Stampede (Joe Crump)

“The Stampede”  A report by Razorﬁsh and Terra  1 

Hello. My name is Joseph Crump, and I am Senior Vice President  of Strategy and Planning at Razorfish. I consider myself one of the  luckiest people on earth because I live in two of the greatest  ciJes in the world: ManhaLan, and Rio de Janeiro.  I am really thrilled to share some ideas with you that resulted  from about five months of quanJtaJve and qualitaJve research  that Razorfish, in partnership with Terra Networks, did in the  three major markets in LaJn America: Brazil, Mexico, and  ArgenJna.  2 

As you can see from this chart, Brazil will, over the next decades,  become one of the world’s leading economies. As such, it’s the  focus of many of the world’s biggest brands and companies.  Everyone, it seems, is interested in doing business in Brazil – and  in LaJn America generally.  Because of this, Razorﬁsh – in conjuncJon with Terra Networks,  the largest digital media company in LaJn America, undertook a  5‐month study into the largest segment of the populaJon: The  group known throughout the region at Classe C.  The following presentaJon will illustrate why Classe C is, in our  esJmaJon, both the most powerful and the most misunderstood  group in the region.  3 

This document doesn’t talk very much about markeJng. This is  maybe ironic, considering that Razorﬁsh is one of the largest  digital markeJng ﬁrms in the world.  4 

And I’m not going to talk very much about the Internet. Again,  this may come as a surprise, since Razorﬁsh was one of the  world’s ﬁrst pure‐play Internet agencies.  5 

Mostly, I’m going to talk about looking. About observaJon. And  about people. This is preLy much my favorite topic, because I was  trained as an anthropologist and a journalist. My favorite thing to  do is to study human beings and how they behave, and to try to  develop insights and tell stories that will help drive user‐centered  innovaJon.  6 

So just to get you warmed up and paying aLenJon, here’s a liLle  test...  7 

What do you see in this photograph? (And no, it has not been  Photoshopped.) This photograph was taken in the Morumbi  neighborhood of Sao Paulo. This is a place, like so much of LaJn  America, where the physical distance between the very rich and  the very poor can be measured in feet.  So now for the test...  If you were going to guess, which community is more “digital”?  Which community spends more Jme online? Which community  represents the biggest economic force?  You don’t need to ever have visited Sao Paulo before. Just go with  your gut. Try to be very honest and open about your assumpJons  and beliefs.   8 

Razorﬁsh has been operaJng in LaJn America now for about  three years, and many of us have been living in the region for far  longer than that. But never have we seen such a rapid change in  the digital evoluJon of a region like we’re seeing unfold in LaJn  America now.  We see a digital revoluJon happening right before our eyes. Let’s  look at some numbers.  9 

The revoluJon is happening fastest and most extensively in Brazil,  which is the economic powerhouse of LaJn America – and on  track to becoming the world’s fourth largest economy within 10  years.  LaJn America has a very extensive socioeconomic classiﬁcaJon  system, which ranks households from Class A (rich) to Class E  (homeless).  And one thing we found very surprising, is that in Brazil, Classe C  – those are the people who lived in the slums or “favelas” in that  photo from Morumbi – have already overtaken the members of  the Classes A and B in their access to computers.  10 

Look at how things have changed in 5 years. Today, half of the  Brazilian internet users belong to the emerging classes (Classe C,  D and E).  11 

And this phenomenon is not unique to Brazil. It’s happening in  Mexico, too.  12 

And also, in ArgenJna – the digital diﬀerence between the upper  and lower classes is becoming very hard to ﬁnd.  13 

Here are some fascinaJng facts across the region.   14 

There are certainly massive problems to be resolved in LaJn  America. We see them in the headlines every day. But there is a  criJcally important counter‐story playing out, as well. The fact is  that many of our assumpJons about LaJn America are ﬂat‐out  wrong. And near the top of the list: The most digital people in the  region are not who you think they are.   15 

Aher months of qualitaJve and quanJtaJve study, Razorﬁsh  believes that it’s Jme for anyone interested in LaJn America –  whether marketers, manufacturers, retailers, poliJcians,  academics – to rethink their fundamental assumpJons. It’s Jme  to reboot your beliefs and stereotypes and segmentaJon models  and media plans. Because I can promise you that they are very,  very wrong.    16 

For anyone who has been living and working in LaJn America, or  helping global brands operate there, this is the stereotypical  image of the members of Classe C. They are the people on the  bus. In the kitchen. They are the people who clean the oﬃce.  They are the people who live in the favelas. And only in a very  glancing way, do their paths cross with the “upper classes.”  17 

But guess what: That stereotype is terribly wrong. Classe C is the  majority of the populaJon – and the fastest growing. They  understand that the educaJonal system in their country is awful –  and so they are working extremely hard to educate themselves.  More than any other class, they are adding skills and moving up  the economic ladder the fastest. And the main driving force of all  of this is the Internet and digital media.  18 

All of us marketers and branders are focused on the bulls‐eye.  People who live in nice houses and drive nice cars and aLend nice  schools. We would like to suggest that in LaJn America, the bulls‐ eye looks really, really diﬀerent.   We would like to suggest that the people known as Classe C are  about to rule the world, and shockingly we don’t understand  them at all right now.   We need to fundamentally re‐think – and in fact, re‐label ‐‐ these  folks. And instead of “Classe C” – a label which we have become  so comfortable with ‐‐ we think we should call them the New  Digital Middle Class. Because that’s exactly what they are.  19 

Our ﬁrst step in the process of rebooJng our assumpJons was to  re‐set the demographic boundaries and deﬁniJons within the  three major markets: Brazil, Mexico, and ArgenJna. This new  group represents the majority of the populaJon in all three  countries, is between the ages of 12 and 35, and has a household  income of between US $,542 and $,2892 annually, depending on  the country.  20 

Our belief, however, is that the numerical data about the New  Digital Middle Class only tells a parJally complete story. One of  the most powerful and unique aspects of our study has been the  ethnographic work that we did throughout LaJn America. We  spent Jme at home with them in the favela of Rocinha, in Rio de  Janeiro ‐ the largest favela in LaJn America.  21 

And in the favela of Paraisopolis, in Sao Paulo.   22 

And in the Classe C neighborhoods surrounding Buenos Aires...  23 

And in the Classe C neighborhoods outside Mexico City.  24 

We looked for the rhythms and rouJnes of their lives at work and  home and play, and supplemented it with vast amounts of  quanJtaJve data. Seven key themes began to emerge. We think  of these seven insights as touchstones, as points of inspiraJon for  brands or companies who are looking to create products or  services or campaigns that beLer serve this emerging majority in  the region.    25 

The ﬁrst insight is that the New Digital Middle Classe (NDMC) has  some very unique behaviors in their use of digital devices and  channels.  26 

As it turns out, the longitudinal data for Brazil is more extensive  than it is for any other LaJn American country. So we took a look  at the digital behavior of the NDMC over Jme, beginning in 2006.  The next few pages of charts illustrate changes in the usage of  various digital devices…   27 

So here is the summary chart:  1)  Aher minimal year‐over‐year changes, the purchase of desktop  computers shot up 15% in the last year, largely because local  Brazilian  manufacturers are now producing extremely  inexpensive laptops well within the budgets of the NDMC.  2)  The number of landline phones has dropped 17.2%, driven  primarily by the inverse increase by 10.6% in the number of  mobile phones.   3)  And interesJngly, despite the penetraJon of mobile phones,  the use of those phones to access the web has increased only  2.4%. This is a direct side‐eﬀect of the price of mobile data  plans, which are prohibiJvely expensive for the NDMC.  31 

This next sequence of charts examines the physical access  locaJons where Brazilian members of the NDMC access the  Web, and how this has changed between 2006 and 2009…  32 

1)  Over the last four years an increasing number of people are  accessing the Internet from home or another person’s home.  This is likely the result of the recent rise in computer sales.  2)  As a result of the increasing number of computer sales, the  number of people who access the internet from work is  dropping.  3)  The use of LAN Houses, or public internet cafes, conJnues to  be a huge force in Brazil. There are more than 90,000 LAN  Houses in Brazil – compared to, for example, 4,000 movie  theatres.  4)  Mobile is sJll not a viable way for the vast majority of the  NDMC to access the Internet.  36 

And this ﬁnal series of charts illustrates the speciﬁc digital  acJviJes that NDMC Brazilians are engaging in, and their  evoluJon…  37 

1.  Brazil conJnues to be a global leader in the use of almost all  forms of social media.  2.  Downloads of all forms – from music to movies and games –  conJnues to rise.  3.  And in one of the most important trends, Brazilians –  parJcularly youth – are using the Web to supplement poor  public educaJon systems. (More on that later in the report.)  41 

As we examined the behaviors of the NDMC, we began to see  some common behaviors among subsets of the group. Eventually,  we idenJﬁed six key behavioral segments, and we then used  quanJtaJve surveys to establish some preliminary segment sizes  for each of the six groups.  42 

The first segment is the “Digi‐naJves.” RepresenJng approximately 19% of the NDMC  populaJon, this generaJon was born in the 2000 decade, typically in a very crowded  urban community. However, their life expectaJons are very different from their parents.   Economic growth and social advancement will help them reach a new level of life.  For them, all technology is familiar and taken for granted. Their families have purchased  all the technology we can imagine: PCs, flat screen TVs, broadband Internet access,  high‐end cell phones. Entertainment is on the Internet, PlaystaJon or Wii… always  playing the latest and coolest games. Only a small part of the entertainment is out‐of‐ home or on the TV set.  If we consider that the literacy level of “Digi‐naJves” will be beLer than ever before,  and that their life achievement expectaJons are more ambiJous, products in the future  will need to be more sophisJcated and communicaJons more elaborate.  Nowadays, even the poorest families are giving cell phones to their kids. While for  parents this is a maLer of safety and communicaJon, for kids it’s a symbolic tool: the  cell phone means freedom and inclusion. They use mobile technology for music and  games, enjoying only the ones they can exchange via Bluetooth. This group is already  digital, and they will be digital extroverts in the near future, always‐on, updaJng their  profile, daJng online, communicaJng and entertaining themselves online as part of  their daily rouJne. 

This boy is 10 years old. He lives in Paraisópolis – a favela in Sao  Paulo ‐‐ with mom, dad and 3 older brothers in a 30 square  meters house.  His mother is the ﬁrst Paulistana (born in the city  of SP) in the family. They arrived 10 years ago, aher a ﬂood in  their hometown in the northeast of Brazil.  His house has all sort  of technologies, including games, cell phones, PC and laptop. He  has his own Orkut & MSN account.  In the other photo, there is a Lan House in one of the poorest and  most violent areas of Buenos Aires.  It is beauJful Sunday  ahernoon, and the boys are playing a soccer game online, instead  of doing it outside. 

The second segment of the NDMC is the “E‐nthusiasts.” This group represents about 20% of the NDMC,  and they are technology enthusiasts. The Internet is a door to a world of opportuniJes: from educaJon  to easy communicaJon with friends and families.  This group is mobile centric, but the PC sJll plays a part in their connecJon, especially when we are  talking about educaJon.  Due to low literacy levels, this group is regarded as proficient on the web, but actually they basically use  only MSN and Orkut. They read and understand around 3,000‐5,000 words.  Women in this group are shy when playing  internet games (they must be at a low level of challenge), and  men are more proficient gamers. They work hard during the day and go to college at night, so they have  liLle Jme to enjoy staying online.   Since they are the first generaJon of naJve urbans or being in the urban slums since very young, they  don’t want the same desJny as their parents: a lifeJme of underpaid, low‐status jobs. They want to take  control of their lives. For women, the idea of taking the path to IT‐related jobs is sJll a distant dream, but  to young men it seems to be the way. Since NGOs and schools recognize the need for an IT‐related  educaJon, many of them offer digital literacy courses as a starter, and undergrad schools offer  cerJficaJons and programming courses. These low level courses open the door for beLer jobs, which will  help them to pay undergrad and post‐grad courses in the future.  Elkyres (in the picture above) comes from a rural area. She is 24 and lives in São Paulo. Her parents  decided to move to the city in order to improve their chances of a beLer life.  Elkyres had the chance to  go to a public school. At the age of 16 she started to work as a maid, but never dropped out of school.  Part of the money she earned was to pay an IT course.  Nowadays she works as admin staff in a small  firm.  As you can see, she loves cell phones!  She just bought this one, and it comes with TV, Orkut and MSN.  However, she ohen does not have enough credits to use all of this.  Elkyres uses Orkut and MSN in a daily  basis, and plays the app “Colheita Feliz” with friends that live in her neighborhood. 

SebasJán is 19 years old, and lives in Mataderos, a slum area with  2.5 million people near Buenos Aires.   He has had a cell phone  since he was 5 years old. His mom gave it to him  in order to  know where he was during the day.  When he turned 10, his  sister gave him a computer. He never goes out to play ball, he  prefers computer games. He has recently ﬁnished a computer  programming course at @ Programar.  He is making 2.500 pesos a  month, and is planning to go on to an undergrad IT course.  46 

The “Climbers” are our third behavioral segment, and make up about 14% of the NDMC. Most  of this group are parents, with several kids at home.  Both men and women work. However, the  challenge of raising kids in an expensive city arises, and leads either men or women to become  entrepreneurs – ohen managing this separate career in addiJon to their “day” jobs.  Technology is central to the entrepreneurial streak in the Climbers. Men ohen start their own  Lan Houses using their savings to buy the first couple of computers. Some pay for the  broadband access, others don’t. Women behave differently, usually asking for help from family  and friends. They can also go to ask for microcredit in banks.  However, making the Lan House business succeed is hard. The internet access business is  constantly challenged by governments and market iniJaJves for digital inclusion and the  increasingly easy access to less expensive PC brands. Because of this, this group of  entrepreneurs has to improve their digital literacy in order to offer other services, instead of  selling only internet access.  Women in this group have discovered how to use their recently acquired skills with technology.  They use MSN and Orkut as e‐commerce tools and sell cosmeJcs, lingerie and clothes to people  from their community who don’t have Jme to go to the bricks and mortar stores. Natura and O  BoJcario are the brands of choice for female digital entrepreneurs.  For this group, credit is a challenge, but they are financially creaJve. They know the value of  money, and do not trust loan insJtuJons. They organize their financial lives around their credit  card limits and personal savings. 

This family is originally from Bolivia. They have lived in Bue, a  slum outside Buenos Aires, since 1980.  Monica – on the right ‐‐ is a single mom and she owns a  CiberCafe.  48 

Her mother works at the CiberCafe, and spends most of her day  online.  49 

The fourth segment, the “E‐Advantagers,” is at the highest financial rung of the NDMC. They make up  approximately 21%  of the NDMC populaJon.   Aher a long journey, these men (predominantly) found a way to get a beLer paycheck. They don’t aim  toward social climbing like the “E‐nthusiasts.” They want a beLer life for themselves and their significant  others. From almost dead‐end jobs to administraJve staff, they used educaJon to reach beLer posiJons.  Many found their way by learning IT‐related skills , and now pursue undergrad and post‐grad courses to  reach their goals. They have the highest income (as individuals) , and work all day in tech related jobs  and/or with tech tools.   They are not heavy users of MSN or Orkut or Facebook. Their main online interests are research and  informaJon. They use email as their main communicaJon tool.   They sJll watch a lot of TV, but are digital literates and have the best reading‐comprehension skills of all  the groups. They also enjoy beLer benefits from their employers, such as health insurance.  These are the big spenders of the NDMC. CosmeJcs and clothing are luxuries they afford, and provide for  their significant others.  Carlos (in the picture above) is 27 years old and married. He works as admin staff at the mobile carrier  TIM, in São Paulo. He completed his two‐year undergrad program in July 2010, and wants to conJnue his  studies by doing his post‐grad in IT. Carlos is aware his salary will double if he does that. Both Carlos and  his wife use the internet for study, search, entertainment (including on the cell phone) and e‐commerce.  They buy expensive brands, and use two or more credit cards to do so. Their debt includes a house, a car  and expensive items for the newborn baby. 

Ernesto is 26, and an ArgenJnian. He was orphaned at the age of  5, and lived on the street working hard just to survive. 3 years ago  he discovered the PH15 program in Buenos Aires, which trains  youth on various forms of digital media. He learned how to take  digital pictures. Today he is a photography professor, and he has  won important internaJonal awards in photography. His  exhibiJon in Germany was a success. He has fans all over the  world, and sells his art photography from his Facebook page.  51 

The “Hard Workers” are our ﬁhh segment, at almost 17% of the  NDMC. Today they live in the urban slums, but life was not always  like this.  Coming from rural (always poor) parts of the country,  they arrived in the big ciJes hoping for a beLer life. From the  warm and less violent rural towns to the cold and violent urban  landscape, they perform the low‐status jobs that the city depends  on: Maids, doormen, handymen, bricklayers and the like. Within  the highly hierarchical LaJn American culture, they are regarded  as “second class ciJzens”.  But the last 10 years of economic  stability and growth have helped them to improve the path for  their children, the “E‐nthusiasts.” They are more poliJcally  conservaJve and religious. They watch a lot of TV, and use the  cell phone as only a communicaJon tool. They do not use PCs  without assistance, but they know the computer’s value because  they see the diﬀerence it has made in the lives of their children  and grandchildren.  

Aher generaJons below the poverty line, our ﬁnal segment – the “Strugglers” –  have found a way to reach a beLer future: a regular job that helps to pay tuiJon  for an inexpensive undergrad school. At about 8% of the NDMC, for them  technology is a crucially important part of social and professional advancement –  but the cost must be factored into the expenses of daily survival. They struggle  just to pay the electricity bills, for example, and ohen unplug their refrigerators  at night to reduce consumpJon. But the internet is never disconnected: For their  children, the Internet is the Jcket to the future.  Kids prefer online games, and cartoons on the TV and online. For them, listening  to music on their cell phones is a big pasJme.  The parents from the “Strugglers” use the internet to do research and  homework, even though their reading‐comprehension skills are limited. They  prefer to watch less TV and enjoy having informaJon and entertainment through  the web.  The” Strugglers” see a beLer future through the combinaJon of educaJon (in IT,  because it oﬀers more opportuniJes) and hard work. 

Claudia Cantero, 26, works as a Programmer and in Technical Support. She  is a mother of two, and at the age of 16 had her first child, Aymara, the girl.  She lives in La Matanza, a slum in the suburbs of Buenos Aires. Her family  comes from the province of Chaco, one of the poorest and less developed  areas in ArgenJna.  She moved from Chaco to Buenos Aires when she was 10 years old.  The  first computer she saw was in the public school years later, when she was  15. She spent her days taking care of her family at home, and had already  postponed the idea of studying. But things changed a year ago when she  saw a pamphlet for Proyecto Programar inviJng those with secondary  school but no university studies to train themselves in programming and  technical support. Claudia wrote down the number on her mobile phone,  and a few weeks later she was facing a PC and trying to understand how a  mouse works. Aher a lot of effort, she graduated at the top of her class,  and was hired by Pragma Consultores. Now, the whole family is proud of  her. Before this profound change in Claudia’s life, her household income  was only $700 pesos. Today, it is $2,700 pesos – and she can’t wait to start  her undergrad IT program.  54 

You might think the New Digital Middle Class is poor, and you  might think the poor aren’t your customers. You would be wrong  on both counts.  55 

There are 37 million Middle Class families in Brazil, with a  monthly income between 3 and 10 Jmes the naJonal minimum wage.  These Middle Class families are responsible for US$ 242,869 billion of all  Brazilian income. And if we add the Classes D and E to this sum, we will  have another US$ 228,347 billion.  That means more than 2/3 of the total  of R$ 1,38 trillion in 2010 comes from these 3 classes. (SOURCE: 2010  Trends of the Majority Study by Data Popular InsJtute)  The Middle Class produces US$ 233,560 billion of the Mexican economy. In  Mexico it represents 26.7% of Classe Media, including C, D and E. (SOURCE:    hLp://www.inegi.org.mx/inegi/contenidos/espanol/prensa/comunicados/ enigh2008.asp )  In ArgenJna, if you also include the Classe Media Baja (whose average  incomes actually fell just out of our NDMC range) these numbers jump to  61.1% of the naJonal income. (SOURCE: INDEC)  56 

The NDMC is especially surprising – and creaJve – in the way  they spend their disposable income.   For example, the combinaJon of the dollar at a low currency rate  and the availability of “mini‐cruises” (which are shorter packages  of duraJon around 3 to 4 days) made the cruise industry see a  boom in the NDMC market during 2009‐2010. The demand was  so high that for the ﬁrst Jme the cruise ships were staying along  the Brazilian coast unJl May, extending the cruising season in  Brazil to eight months, which had never happened before.  “The New Middle Class discovered the mini‐cruises, which are  ideal for this demographic, since these vacaJon packages are  more accessible than the trips of six or seven nights.” said Adrian  Ursilli, markeJng and comercial director of MSC Cruises.  57 

A 2009 study by Avenida Brasil Comunicações revealed that the  populaJon with incomes under R$ 1,700 represented 69% of the  credit card market. And Classes C, D and E were responsible for R $ 111.8 billion in transacJons. According to ABECS (Brazilian  AssociaJon of Credit Card Companies), Classe C already  represents 38% of the 140 million credit cards in Brazil, while  Classes D and E owns another 20%.  Between 2000 and 2007, the total Mexican credit grew from 6.5%  to 13%. In Classe C (or middle class) the growth in the number of  users went from 63% to 74% and in Classe D+ (or low middle  class) the change was from 41% to 61%.  SOURCE: hLp://eleconomista.com.mx/notas‐online/ﬁnanzas/ 2009/06/09/avanza‐bancarizacion‐mexico‐visa  58 

A study by Data Popular InsJtute aﬃrms that it doesn’t make  sense for the NDMC to deposit their money into savings as a form  of investment, because the purchases they would be making  instead (i.e. new clothes for a job interview, a PC to help with  their children’s educaJon) are seen as more valuable ways of  invesJng their money.  59 

Brazilian banks never gave as many loans as they currently do to the NDMC. According  to new rules established by the Banco Central (Brazilian Central Bank), banks must  direct 2% of all the deposits to microcredit or keep this money as frozen assets. In April  of this year, R$ 1,6 billion (or US$ 800 million) were offered to microcredit. This means  Brazilian financial insJtuJons lend 62% from the R$ 2,7 billion (US$ 1,8 billion) available  for this kind of operaJon. In April 2009, they offered 56% of the budget.  A total of 100 thousand contracts are done monthly and the average amount is R$  1,300.00 (US$ 750.00). Microcredit is used in majority for small business  entrepreneurs. These entrepreneurs don’t want to have a boss any longer, and don’t  want to depend on regular employment pracJces. They understand that the NDMC  is growing and needs new services, and that the best people to serve them come from  the same class. (SOURCE: hLp://economia.estadao.com.br/noJcias/not_22646.htm )  Brazilian women take out the majority of  microcredit loans, holding 53% of all  contracts. NDMC women contribute an average of 41% to all family monthly income,  while the richer women from the Classe A contribute only 25%. (SOURCE:  hLp://noJcias.r7.com/economia/noJcias/mulheres‐dominam‐microcredito‐no‐ brasil‐20100328.html )  60 

Pictured above: Elektra stores in San Mar}n Texmelucan in Mexico, and  Recife in Brazil (SOURCE: photo by Fabiano Accorsi, Época Negócios  Magazine, July 2008).  In Mexico, microcredits are growing by 20%. The recent financial crisis  made 533 thousand Mexicans cancel their saving accounts during the first  three months of this year, because they feared losing their money with  “trusted” banks.  Banco Azteca makes credit more accessible and easy to get for nearly 10  million people, and this credit can be obtained with as liLle as $50 pesos.  They even ensure that the condiJons of the loans are the best available for  that market segment and that there is no risk to the consumer: they don’t  raise the rates; they don’t ask for advanced payment deadlines; and the  consumer takes on a fixed weekly payment. It’s that simple.   Grupo Salinas – also the owner of Elektra Stores – sells low‐cost household  products and gives opportuniJes to the boLom of the pyramid to get  access to basic goods and services through installment plans.  61 

The NDMC is both realisJc and pracJcal. They understand that  the public school systems are not very good – and if their children  are going to get a good educaJon, it’s because they used special  weapons and tacJcs – like the Internet.  62 

Aluno Integrado is a project from the Department of EducaJon of  the Brazilian government started in 2010. The program , which  targets high school students from public schools, intends to teach  ICTs so these kids can use their knowledge to create digital  projects that can help their schools and communiJes.  Each student must take 180 hours of classes during 5 months; the  ﬁrst class is in‐ person and the other ones are virtualized.  63 

Anyone who thinks technology is not the career of choice in LATAM is mistaken, even if  in 2008 Computer Science was only the 10th career of choice in Brazilian universiJes  and colleges – with 112,857 enrollments – the number of new technological schools  that opened in the last few years in the country was huge.  These technological schools teach a bunch of professional courses, which are usually  fast and short when compared to undergrad courses, which are about two years. This  helps fulﬁll the needs of the NDMC, who are worried about ﬁnding a job ASAP to help  with their family income.  Both government and private companies are jumping on the tech schools bandwagon.  The Brazilian government plans on invesJng R$ 1,1 billion through the end of 2011.  Currently there are 219,000 enrolled students in the federal technological schools, this  number is 93% higher than those registered in 2003, when there were  only 113,000  students. Also in 2002 there were 140 federal schools of this kind, today they are 214.  The private educaJonal companies are also interested in this trend, and these private  school franchises grew 34% in 2010, according to a research by the consultancy Rizzo  Franchise. For this year, 354 new schools are expected to open. In 2009, when the  country had only 1,044 insJtuJons of this kind, the growth rate was 26%. According to  Marcus Rizzo, of the consultancy Rizzo Franchise, the biggest demand is for informaJcs  courses, because nowadays even the simplest jobs require computer knowledge.  64 

In Brazil, more than 3,7 million NDMC children and teenagers are going to  private high schools. They represent more than half of the 5,5 million Brazilian  kids aLending these insJtuJons.  The number of NDMC undergrad students almost doubled since 2002, when  they represented only 16,2%.  The projecJons for organic growth for the next ﬁve years (2015) are that the  number of NDMC college students will double again, making the NDMC the  majority of higher educaJon students.  (SOURCES: Educação Magazine, #156, 2010 ‐ hLp://revistaeducacao.uol.com.br/ textos.asp?codigo=12881  Ensino Superior Magazine, #134, Nov 2009 ‐ hLp://edumeduem.blogspot.com/ 2010/01/classe‐c‐chega‐universidade.html   Estado de São Paulo Newspaper, Nov 2009 ‐ hLp://www.conjur.com.br/2010‐ fev‐07/segunda‐leitura‐chegada‐classe‐ensino‐superior)  65 

Despite the perpetual crises in the ArgenJne economy, the  ArgenJne government announced an ambiJous plan in April to  buy and distribute 3 million laptops for all students in public high  schools (~4,800 public high schools). The plan will be completed  in 2012. Other aspects of the plan include the improvement of  Internet access around the schools (the installaJon of ~1200  servers in schools) and the digital training of teachers. Teachers  will receive special face‐to‐face training that will be organized by  each province and funded by the Technical EducaJon Act.  66 

NGOs are fighJng high school drop‐out rates and fulfilling the  desperate need for IT professionals by offering 3‐4 month IT  courses to 16‐25 year olds from high risk areas. Many students go  to these programs without even knowing what programming (as  a word) means! They get into these programs and become  fascinated. The drop‐out rate is among the lowest for any group,  in any subject area.  67 

In September 2007, the Secretaria de Educacion Pública of  Mexico (Department of Public EducaJon) introduced an Open  EducaJon Pla„orm, with more than 131 educaJonal  establishments in the country.  More than 131 public insJtuJons now have the capacity to  educate 40 thousand students ‐‐ thanks to the use of new  technologies. These new virtual classrooms allow students to go  to class from anywhere at anyJme, the only barrier is the need  for a computer with Internet access.   68 

The study revealed an interesJng paLern in the way the NDMC  adopts digital media. It seems to occur in three disJnct phases.  69 

The first phase is Discovery – when the NDMC understand that,  for the first Jme in their lives, the Web puts the enJre world at  their fingerJps. The absolute core acJvity during this phase is  social media.   70 

The highly social nature of LaJn American culture plays an  important part in the rise of social networks in the region. Along  with e‐mail and IM, social networks oﬀer an important way for  users in the region to stay in touch with friends and family, both  in their home country and abroad. The heavy penetraJon of  social networking in this region is also playing an important role  in facilitaJng the disseminaJon of other types of Web 2.0  content.  71 

Orkut reaches 72% of all Brazilian internet users. In April 2010  Orkut reached 30 million daily unique visitors, with 70% of its  users younger than 34 years old. In June 2010, Orkut had 60.7%  of all the visits to social networks in Brazil.  72 

LaJn America loves TwiLer, with Brazil leading the world in the  adopJon of the pla„orm.  73 

Facebook is tremendously popular in Mexico.  74 

Aher the “Discovery” phase, the New Digital Middle Class begins  to understand that social media and digital technology could also  be the primary catalysts for entrepreneurship and ﬁnancial  advancement. A huge percentage of NDMC start businesses such  as Lan Houses, repair stores for cell phones, IT courses, and  reselling of consumer goods through social networks and instant  messengers.  75 

Consider Elizelma, in Sao Paulo. Four years ago she barely knew  how to use the Internet. Today she uses Orkut and MSN as a re‐ seller of Natura products, the Brazilian leading manufacturer and  marketer of skin care, cosmeJcs, perfume and hair care products.  Natura has an "army" of more than 1,500 women selling goods all  over Brazil. They educated these women in the use of the web,  and as a result they increased producJvity and diminished all sort  of errors in the purchase system. Besides doing door‐to‐door  sales, Elizelma sells goods through MSN (showing clothes in the  webcam) and uses Orkut to display for the cosmeJcs and  perfumes she sells.  76 

Unsurprisingly, the mobile phone is not only the lifeline for the NDMC, it is  increasingly their key business tool, as well. And when the cell phone  breaks – unlike our behavior in the U.S. – they don’t simply replace it. They  take it in to get it repaired. The favelas and poor commercial areas  throughout LaJn America are ﬁlled with Jny repair shops like this one in  Mexico City. And this, in turn, has spawned a secondary industry in the  training of people to perform cell phone repairs. This Jny “school” oﬀers  basic, intermediate, and advanced training.  The Basic module takes 20 hours, costs US$ 200.  The Intermediate is a 12 hours course, and costs US$ 450.  The Advanced take 8 hours, and costs another US$ 400.  At the end, the person can start his/her own repair shop. It is a huge  investment for the average NDMC person, but the advanced module  assures graduates that their cell phone repair business will have at least a  30‐40% margin (greater than drug dealing).   77 

The third phase of digital parJcipaJon for the NDMC is called  “TransformaJon,” and it’s when they begin to use digital media  and tacJcs to inﬂuence their culture, their communiJes, and  their poliJcal landscape. Digital becomes a force for change.  78 

On of the best examples of this occurred in Chile. A second grade student named  Maria used Facebook and SMS to organize a protest against the educaJonal  policies of Chile’s president, Michelle Bachelet and the educaJon minister. Maria  encouraged all the students in Chile to “Skip School” on May 30. 600,000  students protested, making it the largest student strike in Chilean history.  AuthoriJes were stunned by the organizaJon of the protest, now widely known  as "the march of the penguins" ‐ in reference to the protesters' school uniforms.  Using the internet and cell phones, the students have rewriLen the rules of  dissent with their ability instantly to organize marches and make collecJve  decisions. The organizers are typically very young, with an average age of 16, and  their support goes all the way down to 11‐year‐olds, who organized forums and  debate the right to a free educaJon, turning their school breaks into a civics  lesson.  Hundreds of colleges were occupied and classes were cancelled for up to 10  days. Alliances between poor students at state schools and pupils in the private  educaJon system erased the usual class lines that mark Chilean social protests.  79 

Mexico has also used digital media to stage major poliJcal  protests. Just this year, the Mexican government wanted to  charge a 3% tax on Internet services. This sparked a huge social  movement – ciJzens used social networks to communicate with  each other and directly with the Senate, asking why the  government would charge more for a service that’s “essenJal” to  all ciJzens.  The protest occurred almost enJrely in TwiLer, with the  #internetnecesario tag. “If you want your opinion to be heard use  #internetnecesario. You are the Internet.”   80 

In 2007, 12 Brazilian motorcycle couriers used their mobile  phones with cameras to take pictures and make videos of bike  and car accidents, bad road condiJons,   poliJcian´s promises  that never come true, etc. Everything was published in real Jme  on the website www.megafone.net/SAOPAULO with tags chosen  by these city chroniclers of São Paulo. The project was later  transformed in a documentary.  81 

The Ficha Limpa (Clean Record) Law was delivered in 2010 to the Brazilian  NaJonal Congress by a popular iniJaJve, requesJng that poliJcal  candidates found guilty of commiˆng serious crimes such as money  laundering, drug dealing, corrupJon, use of public funds and electoral  infringements be forbidden from running for public office.  More than 3 million Brazilians signed an online peJJon for approval of the  law. When some poliJcians in the Brazilian Congress – not interested in  passing the law – started to suggest the postponement of the vote on the  law,  more than 41,000 e‐mails were sent to each one of the Brazilian  Congressmen. The campaign for the peJJon was done through e‐mail,  TwiLer, Facebook and Orkut. In fact, Ficha Limpa became a top TwiLer  trending topic for a week in Brazil.  Thanks to the effort done by digital campaigners, the law passed through  the Brazilian Congress in record Jme and went into effect in October of this   year.  82 

Mobile is a key trend for almost any social class in almost any  region of the world. But Razorﬁsh believes that there are some  unique dynamics playing out in mobile among the NDMC in LaJn  America.  Mobile penetraJon in LaJn America and the Caribbean was  approximately 80% in early 2009, well above the world average  which was about 58%. Several countries, including ArgenJna,  Jamaica, Uruguay, and Venezuela have passed the 100%  penetraJon threshold.  With 458 million people owning a mobile phone in early 2009,  LaJn America and the Caribbean together hold approximately  12% of the world’s 3.97 billion mobile subscribers.  83 

The NDMC don’t necessarily want smartphones – they want  phones that are smart.   The cheap and awful doesn’t interest them. They want the best  devices that fit their lifestyle. iPhones and BlackBerries have too  many irrelevant features and funcJons, and they would probably  just get stolen.  So, instead of purchasing low‐end feature phones (like simple flip  phones) or the top smartphones in the market, the New Digital  Middle Class looks for a specific kind of product that meets their  funcJonal needs and also gives a lot of status (another big  concern for them): the Net‐phones.  These mobile devices look like the best smartphones: they are  touch‐screen, access the web, have an aLracJve design, a camera  with lots of megapixels, radio, mp3 player… and all that for an  affordable price. Many of them also have built‐in televisions.  Some great examples are the Motorola CUBO, the Samsung Star  and LG Scarlet and the Chinese knock‐off “iPhones”.  84 

LaJn Americans are accessing a lot of social media and  entertainment content through the mobile web, and their  potenJal for being heavy users of mobile internet, like they  already are for tradiJonal web, is huge, but there are two major  barriers:  1.  Safety – Many of the NDMC live in neighborhoods that are not  enJrely secure. They are nervous about pulling out an  expensive phone on the street or on the bus.  2.  Cost – Data charges for the mobile web are prohibiJvely  expensive for most members of the NDMC.  86 

A signiﬁcant percentage of the NDMC uses phones with web  access capability, but only a fracJon of these people are actually  taking advantage of this capability. The data plans are extremely  prohibiJve, pushing the Middle Class away of the mobile web.   SOURCES:  May 2009 Report About Habits of the Mexican Internet Users by  AMIPCI;  and 2009 Survey on the Use of the ICTs in Brazil by NIC.br.  87 

Again and again we have seen how the NDMC is really creaJve in  solving their ﬁnancial dilemmas. The mobile web is another  example. The NDMC are heavy users of Bluetooth technology to  circumvent carrier charges and share content with each other.  Movies, games, MP3s, videos – if it can be shared, the NDMC will  be sharing it by Bluetooth. This occurs from phone to phone, and  also from phone to PC. Bluetooth is the pla„orm of choice for the  NDMC.  88 

This photo is from one of the dozens of booths outside the main  train staJon in Mexico City. But it could just as easily have been  from any of the commercial districts in any of the poor  commercial areas in the favelas. These booths sell any Hollywood  movie or PlaystaJon Game you can imagine for 5‐10 pesos – all  transferred on the street, via Bluetooth.  89 

Transfercel is a debit card Jed to a cell phone applicaJon. The  company’s target are Middle Class Mexicans who can’t have a  bank account, and Mexicans living in the US who want to transfer  money to their families back in their home country. The users can  transfer money through the applicaJon at US$ 5.00, instead of  paying the usual $35 for the bank. The Transfercel card is not Jed  to any bank, and it requires users to press only 2 keys on their cell  phones.   90 

Women are the CTO, CFO, and generally early adopters of New  Digital Middle Class household.  NDMC women are hard workers who usually have more than one  job and are also responsible for the ﬁnances at home. Because of  that, they are the ones who make the purchasing decisions,  including the tech products for their homes. They understand the  power of digital to improve their quality of life through access to  informaJon and educaJon, to change their children's future for  the beLer, and to be a tool for entrepreneurism and generaJons  of new income.  91 

All across LaJn America, women have achieved parity with men  in their access to digital.  (SOURCES: Amipci ‐ Internet Users 2006,  Amipci ‐ Internet Users  2009,  Ibope Net/RaJngs September 2006,  Ibope Net/RaJngs  April 2010,  D’Alessio ArgenJna IROL Internet en la ArgenJna)  92 

Retailers – both online and oﬄine – understand that women, not  men, are the main drivers of purchasing decisions. This ﬂies in the  face of many paternalisJc stereotypes of LaJn America.   93 

Even more interesJngly, in Brazil women are substanJally more  entrepreneurial than men. Again, this data runs completely  contrary to convenJonal wisdom about the role of women in the  culture.  94 

The Internet plays a huge role in the lives and self‐percepJon of  women. They view the Web as not only as a beLer source of  entertainment than “old media,” but also the primary means of  tangibly improving their lives and the lives of their families.  95 

So one of the larger messages of this study  is the central role of women in the digital  evoluJon of the NDMC. The beaJng heart  of the New Digital Middle Class is female.  Women are breaking down the generaJon  gap and bringing down the digital divide by  acJvely using the Web and being the  primary economic engine of the emerging  classes.   96 

At last, we return to the test from the beginning of the report. If  you are like most people, and if you were truthful to your  insJncts, you probably assumed that the “most digital” group was  the people on the right side of this photo. It would be a  reasonable assumpJon. But Razorﬁsh hopes that now you might  be willing to adjust your beliefs.  97 

Should you have quesJons or comments, please feel free to drop  me a line.  Joe Crump  Senior Vice President of Strategy and Planning, Razorﬁsh  joe.crump@razorﬁsh.com   98 

This study could not have been possible without the support of  our good friends at Terra, the largest digital communicaJons  company in LaJn America. We are grateful for their conJnued  friendship.  99 

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