Universal Mccann Report Anytime Anyplace

Anytime, Anyplace: Understanding the Connected Generation

UM Global Digital Insight - In-depth Study 002

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The rapid rise of portable technology has forever changed the world we live in. The mobile phone is the world’s largest Internet, computing and communications platform with 2.3bn users; Laptops have overtaken desktops as the PC of choice; the iPod has sold 100m units and a whole wealth of mobile media technologies such as portable video players are on the cusp of going mass market. The emergence of these portable platforms has happened in tandem with the massive growth in social media, creating a proliferation of content such as video clips, digital photos, games, podcasts and vodcasts that can be downloaded or transferred to portable devices and consumed in an out-of-home environment. This growth in portable technology and content has changed 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.

The promise for content owners and marketing communications is huge but how is this going to be delivered? The gulf between industry expectations and what consumers are willing to accept is currently vast. To answer these questions, Universal McCann implemented the world’s largest survey into portable technology and mobile media platforms as part of its ongoing global digital research programme. The survey covered three key strands of portable technology and mobile media; platforms, content and advertising and marketing, investigating usage, growth potential, attitudes and demand. The research covered 21 markets from five continents and was completed in July 2007, providing a truly unique global perspective.

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THE GULF BETWEEN INDUSTRY EXPECTATIONS AND WHAT CONSUMERS ARE WILLING TO ACCEPT IS CURRENTLY VAST.

PORTABLE MEDIA DEVICES

PORTABLE CONTENT

MARKETING COMMUNICATIONS

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EXECUTIVE SUMMARY

“What did we learn?”

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EXECUTIVE SUMMARY

Access is universal world-wide • Consumers in the connected world have access to a massive range of portable devices regardless of local market economic, social and cultural conditions.

Illegal downloads leading the way • Ripping legal CDs to portable devices is the number one source of content, 38% have done so. This is still ahead of peer-to-peer illegal downloads, which stands at 36%.

Audio devices currently dominate • 41% have an audio player versus 20% who have a player with video capacity.

• Both exceed paid-for downloads, which is just 16% despite the fact that music is the number one form of portable content that users would pay for.

Mobile phones are evolving from voice to data devices • The leading markets are driven by messaging and data. In Japan just 24% of mobile usage is phone calls, compared to 65% in the USA.

Branded content is the most popular advertising format • Branded content is the most popular of all advertising formats with 67% finding this acceptable or valuable.

3G phones are the most in demand portable device worldwide • 3G is the number one in demand portable technology – 43% want to 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.

• Opportunity exists in this future media environment to provide consumers with what they want and drive genuine consumer benefit by creating, sponsoring or providing access to content.

HOW WE DID IT The research was conducted via self completion online surveys by 10,000 16-54 ‘Connected World’ individuals who are Internet connected mobile phone users. Although there are hundreds of millions of mobile users without access to the Internet, it was felt that the dynamic between mobile and online was essential to access the full range of content and understand the relationship between portable technology and the Internet.

All the sample groups were nationally representative to the mobile, internet-connected universe (Figure 1). In many of the more emerging markets this defaults to an urban sample. This selection of countries provided a universe of 690m, 30% of the global mobile universe. The mix of saturated, maturing and emerging markets allowed for in-depth and robust assessment of the current 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

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158.3

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64.7

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44.4

28.6 29.7 30.5 38

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11.4 11.5 11.6 12.2 17 17.6 18.2

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Source: Internet World Stats, TGI Europa, Simmons & Local market surveys

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“THE MINIMUM REQUIREMENT TO BE INVOLVED WAS A MOBILE PHONE AND ACCESS TO THE INTERNET.” MARKETS TARGETED IN RESEARCH

USA

France, Germany, Greece, Italy, Spain, UK,

Russia South Korea China

Pakistan India

Mexico

Thailand

Japan Taiwan Philippines

Malaysia

Brazil

.

Singapore Australia

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PLATFORMS

“What’s in your bag?”

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WHICH PORTABLE PLATFORMS ARE THE MOST POPULAR?

Figure 2: Device ownership global average

% Ownership

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The portable device that leads the way is the digital camera, with 75% currently owning one. This high availability of cameras underlines the extent to which photographs are the first point of content creation bar none.

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% Ownership

Portable devices have proliferated over the past few years - Figure 290 Fig 2 80 Fig 2 shows the global average for device penetration amongst our sample 70 60 of mobile and internet connected individuals. The ranking of devices 50 is particularly relevant as it demonstrates the entry points for content 40 and advertising. 30

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The other interesting point is the dominance of the MP3 player over the iPod. At a global level this can be attributed to the success of low-cost flash players in the Asian markets. It is also clear how audio-only platforms lead video ones. This is a clear implication on the distribution of portable content. Laptops are now more likely to be wireless and at 31% are an established platform for out-of-home and significantly lead portable gaming devices. At 31% 3G compares favourably to many other portable media technologies amongst our mobility audience. Dedicated mobile email devices such as the Blackberry have yet to make an impact with just 6% claiming to use them, showing that they are still firmly business devices.

Figure 3: Multiple device ownership global average

1 (Just a mobile) 2

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3 4 5+

1 (Just a mobile) 2

Fig 3

3 4 5+

9%

9% 29%

29%

18%

18%

Unsurprisingly multiple device ownership is the norm (Figure 3). A massive 25% have five or more of these devices in their ownership.

19%

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COUNTRIES COMPARED

Portable media player

Laptop

Digital Camera

100 90 80 70 60 50 40 30 20 10

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Looking at specific devices it is clear that the portable media player (music, video and combined players) is the main portable technology platform. The majority of these devices are music only and the high levels of usage in emerging markets can be linked to the popularity of low cost flash based players such as iRiver and Creativelabs. 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’.

Figure 4: Device penetration by market

% Ownership

When looking at adoption by market (Figure 4) the main surprise is the extent of ownership in supposedly ‘less developed’ markets. This reflects the nature of the connected audience and shows how involved and active this segment of Internet-connected mobile users are, regardless of a low overall penetration within their country. If you are connected you are connected, where ever you are in the world. This underlines the divide that exists in emerging markets between the online and the offline audience.

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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 creep of convergent devices. It is also particularly pertinent considering Fig 4 the large number of portable devices that the mobility audience own. Figure 5 shows the percentage that agree with the statement “I like the idea of having one portable device to fulfil all my needs” and there is a clear trend. The top markets driving the demand for convergence are the emerging markets. Mexico leads with a massive 79% strongly attracted to the concept of convergent devices. The next seven markets are Malaysia, Brazil, India, and the Philippines. The markets where the convergence is least popular are all affluent. The lowest figure is Japan with 27%, Taiwan with 29% and the US with 31%. Convergence is clearly driven less by aspiration and more by financial necessity. There is no real need for a convergent product in the US, Germany and Japan – multiple dedicated devices is affordable and aspirational.

Figure 5: Percentage Completely Agree with the statement “I like the idea of having one portable device to fulfill all my needs” Mexico Malaysia Brazil India Philippines Spain Greece China Pakistan Russia Italy Singapore Thailand Australia France UK

South Korea Germany US

Taiwan Japan

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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.”

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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

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Always Take 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

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THE ROLE OF PORTABLE TECHNOLOGIES Respondents were asked to state what device they typically used in certain occasions. Figures 7 - 10 show the top usage occasions for portable devices. Mobile Phones usage is clearly defined by travelling, four of the top six are forms of transport, trains, underground, bus, walking and the 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 of these needstates shows how crucial the mobile is to our out-of-home lives. It is also interesting that the commonly held stigma that people do not want to use mobile phones on public transport does not apply. These figures reflect the huge growth of data and messaging. Fig 7

Figure 7: Where do you use your mobile phone? Global Average

The laptop in contrast, is all about in-home usage. Unsurprisingly it is driven by working and studying but the extent to which users are combining laptop usage with in-home media consumption shows how important it is for online and TV and online and radio. This is confirmation in a global context of the much talked about concept of ‘media meshing’ i.e consuming more than one media at the same time. Portable media players and portable gaming share the same needstates – it is all about travel, with a mix of short commuting and long-haul travel. It is also very interesting to see that these two devices have also crossed over with in-home media consumption – again 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 8 to play in the home. Figure 8: Where do you use your laptop? Global Average Laptop

Mobile Phone In a car (passenger)

At home while watching TV

Walking

At home while listening to the radio

Shopping

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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

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On train / underground

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FUTURE GROWTH

IMPLICATIONS

Good news for the mobile phone manufacturers and the networks, 43% of the global sample intend to obtain a 3G phone in the future, promising huge potential (Figure 11). This is followed by video iPods; not only good for Apple but an indication that out-of-home video is set to be a major global platform. Wireless laptops come in third, confirming the ever growing demand for portable computing.

The extent of portable device ownership is staggering, both in terms of penetration across markets and the number of devices that users have. There is clearly a massive demand across the connected world for these products and the lifestyle they enable. At present the key platforms for marketers and advertisers are centred around audio, with the mp3 player and the audio only iPod being found everywhere. In theory this should be reflected in the content that is produced today.

The technologies that lag are varying. The Nintendo DS lags its rival Sony PSP, indicating that dedicated gaming devices are not as popular as multiple content devices. Non-wireless laptops follow, confirming the shift in demand to flexible out of home computing. Next come portable email devices which show that consumer demand for dedicated email is still relatively low thanks to its association with business.

Figure 11: Which devices are you interested in purchasing in the future? Global Average

3G enabled mobile phone Ipod (video capability) Laptop with wireless (e.g Centrino) Mobile Phone Digital Camera 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

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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 media platforms. Nonetheless the primary portable will always be the mobile phone. Firstly it is ubiquitous, secondly there is massive demand for 3G guaranteeing its role as future multi-media device and thirdly its carried out-of-home on 100% of occasions. Particularly as they continue to move away from multi-media devices.

Global Average

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The short-term future is multi-media. 3G phones are the number one most in-demand portable product, while the video iPod is number two. Two key platforms for the distribution of video.

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MOBILE PHONE USAGE

The mobile phone is the worlds biggest computing and portable media platform. It is forecasted that 3.3bn will be connected by 2011* – growth driven by Asia, Africa and Latin America. The developed markets have reached or are reaching 100% penetration; extraordinary Fig 12 for a relatively young technology.

There are however big variations by markets, even among the numbers of phone calls and SMS messages sent. Figure 13 shows the share of mobile usage occasions by country. The immediate observation is the overall share of SMS, which has extensively eaten into voice usage, but yet to be impacted by MMS.

The other striking fact is the extent to which Japanese usage is driven Figure 12 shows the extent to which users have integrated phones into Internet data, with 23% of usage made up by Internet usage – by far the their lives. On averageUsed 41%the of our global sample makes more than five5+ times by a day highest 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% of usage occasions: USA, Thailand and Taiwan and this will surely of communication.Send a picture (MMS) Once a day message 2 – 3 times a weekover time. decline Internet and MMS frequencies are much lower, but not insignificant. Once a Week Send a text (SMS) 30% use mobile internet moremessage than once a week and 34% send Less often Have used once an MMS more than once a week – encouraging opportunities for Never multimedia content. Make a phone call *MIC (Market Intelligence Center)

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Figure 12: Frequency of using your phone by method of communication - global average

% frequency of communication

Fig 13

Figure 13: Percentage share of total usage occasions by method of communication - global average

Phone Calls Used the Internet

5+ times a day 2 – 4 times a day Once a day 2 – 3 times a week Once a Week Less often Have used once Never

Send a picture (MMS) message Send a text (SMS) message Make a phone call 0%

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USA UK Thailand Taiwan Spain South Korea Singapore Russia Philippines

USA UK Thailand Taiwan Spain South Korea Singapore Russia Philippines Pakistan Mexico Malaysia Japan Italy India Greece Germany France Phone Calls Text (SMS) China Brazil Australia Global Average 0%

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MOBILE PHONE FEATURES

Only two markets fail to reach the 60% penetration threshold, which is interestingly India and the US - two markets at the opposite ends of the economic development scale.

Multi-media handsets are now the norm amongst our connected universe. Figure 14 shows feature penetration across the sample. The enablers of content creation and media are now all mainstream. Colour screens, cameras, web browsing and MMS are all around the 80% penetration mark. However convergence features have had mixed performance. Music players have reached 50% penetration, but more emerging technologies such as Live TV, video calling and payment technologies have yet to make significant penetration, all falling below 20%.

Comparing this to the penetration of music players, a slightly different picture emerges. There are a larger number of developed mobile markets further down the table. The relatively strong performance of developing markets reflects the financial necessity of convergence – the idea of having separate portable devices is more of a luxury. Not a problem in markets such as Japan, the US and France where dedicated business and multiple handsets are more likely to exist.

There are however significant differences when you look at the market 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.

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Figure 14: Mobile phone feature penetration - global average fig 14

Global Average

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Figure 15: Penetration of cameras on

Figure 16: Penetration of music

mobile phones

players on mobile phones

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Colour Screen

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NEXT GENERATION MOBILE SERVICES

The real test is not feature penetration but users’ willingness to adopt and use such technology. Figure 17 shows that the ubiquitous text message remains the most popular mobile application. HoweverFig17 it is closely followed by multimedia content creation and sharing. Taking photos, MMS, taking videos and sending photos are the next four. This Fig17 level of penetration shows the extent to which the mobile phone has evolved from just being a communications device, while indicating its value in User-Generated Content. There is also a creep of Internet services; using mobile web portals, mobile search, downloading content and sending emails have gained significant levels of usage. Unsurprisingly some more cutting edge technologies have yet to approach critical mass, with emerging concepts such as Live TV, electronic payment and video calls still niche. Figure 18 looks at usage in relationship to access and it is clear that the points of access to create content lead active usage. Nearly 100% of those with a camera or video camera have used it. Since these are so easy to use, this is not a surprise. What is a surprise is the extent Fig18 to which very emerging applications such as electronic payment, video calling and watching Live TV have such high levels of take up. This Fig18 is very encouraging for mobile operators as they continue to expand their access to new technologies although it is very unlikely that most of these users will go beyond experimentation to become the regular users that operators seek. However Internet browsing and email lag despite integration on all new user interfaces and heavy promotions from the handset manufacturers and the operators, suggesting more needs to be done to promote these services.

Figure 17: Usage of mobile features (last 6 months) – global average Send a text (SMS) message Taken a photo Send a picture (MMS) message Sent a photo to someone I know Recorded a video Send a text (SMS) message Send a file to another phone via Bluetooth Taken a photo Use the internet pages provided by mobile company Send a picture (MMS) message Download a game Sent a photo to someone I know Sent an email Recorded a video 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 Made a video call Sent an email Electronically paid for goods/ services Sent a photo to a website Used office software e.g Word Processor etc. Downloaded a video clip Watch Live TV Search for directions Made a video call Electronically paid for goods/ services Used office software e.g Word Processor etc. Watch Live TV

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% Ever Use (last 6 months) Camera Figure 18: Conversion – the numbers with access who have used – global average Video Camera Electronic payment system Camera Picture messages (MMS) Video Camera Video Calling Electronic payment system Facility to watch live TV Picture messages (MMS) Emails Video Calling Internet browsing (WAP / GPRS) Facility to watch live TV Emails Internet browsing (WAP / GPRS)

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WHICH MARKETS LEAD EMERGING TECHNOLOGIES? Mobile search Mobile search has long been touted as the application which will finally drive substantial take up of mobile Internet and also provide the link between online and the real world. However usage is still limited in all markets except Japan (Figure 19), where 49% have used mobile search. Only four other markets fall above the average; Greece, China and the UK. Electronic payment for goods and services Electronic payment by mobile could revolutionise commerce. There are 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 Figure 19: Ever usedFig19-21 mobile search

Sending photos to websites The integration of mobile phones and the Internet promises to unleash the tidal wave of User-Generated Content. The growth of camera and video phones means that there is a constant opportunity for citizen reporters. The increasing usage of mobile phone pictures and videos in TV news reporting is proof of this. However outside of Asia its impact has been limited. Figure 21 shows how dominant the Asian markets are, in particularly Japan, China and South Korea which are all at the forefront of social media usage. European markets, normally at the forefront, lag in this connection of mobile and online.

Figure 20: Ever paid using mobile electronic payment systems

Figure 21: Ever sent a photo to a website Sent to a photoSent to a photo to Sent a photo a websitea website a website

Electronically paid for Electronically paid forElectronically paid for goods/ services goods/ services goods/ services

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COUNTRIES COMPARED

IMPLICATIONS

Figure 22 looks at the average levels of adoption by market for all of these technologies and is very revealing in terms of the extent to which mobile phones have woven themselves into the fabric of that society. The countries that lead are Japan, Greece, Italy, China, South Korea and the UK – markets that have all enthusiastically embraced the phone beyond its capacity to make calls.

There are clear global patterns in mobile usage and development. The most sophisticated market is clearly Japan. Not only did they top the mobile usage index, they are the largest users of mobile Internet and also emerging technologies such as electronic payments and search. On a broader scale Northern Asia, Mediterranean Europe and the UK are leading consumer adoption of mobile and driving its future, while in contrast France, Germany and in particularly the US lag. These are useful differences for marketers, mobile operators and content providers to prioritise which markets are worth investing in.

The position of Japan at the top of the index confirms all the preconceptions and anecdotal evidence that states Japan’s pre-eminence in mobile. It is interesting that the US ranks last, again substantiating perceptions that the US has been slower than other markets to embrace mobile phones in a sophisticated manner.

Figure 22: Mobile usage index (average usage across all applications and services tested)

From a global perspective the extent to which mobile owners use their mobiles is quite extraordinary and the shift away from voice to messaging and more slowly to mobile internet is clear. The leading 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 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 UserGenerated Content. There is higher access to camera phones than digital cameras and usage where available is virtually 100%. But the important point is that the mobile is available all of the time. Where the impulsive need to create content via photos or videos is relevant the phone will fill that gap. Mobile pictures, videos and MMS can clearly be worked into all marketing communications where relevant.

Japan Greece Italy China South Korea UK Singapore Philippines Pakistan Mexico Spain Malaysia Global Average India Thailand Australia Russia France Brazil Germany Taiwan US

The mobile also has a multi-media and divergent future. The real emerging technologies that have low overall reach due to technology constraints such as electronic payment, video calling and Live TV have been adopted with huge enthusiasm by those who can. A very encouraging fact for mobile operators, mobile phone manufacturers and marketers the world over. 20

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CONTENT

“What do you want to do?”

21 Fig 25-26

WHERE ARE USERS GETTING CONTENT TODAY?

Buy an official CD and upload 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 Download Podcasts versus music. Films are also more popular than TV Shows on P-2-P, Download Videocasts in the main do not have the same global appeal because TV Shows Buyand a DVDdo and upload it to yoursuch PC not have staggered and controlled distribution.

The journey consumers take to source content for portable devices splits into two; the sourcing of content and the transferring of content. By accessing the absolute number who had done this across various platforms, it allowed us to track demand for paid-for content versus free content while also assessing the possibilities for media owners and advertisers.

Buy a copied CD and upload

the music to your PC InBorrow theanmain, paying for digital media is still relatively unpopular – music official DVD from a friend and upload it to your PC is most popular, but TV and Films have yet to make an impact. Paying 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 when sourcing content which is great news for the music industry. However while file sharing sites are catching fast, underlining the fact that paid for downloads has some way to go before they dislodge the CD and illegal methods. It also shows that consumers favour flexible non-Digital Rights Media (DRM) media regardless of paying for it or not.

file sharing site

they want them and also the complexities of uploading DVD content

Pay a monthly subscription to Transferring of content is very prominent (Figure 24), it shows that there download / stream music is a large of interaction between the PC, Internet and portable Pay forlevel film downloads technology and also that much of what people move to portable Pay for TV show downloads devices is user-generated. More than 60% are moving pictures from 0 5 10 15 20 25 30 35 40 their digital camera to their PC, but surprisingly mobile phones are % Ever Done (last 6 months) closely behind. Transferring videos from the same platforms to a PC is also very popular – facts that underline how important these devices are in the world of UGC. The most popular movement from PC to portable player is music, followed by photos and then video, which 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

Films however are led by illegal file sharing and then DVDs – this

ig 25-26 reflects two facts, one that Peer-to-Peer (P-2-P) gives users films when

Buy an official CD and upload 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

Transfer photos from a digital camera to a PC Transfer music from your PC to 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 to a portable player

Download Videocasts Buy a DVD and upload it to your

PC

Transfer videos from a digital camera to a PC

Buy a copied CD and upload the music to your PC Borrow an official DVD from a friend and upload it to your PC

Transfer videos from a mobile phone to a PC

Pay for music downloads

Transfer videos / TV / films from your PC to a portable player

Download TV shows from a p2p file sharing site Pay a monthly subscription to download / stream music

0

10

20

30

40

50

% Ever Done (last 6 months)

Pay for film downloads Pay for TV show downloads

0

5

10

15

20

25

% Ever Done (last 6 months)

30

35

40

60

70

22

Fig 27-28

LEGAL V ILLEGAL SOURCES

Illegal content is currently satisfying consumers demands, 36% have downloaded music via P2P versus 18% who have paid for digital music. The only markets to buck this trend are the US and South Korea, where the use of P2P sites to obtain music is lower than the percentage who had paid for music downloads – a point that demonstrates the global nature of content piracy.

South Korea Thailand UK China Australia Russia Japan India Global Average Phillipines US France Greece Taiwan Mexico Singapore Italy Pakistan Malaysia 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 Thailand UK China Australia Russia Japan India Global Average Phillipines US France Greece Taiwan Mexico Singapore Italy Pakistan Malaysia Brazil Spain Germany

China Mexico Spain Russia Malaysia Brazil South Korea Greece Italy Global Average Australia India UK France Phillipines Pakistan Singapore Taiwan US Japan Thailand Germany

0

20

40

60

% Ever Done (last 6 months)

China Mexico

80

0

20

40

60

% Ever Done (last 6 months)

80

g 23

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 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

80 70

The surprise with gaming is that portable gaming machines were not the main platform for gaming, with laptops and mobiles leading the way. This is indicative of most people’s casual demands for gaming – which the mobile and the laptop via the Internet do so well.

60 50 40 30 20 10 0

TV Clips, Films and Live TV in terms of interest regardless of platform. The concept of Live TV over PC or phone seems to have resonated with consumers the world over.

Music

TV Clips/ video casts

Films

Live TV

Games

Internet

The Internet is unsurprisingly most popular on a laptop, but the mobile 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 consumer demand is there.

24

CONTENT BY USAGE OCCASION

It is clear that music dominates all usage occasions and is consumed everywhere on a portable device, from travel, to work and even shopping. The next most popular type of content is the Internet and there is demand across the board in-home, out-of-home and at work. Looking at richer more involved forms of media, such as video, films, Live TV and gaming the demand is lower, but still significant in terms Fig 24 of usage.

Another interesting point on gaming – is that there is consumer demand to have it at home while working / studying but not in the office. The relative scores for consuming portable content while at home watching TV demonstrates that portable media is not just for out-of-home. Also it underlines how important duel media consumption and media meshing is. The relationship between traditional media consumption and portable content is an important dynamic.

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

% content platforms used by usage occasion

70

80

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

Scale of 1 to 5 where 5 equals very interested and 1 equals not at all interested

1.5

2

Male

26

Female

News

Entertainment

Technology

Travel

Entertainment

TOPICS Cinema OF CONTENT BY SEGMENT Sports 40

45

50

55

60

65

fig 30-34 70

% Very Interested Figures 30 to 33 show the top five types of content that are of most interest by key demographic segments. The major consistencies are that the content remains informational and largely functional regardless of segment with news, travel and entertainment information figuring highly. There is no place for celebrities, route planning or UserGenerated Content in any of the segments.

News News Cinema Technology Holiday Entertainment

Male

40

News Cinema

Cinema Entertainment

Technology Holiday

Technology Travel 50

55

60

65

70

% Very Interested

Cinema

70

Female

Travel News 40

45

Cinema

Sports

50

55

60

65

70

65

70

65

70

65

70

% Very Interested

Holiday 40

45

50

55

60

65

70

40

45

% Very Interested

50

55

60

% Very Interested

Figure 32: Content very interested in – under 34s

Figure 33: Content very interested in – over 34s

-34

35+ News

Entertainment

Weather

News

Female

Cinema

Travel

Entertainment Technology

Entertainment

Travel Travel

Holidays News

News

65

-34

News

45

60

Figure 31: Content very interested in – female sample

Male

40

55

Entertainment

Figure 30:Travel Content very interested in – male sample

Entertainment

50

% Very Interested Cinema and sports, while women have ranked entertainment top. The differences by age groups are less pronounced although the younger Sports segments are more entertainment-orientated. Older segments are more 40 45 50 55 60 65 70 tasked based with weather and holiday information figuring in the top % Very Interested five, while news is number one.

Female There are also some subtle differences that pull the segments apart – albeit along fairly stereotypical lines. Men are interested in technology Entertainment

News

45

40

45

50

55

60

65

70

% Very Interested

Cinema

Cinema

-34

40

50

55

60

% Very Interested

Technology

Holiday

45

Travel 40

45

50

55

60

65

70

40

45

50

55

60

27

WHAT WOULD USERS PAY FOR?

Monetising portable content is obviously the ultimate goal for mobile networks, the portable platform content providers and media owners. Fig The size of the user base and massive demands for content suggests that there is much revenue to make, however it is clear that overall demand is still on the low side. The research asked users to score from 1 – 5 how willing they are to pay for content and just three category types passed the average (Figure 34). All three were rich and permanent (i.e. not intended for single use) types of media; Music, Films and Games. The next two categories that people would be likely to pay for are location services and directions, a surprisingly high ranking for one off service, but one that demonstrates there is value in mobile services. Live TV, Radio and video clips all fall in the lower half, a long way behind their rich media counterparts of music and film. This suggests their association with free to access traditional media harms their ability to drive paid-for revenue on mobile platforms. A big surprise is the very low ranking of sports highlights and news and results considering that sports is something that has traditionally driven media revenues on most platforms.

It has also been the focus for mobile companies within their portals. This suggests that if untargeted it may not be the best content to monetise. 35 As with interest in types of content – user-generated video comes at the bottom of the list. This clearly indicates that quality and professionalism of production is one of the main drivers to monetisation. A reassuring fact for professional media everywhere. Figure 34: Content willing to pay for – global average

Music downloads Films Game Travel directions / times Local search for products and services (e.g nearest restaurant) Music videos News articles Price comparison services of products you find in the high street Live TV on a mobile Video clips / TV shows Radio / audio shows Consumer reviews of products and services Sports Highlights Sports news articles / results 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 what is being provided legally is not fulfilling demand. The number one source of content is still to rip a CD followed up peer to peer sources. This shows that consumers do not want tightly controlled DRM heavy digital media. They want to be able to use it as they want regardless of paying for it, both a challenge for rights owners to open up their content on digital platforms and also an opportunity for advertisers to provide free top use content to consumers. There is a challenge in wider multimedia monetisation. The topics content that most users want on a regular

basis are largely functional and informational, but the content they are willing to pay for is rich entertainment. These results also show important the mobile phone is as a cross media platform, being more popular for gaming than games machines and the second most popular for Internet, music and TV and video formats. It may become the device in emerging markets where finances demand one, however low demand for convergence in developed markets, mean it will always be a supplementary device, be it one that is always present.

28

MARKETING COMMUNICATIONS

“What do you like?”

29

MARKETING COMMUNICATIONS

Expectations in the industry are huge and it has been hyped as the next big thing. Every year is touted as the year it will happen. But marketing on these devices remains limited as consumer demand is so far removed from industry hype. Mobile phones are dominated by SMS promotions, while display, location based, bluetooth and rich media advertising still remains very much in the nascent stage. Frequently held back by technology issues, lack of advertiser interest and concerns over Fig 36-37 consumer receptiveness. Other platforms such as video players and portable gaming machines have opened up new possibilities for new kinds advertising, sponsorship and branded content in a plethora of new media formats such as podcasts, videocasts, video clips, web services and gaming. However, as with mobile, it is still much at the experimental stage. Figure 35, which looks at mobile phone formats confirms what many have thought. The highest levels of value and acceptability were for the

formats that create clear consumer benefit and ones that are based on “opt in” for example outdoor bluetooth formats both on transport and outdoor adverts. Figure 36, which looks at portable media player formats, demonstrates that the rules of advertising on traditional media still apply. The most interruptive and invasive formats that appear in the middle of clips or come in the form of paid for recommendations are the least acceptable to consumers. As the format becomes less interruptive for example sponsorship and branded content more acceptable it is. Lower the Average Higher value on public transport This Ads distinction from that consumers highlights the opportunity for send info to mobile if opt advertisers and marketers in this space. There is far more flexibility Outdoor adverts/ posters that send info to mobile if opt found to and opportunity than in traditional media, so the opportunity Sponsored search on a to leverage paidresults for communications in formats that create consumer mobile phone search benefit and drive engagement, should be embraced. Adverts on mobile internet pages TV adverts on a mobile phone

0%

6-37

Average

Higher value

Lower Radio/audio shows (Podcasts) sponsored by advertisers

Outdoor adverts/ posters that send info to mobile if opt to

Video clips/shows that are sponsored by advertisers

Sponsored search results on a mobile phone search

Radio/audio shows (Podcasts) created by advertisers

Adverts on mobile internet pages

Video clips/shows that are created by advertisers

TV adverts on a mobile phone

Adverts that appear at the beginning of video clips / shows

20%

40%

60%

% Agree Lower Radio/audio shows (Podcasts) sponsored by advertisers Video clips/shows that are sponsored by advertisers

Average

60%

80%

100%

Figure 36: Opinion on portable device advertising formats

Ads on public transport that send info to mobile if opt

0%

40%

% Agree

Figure 35: Opinion on mobile phone advertising formats

Lower

20%

Higher value

80%

100%

Average

Higher value

Brand recommendations from the presenters of podcasts Adverts that appear in the middle of video clips / shows

0%

20%

40%

60%

% Agree

80%

100%

30

RECEPTIVENESS OF DIFFERENT MARKETS Fig 38

Although opinions between different formats were very uniform 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 portable technology platforms that allow you to compare markets and see where the real opportunities and challenges are. The clearest observation is the significantly lower levels of acceptability in developed markets. This is particularly the case in the US, where clearly a legacy of heavy weight advertising and marketing has had an impact. The next set of countries are also developed, but with significantly higher levels of acceptability than the US. The top seven countries are all emerging markets including Mexico, China, Thailand, Philippines, Malaysia, Brazil and India, demonstrating less cynicism towards paid for communications, but something that will surely emerge as advertising on digital platforms and the commercial application of them becomes more prevalent.

Figure 37: Advertising Acceptiveness Index – scores by market

Advertising Acceptiveness Index Mexico China Thailand Philippines Malaysia Brazil India Spain Singapore Germany Russia Italy Taiwan Pakistan Australia Greece Japan South Korea UK France US

5

5.5

6

6.5

7

7.5

8

Average value score by market across all mobile phone and portable technology advertising formats

31

ADVERTISER FUNDED CONTENT

Portable technologies and mobile open up a huge range of possibilities for advertisers and marketers to produce and distribute content. Recent examples have included CocaCola with iTunes and BMW with videocasts, this in the past has been complicated and expensive due to the tightly controlled distribution channels of broadcast radio and TV and the difficulties of operating in multiple markets. Ad funded content also clearly offers away to offer consumers real benefits, moving away from the interruptive model of advertising and drive engagement. Figure 38 looks at which forms of content most appeal when offered by advertisers for free and the results almost mirror the content that users are willing to pay for – clearly people want to receive the content they attach most value too (as shown previously in Figure 34). These are music, films, live TV and access to events. Again UGC video clips hold no appeal and surprisingly nor do sports.

Fig 39

Figure 38: Content that consumers would most like to receive free of charge from advertisers

Global Average Music downloads SMS (txt msg) that entitle free entry to an event Films SMS (text msg) that entitles you to prod discount Music videos Live TV on a mobile News articles Game Travel directions/times Local search for products and services Video clips/TV shows Radio/ audio shows Price comparison service of prods find in high st Consumer reviews of products and services Sports Highlights Sports news articles/ results Video clips created by other users/ consumers

0

0.5

1

1.5

2

2.5

3

3.5

Scale of 1 to 5 where 5 equals very interested and 1 equals not at all interested

IMPLICATIONS Consumer receptivity to advertising and marketing activity is extremely clear; the most invasive formats such as advertising in the middle of podcasts, pre-roll advertisements and TV ads on mobile phones are the least liked and significantly less acceptable than more progressive formats such as branded content and sponsorship. The emergence of portable technology and their use as a media platform is a massive opportunity for advertisers to create a more positive relationship with consumers by giving them what they want. Portable platforms are open access, cheap to distribute across, global in nature and consumed on users terms. Traditional media, with its high

entry costs, limited geographic reach and strict regulations, has never provided advertisers and brands opportunity before. Brands should be creating appropriate branded content, providing access to rich media content such as music, film and TV shows or even creating mobile services, reaching consumers on their terms in a way that’s more engaging than traditional interruptive formats. It is also clear that certain markets are more receptive than others, with the developed markets that have a legacy of heavier advertising being least receptive. The emerging markets are currently open to newer formats but this may change as users become exposed.

32

“How do we deliver the potential?”

33

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 • There is huge demand for content while advertising in its traditional format, will not succeed on these platforms Define a more positive relationship with consumers • 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 portable technology media, consumers will go elsewhere Leverage the network • Portable platforms like social media have created new avenues to distribute content on a global scale without the high entry costs of global • A global brand and communications positioning must be maintained, content is accessed along language lines not market lines Integrate with social media • Increasingly the connected people are sourcing content from social media platforms • Portable devices should be part of any social media strategy and users should be encouraged to move that content from desktop to devices • This means living by the rules of social media – creativity, participations and interaction

Integrate mobile into the mix properly • The mobile is the world’s number one technology platform and should be core in all future communications, this can be as simple as providing SMS shortcodes on adverts • Avoid interruptive formats and always have “opt-in” Encourage creation of content • A surprising amount of portable media consumption happens at home while watching TV, listening to the radio or even while using the Internet • It is important to link portable content and services to traditional media content 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 the rise of camera phones • Increasingly consumers are uploading this content to social media platforms creating an opportunity for brands to either develop applications that leverage this or place User-Generated Content as a mechanic in campaigns

Asia and Europe offer most commercial potential

Champion simplicity • A very key point in portable technology and mobile. If it is simple and the technology works without much effort then it will be adopted

• Largest demand for content, services and future devices and most receptive to marketing communications

• Simplicity is the reason podcasts took off once they were integrated into the iTunes store, it became a one click process

35

Portable technology allows advertisers to create a more positive relationship with consumers. © Universal McCann 2007. All rights reserved.

Contact For further information and any questions please contact EMEA Research Manager: [email protected]

Global Research - 21 Markets, 10,000 consumers