Module 1: China Internet User Profile Module 2: Mobility

Presented by: Shane Crombie

China Digital Marketplace Overview: Q2 2010

A bit about me..

●1996-2001: Digital creative production, ad serving & project management with Carat Fusion in San Francisco & Wunderman in Los Angeles●2001-2008: Digital media planning & buying with Tribal DDB & Carat in Australia & UM in China.●2008-2010: Executive sales consultant with Sina & Wanmo●Key category experience: IT, Travel, Auto & FMCG●Key client experience Microsoft, Intel, Tourism Australia, Cathay Pacific, Jaguar, Nissan, Unilever & Roche●Key specialisms: Ad serving, social media & haggling

Presentation Structure

1.0 Thought Starters1.1 Demographic Profiling1.2 Usage Trends2.0 Mobility- Global Survey2.1 Mobility- PRC Overview 2.2 Conclusions

1.0 THOUGHT STARTERS

Digital is a phenomenon …

Average hours per week media consumption

Print

Internet

Analogue TV

Digital TV

Analogue radio

Digital radioCine

ma

Outdoor

Wireless

Games

010

20

30

40

50

60

70

80

90

100

1900

1920

1940

1960

1980

2000

2020

Source: Aegis

What are we most curious about?

China searches focused on

wealth management

badooFacebook

DailymotionWebkinzEbuddy

SecondlifeHi5

Club penguin

International searches

predominantly 2.0 social networks

1.1 DEMOGRAPHIC PROFILE

Key Demographic and Internet Metrics

Source: eMarketer, March 2007

China Internet Population Growth 2002-2009

60.8% of Internet usage is mobile

8.9% of Internet usage is mobile only

Source: CNNIC Mar 2010

CNNIC WEBSITE

Key Market Internet Penetration

Source: Internetwordstats.com Dec 2009

Internet Penetration by Region

Source: CNNIC Mar 2010

Internet Penetration By Province

Source: CNNIC Mar 2010

GDP Vs. Internet Penetration By Province

Source: CNNIC Mar 2010

Age Distribution

Internet population is moving into the over 30

category

M/F ratio still lags mature

markets

This situation is consistent with a new

internet market

Male/Female Ratio:54.2/48.8

Over 30 now 38.5%

Source: CNNIC Mar 2010

China and USA age profile comparison

Source: Internet June 2010

Education Distribution

*Tertiary education here refers to college education received through full-time study and also includes adult education and other equivalent education

Early adopters more

educated/higher income

Growth or pre tertiary usage indicative of rural usage

growth

Primary school uptick due to earlier age adoption

Source: CNNIC Mar 2010

Employment distribution

Students & junior office staff

like using the internet (!)

Growth in Unemployed

usage likely due to recession

Source: CNNIC Mar 2010

Income distribution

Greater unemployed

using the internet

Salaries are rising leading to

a skew in the Income usage

profile Source: CNNIC Mar 2010

Urban Vs. Rural Usage

Growth slowed in rural areas in 2009 vs. 2008

40% of non usage due to

lack on knowledge, 20%

due to lack of access

Rural knowledge gap may develop

leading to socio- economic divide

Source: CNNIC Mar 2010

1.1 USAGE TRENDS

Access Time & Costs

At work audience relatively small in

China, internet mainly used for

leisure purposes

2 hours per week is a considerable

increase= 96 more hours online

in 2009 per netizen

Source: CNNIC Mar 2010

Access Device Profile

The desktop is dead long live

mobility!!!

The computer is dead long live smart phones!!

Source: CNNIC Mar 2010

Mobile Usage comparison by age

Under 30 netizens prefer mobile internet,

suggesting this is the future for all internet usage

Small screen size is not a barrier for

content consumption

Source: CNNIC Mar 2010

Mobile Content Consumption Profile

Reading content and txt

messaging/IM predominant

usage indicating lack of 3G penetration

Search is a popular aspect of mobile internet, no info on what

the key topics are

Source: CNNIC Mar 2010

Global Broadband Speed Comparison

Yes China has ‘broadband’ but at 800 kbps its half the global average of 1.5

mbps

Korea has fastest

broadband at 14.6 mbps,

HKG at 7.6 and the USA 18th at

3.9mbps

Source: CNNIC Mar 2010

Preferred Access Locations

Home and work access continued usage growth due

to more importance assoc

with internet

iCafe usage decline attrib. to mobile internet usage increase

Source: CNNIC Mar 2010

Internet Content Consumption Profile

Why the 5% decline in IM

usage?

Growth in eCommerce

signals greater trust in internet

45% of netizens below to a social

network

Gaming now at close to 70% penetration

Source: CNNIC Mar 2010

Blog Usage

221 million netizens now

read blogs, 145 million netizens author a blog

Huge engaged audience but

limited marketing

penetration so far.

Source: CNNIC Mar 2010

2. MOBILITY

"In just a decade, we'll have gone from half the world never having made a telephone call to half the world owning a phone" Pesce, 2007

2.0 GLOBAL TRENDS

Device penetration by market

Device ownership is

high in developing

markets

Laptop ownership is

lower in China due to relative purchase cost

Source: UM ‘Anywhere Anytime’ Global Survey, 2007

Percentage that completely agree with the statement “I like the idea of having one portable device to fulfill all my needs”

Affluent markets prefer, and can afford,

multiple aspirational

devices

China consumers have

mixed preferences

Source: UM ‘Anywhere Anytime’ Global Survey, 2007

Penetration of content sources on mobiles

Both India and the US fail to reach 60%

uptake, interesting given their differences

China consumers love

to listen to music on the go, perhaps highly cultural trend

Penetration of cameras on mobile phones Penetration of music players on mobile phones

Source: UM ‘Anywhere Anytime’ Global Survey, 2007

Global Mobile Usage Index: All data points

All regions & continents

evenly distributed in

rankings, suggesting

nation-unique usage profiles

US consumers use phones to make phone

calls only

Source: UM ‘Anywhere Anytime’ Global Survey, 2007

Acceptiveness to advertising on mobile devices

Developed markets have lower levels of acceptiveness

The key question is will this bifurcation change

as developing markets become

more sophisticated over time

Source: UM ‘Anywhere Anytime’ Global Survey, 2007

2.1 PRC MOBILITY OVERVIEW

We are:

DEMAND

THE GO

ALWAYS ON

ALWAYS

*

The New Mobility

Customization: You order from a menu, a la carte is out.Personalization: You decorate in your own styleInteractivity: You react, respond & recordConvenience: You text & talk to anyone, anytime, anyplaceFreedom: You control your destiny

We have a highly personalized relationship with our mobile phone. It’s with us 24/7, we depend on it and its a symbol of who we are. Its our ‘mini me’ The traditional role of a phone, to send and receive calls & messages, is no longer relevant. Today, we ask for more:

750 millionmobile users

50 millionactive MMS users

27.3%(44 million users) Access to internet

51%diploma education+

61.6% Professionals, young executives and students

430 billionSMS were sent last year

90%+aged 18-40

60 millionactive WAP users

Source: Multiple

*

2009 Mobile landscape in China

Selection of current PRC mobile marketers

Available mobile marketing programs

Interact with brandsUser engagement / participation – survey, voting, etc.Event / product promotion

CRMCRM database integrationCustomer retention – coupons, reminders

Mobile Surveys

Drive brand awarenessText / audio/ images / videos

Performance marketingClick-to-callLead generationCustomer acquisition

Mobile targeting capabilities

By geography (i.e., Beijing, Shanghai or not Guangdong)By handset brand and model (i.e., Nokia Nseries with S60 platform)By handset retail price segment (i.e., Targeting only 2,000RMB handsets and aboveBy handset classification (i.e., High-end and smart phones or female and music phones)

Shanghai UserSony Ericsson W550

Beijing User Nokia N70

FullyOptimizedInventory

Ad Version 3

Ad Version 2

Ad Version 1

Ad Version 4

Ad Version 5

Ad Version 6

Day 1 Day 2

OptimizedInventory

Time Period

New Ad Version

Rotation

New Ad Version

….

End of Campaign

Optim

ized

OptimizedInventory

Time Period

Time Period

Ad Versions

Optimization capabilities

Optimize ad serving by analyzing ad version CTR in a specific ad position by campaign and hour of the day, and automatically rotate in new versions for best performance.

X √ X

Platform optimization

●Serving optimized mobile ad banner automatically to fit different screen resolutions of different phone models

●Optimize approx. 97% of the mobile handsets in China

Conclusions

●With less than 30% internet penetration and annual growth of 70 million new users, China is on track to have half a billion netizens in late 2011.●The internet is going mobile and the demand for custom content and platforms will shift internet resources and thinking to mobility●The new popularity of social networking is showing signs it may impact popularity of standalone platforms like Baidu, 10Cent and gaming verticals.●With close to 150 million active bloggers, marketers must execute brand building programs successfully in this space to maintain market share. Seeding & banners only offer so much.●Netizens are getting older and richer and looking for engaging content experiences that match their evolving interests

EPIC 2014