Tracking the Growth of Social Media in Emerging Markets

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					Tracking the Growth of Social Media in Emerging
The Marketer’s Goldmine

Emerging markets, which
constitute for approximately
60% of the world‘s
population, are rapidly
taking over social media.
Although the primary reason
for people in these markets
to join Facebook or Twitter
was to stay in touch with
friends, this is gradually
changing. Emerging market
consumers are using social
media to share content and
photos, shop online,
recommend products and
post reviews among other
things. According to the
new GlobalWebIndex Social
Networking Map 2011 study,
people in emerging
markets such as the Philippines and Indonesia were much more engaged in social networking when compared to
those in advanced markets. This, along with the fluctuating economy in developed markets such the USA, is driving
brands to explore new markets which are brimming with opportunities. Despite the challenges that come with
marketing to foreign customers, our research showed that brands were more than willing to take their chances. Here
are some reasons why:

        Recent studies show that the BRIC markets (Brazil, Russia, India and China) will collectively have 2.577 billion
        mobile phone subscribers by 2014. Besides texting and calling, a large percentage of these users are expected
        to use their mobile devices for networking, blogging or making online purchases.
        For brands specifically looking to sell their products or offer their services abroad, social media marketing is
        the easiest and the most cost-effective way of entering new or emerging markets.
        According to research by TNS Digital Life (2010), online consumers in emerging, rapid growth markets are
        more engaged than those in mature markets. This means broader reach, more opportunities and a larger
        customer base for brands with ambitious growth plans.
        The study also showed that Egypt and China had comparatively higher levels of digital engagement than
        Japan, Denmark and Finland.
        Malaysians had the highest number of friends across various networking channels (233 on an average),
        followed by Brazilians (231).
        A 2011 study shows that Brazil, at 86%, has the highest level of social penetration.
        Even within developing markets, ethnic minorities visited social networking sites more frequently than non-
        Hispanic whites.

The rapid increase in social network users in emerging markets has dispelled the myth that people in these countries
are slow to adapt to social media. A large chunk of Facebook users come from countries such as India, Brazil and
Malaysia. In fact, Facebook use is growing faster in Africa than on any other continent, while the Asians simply love to
share photos over the internet. For advertisers and brands, these largely untapped markets look promising. While
each country has its fair share of quirks and challenges, we believe that emerging markets are a social media
marketer‘s goldmine.

© Position2, Inc.                                                                                                      1
        Marketing Beyond Borders
        Unlike earlier, when people in countries such as
        Russia or India had to wait for a product to be
        ‗imported‘ from developed nations, buying
        something today is just a click away. The growth of
        e-commerce has benefited both consumers as well
        as brands immensely. Today‘s marketers are no
        longer confined to advertising or selling a product
        within their home countries. Whether it is retail
        brands or FMCG companies, it is as simple as
        promoting their brands on the plethora of
        networking sites out there. What makes social
        media a lucrative platform for online marketers
        looking to discover emerging markets?

            More than the Big Three:
            Besides Facebook, Twitter and LinkedIn, there
            are other social networks in emerging markets
            that attract users too. For social media
            marketers, local platforms equal to higher
            possibility of reaching local users, in the
            language they are comfortable with and on
            the channels they are most likely to use. For
            example, QQ is China‘s largest social network;
            V Kontakte is the most popular in Russia; Orkut
            is strong in India and Brazil; Hi5 leads in Peru;
            and Maktoob is the most important in the Arab
            world. Also, in many countries, Western networking channels are blocked. This however, does not mean
            marketers should give up on online promotional activities in these nations. Our suggestion? Try the popular
            local equivalents. However, recent research by eMarketer indicates that consumers in D&E markets like
            Brazil are gradually opening up to Facebook and Twitter, challenging the dominance of Google‘s Orkut.
            Twitter was ranked #1 among the top ten social networks used by consumers in Brazil, closely followed by
            Facebook. Here’s a tip for brands entering emerging markets: do your homework and study what
            channels are popular in the country you wish to advertise. This way, your chances at successfully reaching
            the right audience are higher.

            Wallet-Friendly Marketing:
            Rewind a few years back when American and European
            brands hesitated from advertising in emerging markets
            because of the expense involved. Print and TV ads
            required huge investments, and did not always
            guarantee returns. A lot has changed since then. The
            advent of social media tools like Facebook, Groupon
            and Twitter opened up a world of marketing
            opportunities for Western brands. The biggest USP of
            social advertising in emerging markets? Low-cost
            investments with little worry about the returns. When
            American company Heinz launched its ketchup and
            other products in India, the company‘s biggest
            challenge was gaining visibility. Additionally, Heinz
            faced the risk of being overshadowed by Kissan, which was synonymous with ketchup in India. Instead of
            investing all its marketing dollars in putting up billboards and print ads, the company advertised on
            YouTube. The award-winning commercial, which required comparatively lesser investment, was a huge
            success and helped the brand test the market before rolling out offline campaigns.

© Position2, Inc.                                                                                                    2
            Reaching Out to Economically Empowered Consumers:
            The incorrect perception that emerging nations are economically weak or unstable is gradually changing.
            The International Monetary Fund has predicted that the total GDP of emerging and developing economies
            will equal those of advanced economies by 2013-14. Some of the so called ‗emerging markets‘ are not just
            technologically advanced, but also boast consumers with solid disposable incomes. These consumers are
            willing to try out new products and are open to the idea of shopping via social networking sites. Simply
            put, consumers in these markets have the money and are willing to spend it; for Western brands dealing
            with slow domestic sales, it can‘t get better than this.

        Emerging Markets vs. Developed Markets: The Fundamental Differences in
        While people across the world join social media for common reasons such as connecting with their friends,
        blogging about their experiences and sharing information, brands need to keep in mind that social media
        marketing is not a one-size-fits-all endeavor. There are certain fundamental differences between marketing in
        developed markets versus emerging markets. Social networking behavior is largely dictated by cultural
        differences and economic disparities that exist in developed, as well as developing nations. This presents a
        challenge for brands designing universal social strategies and requires them to analyze and understand the
        varying social networking behavior across different markets.

                Low-Internet Penetration:
                While consumers in emerging countries are rapidly going ‘social‘, one of the biggest challenges online
                marketers are likely to face is low-internet penetration. Unlike advanced markets, some developing
                countries are still faced with this problem. However, getting around this problem is simply a matter of
                designing marketing messages that are easily viewable in mobile format. According to BCG‘s
                September 2010 report The Internet‘s New Billion, BRICI countries—Brazil, Russia, India, China, and
                Indonesia—will represent more than 1 billion internet users by 2015. Many of these users are expected
                to develop distinct internet usage patterns, including major reliance on mobile phones as their main
                access point.

                Overcoming the Language
                Brands that are determined to
                establish a strong social media
                presence in these countries
                don‘t let language issues deter
                them from targeting their
                customers. According to
                Internet World Stats, English is
                still the most widely spoken
                language online. Yet, it only
                accounts for a quarter of all
                online usage, with simplified
                Chinese running a close
                second. Although bilingual
                users may look for important
                information in English, they
                are more likely to engage in
                social media in their own
                language. In our opinion,
                brands turning away from
                these markets because of
                language barriers are
                overlooking an important
                demographic. The answer lies
                in hiring native speaking
                translators who are also social

© Position2, Inc.                                                                                                     3
                media experts. Although machine translators are comparatively inexpensive, they are not usually
                accurate and cannot understand informal linguistic terms that are usually used in social media.

                Comfort with Remote Payments:
                Much before the concept of online shopping caught on, the Americans were already comfortable with
                purchasing products remotely using catalogues, infomercials etc. With the emergence of e-commerce,
                they adapted faster to virtual forms of payment by using credit or debit cards, unlike their
                counterparts in emerging markets. People in emerging countries were slower to get accustomed to the
                idea of paying virtually and preferred to use cash and pay in person. Although this is gradually
                changing, for online marketers, the ‗mode-of-payment‘ is one of the biggest challenges they face. In
                order to overcome this hurdle, here‘s what we suggest: a) use virtual coupons (e.g.Groupon) or b)
                partner with a local agency to work out the cash-on-delivery system.

        Creating a Solid Online Marketing Plan
        While creating marketing messages and social media campaigns for audiences in emerging nations, brands
        need to keep in mind the cultural differences, economic situation of the region, and have a thorough
        knowledge of customers‘ online buying behavior. A solid online marketing strategy is vital for brands that are
        keen on succeeding in these markets. Here are some key points to be remembered while creating an online
        marketing plan for emerging markets:

                Educate your Customers:
                It would be incorrect to assume that your target audience has prior product knowledge and knows
                what your company does. As an online marketer entering a new market for the first time, educating
                customers about your products is a must. Targeting an audience that is unaware of the services
                offered or the products being marketed increases the possibility of your promotional messages getting
                ignored. The best approach would be to effectively communicate what your company does before
                launching a complete social advertising campaign.

                Understand the Culture and Behavior:
                Countries such as India, China, Russia, Malaysia etc are loosely grouped as ‗emerging markets‘. Yet,
                your marketing strategy for Indian customers, for instance, may not be as well received by those in
                Russia or vice versa. Our research shows the online buying behavior in these countries is largely
                dictated by the culture unique to that region. As a marketer aiming to engage with your customers via
                social media it is important to do some background research and understand what drives them. When
                American coffee giant Starbucks, decided to strengthen its footprint in China, the company wisely
                decided to go into location-based marketing via micro-blogging, Weibo. There were three things that
                worked for Starbucks 1) Weibo is China‘s third most-visited website, with vast user base and strong
                brand awareness. 2) Having done the required background research, Starbucks understood that the
                Chinese were not open to strangers and especially did not like the idea of Western networking sites.
                By leveraging on the popularity of Weibo, the coffee company managed to reach out and engage with
                their target customers. 3) The predominately tea-consuming population of China was trending towards
                coffee, especially the younger social media savvy demographic.

                The ‘Pay Less, Shop Often’ Formula:
                As discussed earlier, consumers in emerging markets are more financially empowered than ever
                before. However, the recent economic empowerment has had little effect on the ‗hunt for bargains‘
                approach to both online as well as offline shopping. Most often than not, the bargain hunters are on
                the lookout for the ―less than $2″ offer on their local deal-of-the-day website. Online marketers
                targeting this demographic should understand that these consumers wouldn‘t mind shopping for the
                same product frequently…as long as it is marketed as ‗inexpensive‘.

Emerging markets are e-commerce magnets. What makes countries such as China, Brazil, Russia etc the marketer‘s
goldmine is the improving economic situation in these regions, as well as people‘s willingness to shop online.
Marketing in emerging countries comes with its unique set of challenges. This, however, has not deterred popular
Western brands such as Nike, L‘Oreal and Starbucks to name a few, from successfully establishing a strong presence in
these countries via social media. While internet connectivity can be a hurdle in some countries, the rise of mobile

© Position2, Inc.                                                                                                        4
social networking can help brands connect with their customers. We expect to see a significant increase in mobile
social media users in the years ahead.

Earlier, brands that had otherwise established a solid social media presence in advanced countries, shied away from
emerging markets because of cultural differences and linguistic issues. For today‘s marketers these factors are hardly
perceived as barriers. While understanding the customer, studying their shopping behavior and cultural make-up does
require time and effort, many brands are willing to go that extra mile. This is because of the exponential increase in
the number of people engaging in foreign language social media channels. Also, the fact that social advertising in
these markets does not require huge budgets is an added advantage. That said, emerging markets are undoubtedly the
world‘s fastest growing consumer markets; for companies looking to give their sales charts a shot–in-the-arm, these
markets certainly look promising.

© Position2, Inc.                                                                                                   5
About Position2
Position2 is a Search and Social Media Marketing firm that delivers continuous growth for our clients using our
proprietary ―Surround and Intent‖ Marketing Methodology, delivered by our products. Our proprietary methodology is
a result of years of experience in working with diverse clients to deliver customer acquisition goals through search
engine optimization (SEO), social media marketing (SMM), and Pay Per Click (PPC) and online media advertising.

Position2 was founded in 2006 with funding from Accel Venture Partners, and has offices in Palo Alto, Bangalore and
Mumbai. Position2 is a certified agency with Google, Yahoo, Bing and is also part of the Google Adwords advisory

Position2's flagship product is Position2 Brand MonitorTM, a platform that allows users to listen, discover and engage
with social media conversations in real time. With a team of over 100 professionals, Position2 also provides expertise
in online marketing solutions: SEO, PPC, Media and Advertising.

Position2 works with leading global brands:

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© Position2, Inc.                                                                                                        6

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Description: Marketing in emerging countries comes with its unique set of challenges. This, however, has not deterred popular Western brands such as Nike, L'Oreal and Starbucks to name a few, from successfully establishing a strong presence in these countries via social media.