the percentage that agree with the statement “I like Brazil India the idea of having one portable device to fulfil all my needs” and there Philippines Spain is a clear trend. The top markets driving the demand for convergence Greece China are the emerging markets. Mexico leads with a massive 79% strongly Pakistan Russia attracted to the concept of convergent devices. The next seven markets Italy Singapore are Malaysia, Brazil, India, and the Philippines. The markets where Thailand the convergence is least popular are all affluent. The lowest figure is Australia France Japan with 27%, Taiwan with 29% and the US with 31%. Convergence UK South Korea is clearly driven less by aspiration and more by financial necessity. Germany US There is no real need for a convergent product in the US, Germany Taiwan Japan and Japan – multiple dedicated devices is affordable and aspirational. 0 20 40 60 80 % All Agree Convergence – “The concept of a technological device delivering more than one application or purpose. For instance a mobile phone may also play music or stream live TV. Devices have become increasingly convergent as technology has miniaturised and competition between devices manufacturers has increased.”

12 BOND WITH PORTABLE TECHNOLOGY To understand the relationship respondents have with their portable technologies we asked them to declare which ones were always taken out-of-home and which ones were occasionally used. The results (figure 6) are very clear; the mobile phone is the key device and has the strongest relationship with the user. Virtually 100% of our universe take the phone everywhere they go. The next most important technology is the portable music and video player, with more than 40% of owners always taking out-of-home. Figure 6: Which devices do you take out of home? Global average Sometimes Take Always Take 100% 90% % Take Out Of Home 80% 70% 60% 50% 40% 30% 20% 10% 0% a vi ng op e ay / er on pl ic ce De mi pt er am o us ph La ga de m lc ile e vi ble ta bl ob gi rta rta M Di Po Po

13 THE ROLE OF PORTABLE TECHNOLOGIES Respondents were asked to state what device they typically used in The laptop in contrast, is all about in-home usage. Unsurprisingly it certain occasions. Figures 7 - 10 show the top usage occasions for is driven by working and studying but the extent to which users are portable devices. combining laptop usage with in-home media consumption shows how important it is for online and TV and online and radio. This is Mobile Phones usage is clearly defined by travelling, four of the top confirmation in a global context of the much talked about concept of six are forms of transport, trains, underground, bus, walking and the ‘media meshing’ i.e consuming more than one media at the same time. top quite surprisingly is in a car. The two out-of-home occasions when mobiles are most used is at work and while shopping. The combination Portable media players and portable gaming share the same of these needstates shows how crucial the mobile is to our out-of-home needstates – it is all about travel, with a mix of short commuting and lives. It is also interesting that the commonly held stigma that people long-haul travel. It is also very interesting to see that these two devices do not want to use mobile phones on public transport does not apply. have also crossed over with in-home media consumption – again These figures reflect the huge growth of data and messaging. driving the idea of media meshing but in more of an unexpected way. It is clear from all platforms that portable technology also has a key role Fig 7 to play in the home. Fig 8 Figure 7: Where do you use your mobile phone? Global Average Figure 8: Where do you use your laptop? Global Average Mobile Phone Laptop In a car (passenger) At home while watching TV Walking At home while listening to the radio Shopping At work At work At home while on the Internet On a bus On a plane On train / underground In a car (passenger) 58 60 62 64 66 68 70 72 0 5 10 15 20 25 30 35 % use % use Figure 9: Where do you use your portable media / music player? Global Average Figure 10: Where do you use your portable gaming device? Global Average Portable Media / Music Players Portable Gaming Device On train / underground On a plane Walking On train / underground On a bus In a car While exercising On a bus On a plane At home while listening to the radio At home while watching TV At home while watching TV 0 5 10 15 20 25 30 35 40 45 0 1 2 3 4 5 6 7 8 9 10 % use % use

14 FUTURE GROWTH IMPLICATIONS Good news for the mobile phone manufacturers and the networks, The extent of portable device ownership is staggering, both in terms 43% of the global sample intend to obtain a 3G phone in the future, of penetration across markets and the number of devices that users promising huge potential (Figure 11). This is followed by video iPods; have. There is clearly a massive demand across the connected world not only good for Apple but an indication that out-of-home video is for these products and the lifestyle they enable. At present the set to be a major global platform. Wireless laptops come in third, key platforms for marketers and advertisers are centred around confirming the ever growing demand for portable computing. audio, with the mp3 player and the audio only iPod being found everywhere. In theory this should be reflected in the content that is The technologies that lag are varying. The Nintendo DS lags its rival produced today. Sony PSP, indicating that dedicated gaming devices are not as popular as multiple content devices. Non-wireless laptops follow, confirming the The short-term future is multi-media. 3G phones are the number one shift in demand to flexible out of home computing. Next come portable most in-demand portable product, while the video iPod is number email devices which show that consumer demand for dedicated email two. Two key platforms for the distribution of video. is still relatively low thanks to its association with business. It is also clear how important portable technology is becoming a source of User-Generated Content, as well as a media platform. The digital camera is the number one portable technology device in its own right and a key link between the mobile world and social Figure 11: Which devices are you interested in purchasing in the future? Global Average media platforms. Global Average Nonetheless the primary portable will always be the mobile phone. Firstly it is ubiquitous, secondly there is massive demand for 3G 3G enabled mobile phone Ipod (video capability) guaranteeing its role as future multi-media device and thirdly its Laptop with wireless (e.g Centrino) carried out-of-home on 100% of occasions. Particularly as they Mobile Phone Digital Camera continue to move away from multi-media devices. Other portable media player PDA (personnel digital assistant) Other MP3 / digital audio player Ipod (audio only) PSP (Playstation portable) Portable email device (e.g Blackberry) Laptop without wireless/wifi Nintendo DS 0 10 20 30 40 50 % plan to purchase

15 MOBILE PHONE USAGE The mobile phone is the worlds biggest computing and portable There are however big variations by markets, even among the numbers media platform. It is forecasted that 3.3bn will be connected by 2011* of phone calls and SMS messages sent. Figure 13 shows the share of – growth driven by Asia, Africa and Latin America. The developed mobile usage occasions by country. The immediate observation is the markets have reached or are reaching 100% penetration; extraordinary overall share of SMS, which has extensively eaten into voice usage, but Fig 12 for a relatively young technology. yet to be impacted by MMS. Figure 12 shows the extent to which users have integrated phones into The other striking fact is the extent to which Japanese usage is driven their lives. On averageUsed the our global sample makes more than five5+ times by data, with 23% of usage made up by Internet usage – by far the 41% of Internet a day calls a day, while 35% send more than five texts a day; a huge volume 2 – 4 times a day in the world. Only three markets have phone calls above 60% highest Send a picture (MMS) of communication. Once a day usage occasions: USA, Thailand and Taiwan and this will surely of message 2 – 3 times a week decline over time. Internet and MMS frequencies are much lower, but not insignificant. Once a Week Send a text (SMS) 30% use mobile internet more than once a week and 34% send message Less often an MMS more than once a week – encouraging opportunities for Have used once Never multimedia content. Make a phone call *MIC (Market Intelligence Center) 0% 50% 100% Figure 12: Frequency of using your phone by method of communication - global average Figure 13: Percentage share of total usage occasions by method of % frequency of communication communication - global average 12 Fig 13 Phone Calls Text (SMS) Text (MMS) (Internet) USA UK Used the Internet 5+ times a day Thailand Taiwan 2 – 4 times a day Send a picture (MMS) Spain Once a day South Korea message 2 – 3 times a week Singapore Once a Week Russia Send a text (SMS) message Less often Philippines Have used once Pakistan Never Mexico Make a phone call Malaysia Japan Italy 0% 50% 100% India Greece % frequency of communication Germany France Phone Calls China (SMS) Text Text (MMS) (Internet) USA Brazil UK Australia Thailand Global Average Taiwan Spain 0% 20% 40% 60% 80% 100% South Korea Singapore % Share of total mobile phone communications occasions Russia Philippines

16 MOBILE PHONE FEATURES Multi-media handsets are now the norm amongst our connected Only two markets fail to reach the 60% penetration threshold, which is universe. Figure 14 shows feature penetration across the sample. interestingly India and the US - two markets at the opposite ends of the The enablers of content creation and media are now all mainstream. economic development scale. Colour screens, cameras, web browsing and MMS are all around the Comparing this to the penetration of music players, a slightly different 80% penetration mark. However convergence features have had picture emerges. There are a larger number of developed mobile mixed performance. Music players have reached 50% penetration, markets further down the table. The relatively strong performance of but more emerging technologies such as Live TV, video calling and developing markets reflects the financial necessity of convergence payment technologies have yet to make significant penetration, all – the idea of having separate portable devices is more of a luxury. falling below 20%. Not a problem in markets such as Japan, the US and France where There are however significant differences when you look at the market dedicated business and multiple handsets are more likely to exist. splits. Figures 15 and 16 show the claimed penetration of camera phones and music players – two key technologies for creating content and enabling media on a mobile device. The markets leading the charge are a mix of developed Asian markets and European; South Korea, Greece, Japan, Singapore and the UK make up the top five. fig 15 fig 16 Figure 14: Mobile phone feature penetration - global average fig 14 Figure 15: Penetration of cameras on Figure 16: Penetration of music mobile phones players on mobile phones Global Average Camera Music Player Colour Screen South Korea China Picture messages (MMS) Greece Greece Camera Japan South Korea Internet browsing (WAP / GPRS) UK UK Emails Italy Italy Video Camera Mexico Global Average Bluetooth China Spain Music Player FM Radio Spain Camera Mexico Global Average Brazil Video Calling France Germany Facility to watch live TV South Korea Australia Russia Electronic payment system Greece Germany India 0 20 40 60 80 100 Russia Australia Japan Brazil France % penetration India UK Japan US Italy US Mexico 20 0 10 30 40 50 60 70 80 90 100 0 20 40 60 80 % penetration % penetration China Spain

17 NEXT GENERATION MOBILE SERVICES The real test is not feature penetration but users’ willingness to adopt Figure 17: Usage of mobile features (last 6 months) – global average and use such technology. Figure 17 shows that the ubiquitous text Fig17 message remains the most popular mobile application. However it is Send a text (SMS) message Taken a photo closely followed by multimedia content creation and sharing. Taking Send a picture (MMS) message Sent a photo to someone I know photos, MMS, taking videos and sending photos are the next four. This Fig17 Recorded a video Send a text (SMS) message Send a file to another phone via Bluetooth level of penetration shows the extent to which the mobile phone has Taken a photo Use the internet pages provided by mobile company Send a picture (MMS) message Download a game evolved from just being a communications device, while indicating its Sent a photo to someone I know Sent an email Recorded a video value in User-Generated Content. Sent a photo to a website Send a file to another phone via Bluetooth Downloaded a video clip Use the internet pages provided by mobile company Search for directions Download a game There is also a creep of Internet services; using mobile web portals, Made a video call Sent an email Electronically paid for goods/ services mobile search, downloading content and sending emails have gained Sent a photo to a website Used office software e.g Word Processor etc. Downloaded a video clip Watch Live TV significant levels of usage. Unsurprisingly some more cutting edge Search for directions Made a video call technologies have yet to approach critical mass, with emerging Electronically paid for goods/ services 0 20 40 60 80 100 Used office software e.g Word Processor etc. concepts such as Live TV, electronic payment and video calls still niche. Watch Live TV % Ever Use (last 6 months) Figure 18 looks at usage in relationship to access and it is clear that 0 20 40 60 80 100 the points of access to create content lead active usage. Nearly 100% % Ever Use (last 6 months) of those with a camera or video camera have used it. Since these are Camera Figure 18: Conversion – the numbers with access who have used – global average Video Camera so easy to use, this is not a surprise. What is a surprise is the extent to Fig18 Electronic payment system which very emerging applications such as electronic payment, video Camera Picture messages (MMS) calling and watching Live TV have such high levels of take up. This Video Camera Fig18 Video Calling is very encouraging for mobile operators as they continue to expand Electronic payment system Facility to watch live TV their access to new technologies although it is very unlikely that most Picture messages (MMS) Emails of these users will go beyond experimentation to become the regular Video Calling Internet browsing (WAP / GPRS) users that operators seek. Facility to watch live TV 0% 20% 40% 60% 80% 100% Emails However Internet browsing and email lag despite integration on all new Internet browsing (WAP / GPRS) % of those with access who use (Conversion) user interfaces and heavy promotions from the handset manufacturers 0% 20% 40% 60% 80% 100% and the operators, suggesting more needs to be done to promote % of those with access who use (Conversion) these services.

18 WHICH MARKETS LEAD EMERGING TECHNOLOGIES? Mobile search Sending photos to websites Mobile search has long been touted as the application which will finally The integration of mobile phones and the Internet promises to unleash drive substantial take up of mobile Internet and also provide the link the tidal wave of User-Generated Content. The growth of camera and between online and the real world. However usage is still limited in video phones means that there is a constant opportunity for citizen all markets except Japan (Figure 19), where 49% have used mobile reporters. The increasing usage of mobile phone pictures and videos search. Only four other markets fall above the average; Greece, China in TV news reporting is proof of this. However outside of Asia its impact and the UK. has been limited. Figure 21 shows how dominant the Asian markets are, in particularly Japan, China and South Korea which are all at the Electronic payment for goods and services forefront of social media usage. European markets, normally at the Electronic payment by mobile could revolutionise commerce. There are forefront, lag in this connection of mobile and online. a number of ways that electronic payment can be activated by mobile; either wirelessly with a dedicated point of sale device, by text code or over a secure mobile internet portal. But only Japan shows significant adoption, with a stunning 81% claiming to use it. The next market is South Korea with just 19%. Fig19-21 Fig19-21 Fig19-21 Ever used mobile search Figure 19: Figure 20: Ever paid using mobile electronic payment systems Figure 21: Ever sent a photo to a website Electronically paid for paid for ElectronicallyElectronically paid for Sent a photo to photoSent a photo to Sent a to goods/ services services goods/ goods/ services a website website a website a Japan Japan Japan Japan Japan Japan Japan Japan Japan Greece Greece Greece South Korea KoreaSouth Korea South China China China China China China China China China South South Korea KoreaSouth Korea UK UK UK Brazil Brazil Brazil Mexico Mexico Mexico France France France Greece Greece Greece Greece Greece Greece Italy Italy Italy Russia Russia Russia India India India South South Korea KoreaSouth Korea Spain Spain Spain Italy Italy Italy Spain Spain Spain India India India France France France Mexico Mexico Mexico US US US Brazil Brazil Brazil India India India UK UK UK US US US 0 0 20 020 40 40 20 60 60 40 0 60 0 20 20 40 40 60 80 0 60 2080 40100 60 100 80 100 0 0 20 20 40 80 0 60 20 80 40 100 60 100 80 40 60 100 % Ever % Ever Done months)months) 6 months) Done (last 6 (last 6 % Ever Done (last Done (last 6 (last 6 % Ever % Ever Done months)months) 6 months) % Ever Done (last Done (last 6 (last 6 % Ever % Ever Done months)months) 6 months) % Ever Done (last

19 COUNTRIES COMPARED IMPLICATIONS Figure 22 looks at the average levels of adoption by market for all of There are clear global patterns in mobile usage and development. The these technologies and is very revealing in terms of the extent to which most sophisticated market is clearly Japan. Not only did they top the mobile phones have woven themselves into the fabric of that society. mobile usage index, they are the largest users of mobile Internet and The countries that lead are Japan, Greece, Italy, China, South Korea also emerging technologies such as electronic payments and search. and the UK – markets that have all enthusiastically embraced the On a broader scale Northern Asia, Mediterranean Europe and the UK phone beyond its capacity to make calls. are leading consumer adoption of mobile and driving its future, while in contrast France, Germany and in particularly the US lag. These The position of Japan at the top of the index confirms all the are useful differences for marketers, mobile operators and content preconceptions and anecdotal evidence that states Japan’s providers to prioritise which markets are worth investing in. pre-eminence in mobile. From a global perspective the extent to which mobile owners use It is interesting that the US ranks last, again substantiating perceptions their mobiles is quite extraordinary and the shift away from voice to that the US has been slower than other markets to embrace mobile messaging and more slowly to mobile internet is clear. The leading phones in a sophisticated manner. mobile markets are the most data and messaging orientated and the others will surely follow. Overall though mobile internet is still the least adopted technology where available. Just 54% of those with access to Internet on their phone have used it and there clearly is still much Figure 22: Mobile usage index (average usage across all applications and services tested) to do to encourage usage and should be taken into consideration for those developing mobile internet services. The mobile phone is the most important tool for creating User- Japan Greece Generated Content. There is higher access to camera phones than Italy digital cameras and usage where available is virtually 100%. But the China South Korea important point is that the mobile is available all of the time. Where the Singapore UK impulsive need to create content via photos or videos is relevant the Philippines phone will fill that gap. Mobile pictures, videos and MMS can clearly Pakistan Mexico be worked into all marketing communications where relevant. Spain Malaysia The mobile also has a multi-media and divergent future. The real Global Average India emerging technologies that have low overall reach due to technology Thailand constraints such as electronic payment, video calling and Live TV Australia Russia have been adopted with huge enthusiasm by those who can. A very France encouraging fact for mobile operators, mobile phone manufacturers Brazil Germany and marketers the world over. Taiwan US 20 25 30 35 40 45 50 % Average usage (last 6 months)

20 CONTENT “What do you want to do?”

21 Fig 25-26 WHERE ARE USERS GETTING Buy an official CD and upload CONTENT TODAY? the music to your PC Download music from a peer to peer file sharing site Borrow an official CD and upload the music to your PC Download films from p2p file sharing site The journey consumers take to source content for portable devices versus music.Podcasts are also more popular than TV Shows on P-2-P, Download Films splits into two; the sourcing of content and the transferring of content. because TV Shows in the main do not have the same global appeal Download Videocasts By accessing the absolute number who had done this across various Buyand do uploadhave such staggered and controlled distribution. a DVD and not it to your PC platforms, it allowed us to track demand for paid-for content versus Buy a copied CD and upload In thean official DVDyour PC for digital media is still relatively unpopular – music the music to main, paying free content while also assessing the possibilities for media owners Borrow from a friend and upload it to your PC is most popular, but TV and Films have yet to make an impact. Paying and advertisers. Pay for music downloads à-la-carte is more sought-after than subscription payment methods. Download TV shows from a p2p As demonstrated in Figure 23 traditional fixed media formats still rule file sharing site Transferring of content is very prominent (Figure 24), it shows that there Pay a monthly subscription to when sourcing content which is great news for the music industry. download / stream music is a large level of interaction between the PC, Internet and portable Pay for film downloads However while file sharing sites are catching fast, underlining the fact technology and also that much of what people move to portable Pay for TV show downloads that paid for downloads has some way to go before they dislodge the devices is user-generated. More than 60% are moving pictures from CD and illegal methods. It also shows that consumers favour flexible 0 5 10 15 20 25 30 35 40 their digital camera to their PC, but surprisingly mobile phones are non-Digital Rights Media (DRM) media regardless of paying for it % Ever Done (last 6 months) closely behind. Transferring videos from the same platforms to a PC is or not. also very popular – facts that underline how important these devices Films however are led by illegal file sharing and then DVDs – this are in the world of UGC. The most popular movement from PC to ig 25-26 reflects two facts, one that Peer-to-Peer (P-2-P) gives users films when portable player is music, followed by photos and then video, which they want them and also the complexities of uploading DVD content considering the complexities, an amazing 36% have done so. Figure 23: Sources of content for portable devices - global average Figure 24: Transferring content to portable devices - global average Buy an official CD and upload the music to your PC Transfer photos from a digital Download music from a peer to camera to a PC peer file sharing site Borrow an official CD and Transfer music from your PC to upload the music to your PC a portable player Download films from p2p file sharing site Transfer photos from a mobile phone to a PC Download Podcasts Transfer photos from your PC Download Videocasts to a portable player Buy a DVD and upload it to your PC Transfer videos from a digital Buy a copied CD and upload camera to a PC the music to your PC Borrow an official DVD from a Transfer videos from a mobile friend and upload it to your PC phone to a PC Pay for music downloads Transfer videos / TV / films from Download TV shows from a p2p your PC to a portable player file sharing site Pay a monthly subscription to download / stream music 0 10 20 30 40 50 60 70 Pay for film downloads % Ever Done (last 6 months) Pay for TV show downloads 0 5 10 15 20 25 30 35 40 % Ever Done (last 6 months)

22 South Korea Fig 27-28 Thailand UK China Australia Russia LEGAL V ILLEGAL SOURCES Japan India Global Average Phillipines US France Greece Illegal content is currently satisfying consumers demands, 36% have Taiwan downloaded music via P2P versus 18% who have paid for digital Mexico music. The only markets to buck this trend are the US and South Singapore Korea, where the use of P2P sites to obtain music is lower than Italy Pakistan the percentage who had paid for music downloads – a point that Malaysia demonstrates the global nature of content piracy. Brazil Spain Germany 0 20 40 60 80 % Ever Done (last 6 months) Figure 25: Purchased digital music online Figure 26: Used a Peer-to-Peer service to download music South Korea China Thailand Mexico UK Spain China Russia Australia Malaysia Russia Brazil Japan South Korea India Greece Global Average Italy Phillipines Global Average US Australia France India Greece UK Taiwan France Mexico Phillipines Singapore Pakistan Italy Singapore Pakistan Taiwan Malaysia US Brazil Japan Spain Thailand Germany Germany 0 20 40 60 80 0 20 40 60 80 % Ever Done (last 6 months) % Ever Done (last 6 months) China Mexico

WHAT CONTENT DO USERS WANT ON THEIR DEVICES? To understand what types of content platforms fit with portable devices (Figure 27) we asked respondents to state which types of entertainment or information would interest them on what platform. There is a clear pattern by type of content. Music holds most interest on video and music players, with the mobile phone very close behind. This is a visual demonstration of the mobile phone companies success at driving convergence through music. Laptops also figure highly thanks to people streaming or playing music files while they work or surf the Internet. The most popular platform for TV clips and films is the laptop suggesting that most video content is not shifted between PC and portable player. What is interesting again is that mobile is up there with g 23 the portable media player. Also interesting are the similarities between Figure 27: Content platform demands by device Digital video & music player Portable gaming device Laptop Mobile Phone TV Clips, Films and Live TV in terms of interest regardless of platform. 80 The concept of Live TV over PC or phone seems to have resonated with 70 consumers the world over. 60 The surprise with gaming is that portable gaming machines were not 50 the main platform for gaming, with laptops and mobiles leading the 40 way. This is indicative of most people’s casual demands for gaming – which the mobile and the laptop via the Internet do so well. 30 20 The Internet is unsurprisingly most popular on a laptop, but the mobile 10 phone is also key and holds interest for 46% of our global respondents. This backs up early figures on mobile Internet which shows that the 0 Music TV Clips/ Films Live TV Games Internet consumer demand is there. video casts

24 CONTENT BY USAGE OCCASION It is clear that music dominates all usage occasions and is consumed Another interesting point on gaming – is that there is consumer everywhere on a portable device, from travel, to work and even shopping. demand to have it at home while working / studying but not in the office. The relative scores for consuming portable content while at The next most popular type of content is the Internet and there is home watching TV demonstrates that portable media is not just for demand across the board in-home, out-of-home and at work. out-of-home. Also it underlines how important duel media consumption Looking at richer more involved forms of media, such as video, films, and media meshing is. The relationship between traditional media Fig 24 and gaming the demand is lower, but still significant in terms Live TV consumption and portable content is an important dynamic. of usage. Figure 28: Content platform used by usage occasion - global average Music TV Clips Films Live TV Games Internet At work In a car (passenger) Walking On a bus Underground At home while watching TV Working/studying at home 0 10 20 30 40 50 60 70 80 % content platforms used by usage occasion

25 TOPICS OF CONTENT The topics of content that our sample demand are driven by informational and news needs (Figure 29). Travel, general news and entertainment lead the way. Services such as cinema listings, weather, route planning and shopping have lower levels of demand. Somewhat surprisingly user-generated clips fall bottom, which seems to fit contrary to most mobile operators’ attempts to drive mobile portal usage through UGC mechanics such as Orange Mobile “Hot or not” and the popularity of UGC podcasts on services such as iTunes. fig 29 Figure 29: Topics of content interested in – global average Travel News Entertainment Holidays Technology Cinema Weather Music news / reviews Route Planning Sports Business Shopping Celebrities Video Clips created by other users 0 0.5 1 1.5 2 Scale of 1 to 5 where 5 equals very interested and 1 equals not at all interested

26 Male Female News Entertainment Technology Travel Entertainment Male News TOPICS OF CONTENT BY SEGMENT Cinema News Cinema Sports Technology fig 30-34 Holiday 40 45 50 55 60 65 70 Entertainment 40 45 50 55 60 65 70 % Very Interested Cinema % Very Interested Figures 30 to 33 show the top five types of content that are of most and sports, while women have ranked entertainment top. The interest by key demographic segments. The major consistencies are differences by age groups are less pronounced although the younger Sports that the content remains informational and largely functional regardless segments are more entertainment-orientated. Older segments are more 40 45 50 55 60 65 70 of segment with news, travel and entertainment information figuring tasked based with weather and holiday information figuring in the top % Very Interested highly. There is no place for celebrities, route planning or User- five, while news is number one. Generated Content in any of the segments. Female There are also some subtle differences that pull the segments apart – albeit along fairly stereotypical lines. Men are interested in technology -34 Entertainment Entertainment Figure 30:Travel very interested in – male sample Content Figure 31: Content very interested in – female sample News News Male Female Cinema News Cinema Entertainment Technology Technology Holiday Travel Travel Entertainment 40 45 50 55 60 65 70 News % Very Interested 40 45 50 55 60 65 70 Cinema Cinema % Very Interested Sports Holiday 40 45 50 55 60 65 70 40 45 50 55 60 65 70 % Very Interested % Very Interested Figure 32: Content very interested in – under 34s Figure 33: Content very interested in – over 34s -34 35+ Entertainment News News Weather Female Travel Cinema -34 Entertainment Technology Entertainment Travel Travel Holidays News News 40 45 50 55 60 65 70 40 45 50 55 60 65 70 Cinema Cinema % Very Interested % Very Interested Technology Holiday Travel 40 45 50 55 60 65 70 40 45 50 55 60 65 70

27 WHAT WOULD USERS PAY FOR? Monetising portable content is obviously the ultimate goal for mobile It has also been the focus for mobile companies within their portals. This networks, the portable platform content providers and media owners. Fig suggests that if untargeted it may not be the best content to monetise. 35 The size of the user base and massive demands for content suggests that As with interest in types of content – user-generated video comes at the there is much revenue to make, however it is clear that overall demand bottom of the list. This clearly indicates that quality and professionalism is still on the low side. The research asked users to score from 1 – 5 how of production is one of the main drivers to monetisation. A reassuring willing they are to pay for content and just three category types passed the fact for professional media everywhere. average (Figure 34). All three were rich and permanent (i.e. not intended for single use) types of media; Music, Films and Games. Figure 34: Content willing to pay for – global average The next two categories that people would be likely to pay for are location services and directions, a surprisingly high Music downloads Films ranking for one off service, but one that demonstrates Game there is value in mobile services. Live TV, Radio and video Travel directions / times Local search for products and services (e.g nearest restaurant) clips all fall in the lower half, a long way behind their rich Music videos media counterparts of music and film. This suggests their News articles Price comparison services of products you find in the high street association with free to access traditional media harms their Live TV on a mobile ability to drive paid-for revenue on mobile platforms. Video clips / TV shows Radio / audio shows A big surprise is the very low ranking of sports highlights and Consumer reviews of products and services news and results considering that sports is something that Sports Highlights Sports news articles / results has traditionally driven media revenues on most platforms. Video clips created by other users / consumers 0 0.5 1 1.5 2 2.5 3 Scale of 1 to 5 where 5 equals very interested and 1 equals not at all interested IMPLICATIONS These results underline the fact that demand for content is massive, but basis are largely functional and informational, but the content they what is being provided legally is not fulfilling demand. The number one are willing to pay for is rich entertainment. These results also show source of content is still to rip a CD followed up peer to peer sources. important the mobile phone is as a cross media platform, being more This shows that consumers do not want tightly controlled DRM heavy popular for gaming than games machines and the second most popular digital media. They want to be able to use it as they want regardless of for Internet, music and TV and video formats. It may become the paying for it, both a challenge for rights owners to open up their content device in emerging markets where finances demand one, however low on digital platforms and also an opportunity for advertisers to provide demand for convergence in developed markets, mean it will always be a free top use content to consumers. There is a challenge in wider multi- supplementary device, be it one that is always present. media monetisation. The topics content that most users want on a regular

28 MARKETING COMMUNICATIONS “What do you like?”

29 MARKETING COMMUNICATIONS Expectations in the industry are huge and it has been hyped as the formats that create clear consumer benefit and ones that are based on next big thing. Every year is touted as the year it will happen. But “opt in” for example outdoor bluetooth formats both on transport and marketing on these devices remains limited as consumer demand is so outdoor adverts. far removed from industry hype. Mobile phones are dominated by SMS Figure 36, which looks at portable media player formats, demonstrates promotions, while display, location based, bluetooth and rich media that the rules of advertising on traditional media still apply. The most advertising still remains very much in the nascent stage. Frequently held interruptive and invasive formats that appear in the middle of clips or back by technology issues, lack of advertiser interest and concerns over consumer receptiveness. Other platforms such as video players and Fig 36-37 come in the form of paid for recommendations are the least acceptable to consumers. As the format becomes less interruptive for example portable gaming machines have opened up new possibilities for new sponsorship and branded content the more acceptable it is. Lower Average Higher value kinds advertising, sponsorship and branded content in a plethora of new media formats such as podcasts, videocasts, video clips, web services This Ads on public transport that distinction from opt send info to mobile if consumers highlights the opportunity for and gaming. However, as with mobile, it is still much at the advertisers andposters that Outdoor adverts/ marketers in this space. There is far more flexibility experimental stage. and opportunity than found in traditional media, so the opportunity send info to mobile if opt to to leverage search resultscommunications in formats that create consumer Sponsored paid for on a Figure 35, which looks at mobile phone formats confirms what many mobile phone search benefit and drive engagement, should be embraced. have thought. The highest levels of value and acceptability were for the Adverts on mobile internet pages TV adverts on a mobile phone 0% 20% 40% 60% 80% 100% 6-37 Figure 35: Opinion on mobile phone advertising formats Figure 36: Opinion on portable device advertising formats % Agree Lower Average Higher value Lower Average Higher value Ads on public transport that Radio/audio shows (Podcasts) sponsored send info to mobile if opt by advertisers Outdoor adverts/ posters that Video clips/shows that are sponsored send info to mobile if opt to by advertisers Sponsored search results on a Radio/audio shows (Podcasts) created mobile phone search by advertisers Video clips/shows that are created Adverts on mobile internet pages by advertisers Adverts that appear at the beginning of TV adverts on a mobile phone video clips / shows 0% 20% 40% 60% 80% 100% Brand recommendations from the presenters of podcasts % Agree Adverts that appear in the middle of video clips / shows Lower Average Higher value 0% 20% 40% 60% 80% 100% Radio/audio shows (Podcasts) sponsored by advertisers % Agree Video clips/shows that are sponsored by advertisers

30 RECEPTIVENESS OF DIFFERENT MARKETS Fig 38 Although opinions between different formats were very uniform Figure 37: Advertising Acceptiveness Index – scores by market between markets, there are significant differences between the overall levels of receptivity. Figure 37 represents an index based on the average level of value across all formats, both mobile and wider Advertising Acceptiveness Index portable technology platforms that allow you to compare markets and Mexico China see where the real opportunities and challenges are. Thailand Philippines Malaysia Brazil The clearest observation is the significantly lower levels of acceptability India Spain in developed markets. This is particularly the case in the US, where Singapore Germany clearly a legacy of heavy weight advertising and marketing has had Russia Italy an impact. The next set of countries are also developed, but with Taiwan Pakistan significantly higher levels of acceptability than the US. Australia Greece Japan South Korea The top seven countries are all emerging markets including UK France Mexico, China, Thailand, Philippines, Malaysia, Brazil and India, US demonstrating less cynicism towards paid for communications, but 5 5.5 6 6.5 7 7.5 8 something that will surely emerge as advertising on digital platforms Average value score by market across all mobile phone and portable technology and the commercial application of them becomes more prevalent. advertising formats

31 ADVERTISER FUNDED CONTENT Fig 39 Portable technologies and mobile open up a huge range of Figure 38: Content that consumers would most like to receive free of charge from advertisers possibilities for advertisers and marketers to produce and distribute content. Recent examples have included Coca- Cola with iTunes and BMW with videocasts, this in the past Global Average has been complicated and expensive due to the tightly Music downloads SMS (txt msg) that entitle free entry to an event controlled distribution channels of broadcast radio and TV Films SMS (text msg) that entitles you to prod discount and the difficulties of operating in multiple markets. Ad Music videos Live TV on a mobile funded content also clearly offers away to offer consumers News articles Game real benefits, moving away from the interruptive model of Travel directions/times advertising and drive engagement. Local search for products and services Video clips/TV shows Radio/ audio shows Figure 38 looks at which forms of content most appeal Price comparison service of prods find in high st Consumer reviews of products and services when offered by advertisers for free and the results almost Sports Highlights Sports news articles/ results mirror the content that users are willing to pay for – clearly Video clips created by other users/ consumers people want to receive the content they attach most value 0 0.5 1 1.5 2 2.5 3 3.5 too (as shown previously in Figure 34). These are music, Scale of 1 to 5 where 5 equals very interested and films, live TV and access to events. Again UGC video clips 1 equals not at all interested hold no appeal and surprisingly nor do sports. IMPLICATIONS Consumer receptivity to advertising and marketing activity is extremely entry costs, limited geographic reach and strict regulations, has never clear; the most invasive formats such as advertising in the middle of provided advertisers and brands opportunity before. Brands should be podcasts, pre-roll advertisements and TV ads on mobile phones are creating appropriate branded content, providing access to rich media the least liked and significantly less acceptable than more progressive content such as music, film and TV shows or even creating mobile formats such as branded content and sponsorship. services, reaching consumers on their terms in a way that’s more engaging than traditional interruptive formats. The emergence of portable technology and their use as a media platform is a massive opportunity for advertisers to create a more positive It is also clear that certain markets are more receptive than others, with relationship with consumers by giving them what they want. the developed markets that have a legacy of heavier advertising being least receptive. The emerging markets are currently open to newer Portable platforms are open access, cheap to distribute across, global formats but this may change as users become exposed. in nature and consumed on users terms. Traditional media, with its high

32 “How do we deliver the potential?”

34 MAKING IT WORK “There is a massive gulf between content owners, advertisers and marketers and what consumers are willing to accept and what they really want to adopt. However demand is emerging fast and there are clear rules to succeed.” Think content not just advertising Integrate mobile into the mix properly • There is huge demand for content while advertising in its traditional • The mobile is the world’s number one technology platform and format, will not succeed on these platforms should be core in all future communications, this can be as simple as providing SMS shortcodes on adverts Define a more positive relationship with consumers • Avoid interruptive formats and always have “opt-in” • Portable technology allows brands to create and distribute or provide access to content, applications and services that offer true benefits • There is too much choice to maintain interruptive formats to exist on Encourage creation of content portable technology media, consumers will go elsewhere • A surprising amount of portable media consumption happens at home while watching TV, listening to the radio or even while using the Internet Leverage the network • Portable platforms like social media have created new avenues to • It is important to link portable content and services to traditional distribute content on a global scale without the high entry costs of global media content • A global brand and communications positioning must be maintained, content is accessed along language lines not market lines Drive User-Generated Content • Portable technologies are driving User-Generated Content on social media platforms. This is both due to low-cost digital cameras and Integrate with social media the rise of camera phones • Increasingly the connected people are sourcing content from social media platforms • Increasingly consumers are uploading this content to social media platforms creating an opportunity for brands to either develop • Portable devices should be part of any social media strategy and users applications that leverage this or place User-Generated Content as a should be encouraged to move that content from desktop to devices mechanic in campaigns • This means living by the rules of social media – creativity, participations and interaction Champion simplicity • A very key point in portable technology and mobile. If it is simple Asia and Europe offer most commercial potential and the technology works without much effort then it will be adopted • Largest demand for content, services and future devices and most • Simplicity is the reason podcasts took off once they were integrated receptive to marketing communications into the iTunes store, it became a one click process

Contact For further information and any questions please contact EMEA Research Manager: Tom.Smith@universalmccann.com Global Research - 21 Markets, 10,000 consumers

Anytime Anyplace Um Global Research Sep 2007

by Tom Smith on Sep 22, 2008

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