In December 2012, André Andrade was appointed vice chairman of the MEF Latin American board. He is the CEO of Titans Group, a Brazilian-based company which provides value-added-services (VAS), such as device security and mobile learning, to major mobile operators across Latin America, and through them to 10 million customers in 17 countries.
Q1. What makes mobile such an important channel for customer engagement in Latin America?
Latin America (LatAm) has over 100 percent mobile phone penetration (according to the Teleco). This is a consequence of two key factors factors which directly contribute to the engagement of customers in the region.
• The majority of the LatAm population is in the middle to low income bracket with limited access to computers, tablets and fixed-line phones. Mobile offers an all-in-one substitute for these services, allowing voice calls, text messaging and internet access.
• The availability of pre-paid plans makes mobile much more accessible since customers, in many cases, do not have a fixed monthly salary, they work in an informal economy and do not want to – or cannot afford to – make the financial commitment to a post-paid mobile contract. Pre-paid plans are a great option for the majority of the population – with the ability to pay ahead and use only what you have or need.
Taken together, these factors have made mobile the primary engagement tool for customers who typically have made their first phone call on a mobile device rather than fixed line, have used their first messaging service via SMS and not a traditional email and have accessed the Web for the first time via a mobile and not a PC or laptop.
The all-in-one importance of the mobile phone will continue to grow driven by the provision of essential services like mobile banking. The majority of LatAm mobile consumers are unbanked (i.e. do not have a regular bank account) and mobile increasingly gives them the opportunity to access banking services, credit tools and m-commerce.
Q2. Which countries stand out particularly as mobile markets? What makes them so important? (Brazil seems to get a lot more attention than any other LatAm country, why is this? Is it justified?)
Brazil represents over a third of the total mobile market in the region (according to the Teleco) making it of natural importance to mobile network operators (MNOs), mobile phone manufacturers and VAS players. However the attention that it receives is disproportionate. For example, Mexico is a huge market for VAS services with better average revenue per user (ARPU) than Brazil and a fast-growing economy. Argentina, Chile, Colombia and Peru are also very important markets with significant customer bases.
It’s also worth remembering that LatAm has two dominant mobile operators – America Movil and Telefonica. Service providers are naturally attracted to them because they can offer business in all regions, regardless of the size of the local country operation – this is one of the essential ingredients for success in Latin America as a VAS company.
Q3. What are the differences and similarities between the way the LatAm audience interacts/use with mobile compared with the North American audience?
Mobile users in LatAm are largely similar to North America, except for two major differences:
• The purchasing power of users in LatAm is significantly lower and secondly, which is a consequence of the first, there is latency in technology and service adoption. For example, SMS took much longer to take off in the region due to the cost of sending a message (which is now significantly less) and culturally, users had never sent an email before, so sending an SMS was not something that came naturally.
• As mobile tariffs were lowered and texting became the cultural norm this service has seen huge increase. With the growth of smartphones, the same has happened to Web browsing and the availability and downloading of mobile apps – going forward LatAm represents an important and growing market for app developers and m-commerce players.
Q4. What are the popular mobile sites, m-commerce sites, mobile social networks? Are there many that span different countries?
Major global sites and services such as Google, Facebook, Twitter and Youtube are all popular in LatAm. However there are plenty of homegrown services and start ups in all the major LatAm countries – examples in Brazil include Buscapé, Abril (the largest publishing house) and Terra.
There aren’t many examples of pan-LatAm success stories with mobile, for two reasons:
• The language difference, Portuguese in Brazil and Spanish in all other countries.
• Even though Spanish is the native tongue in many LatAm countries each country has a very particular culture. Savvy service providers appreciate these nuances, adapting their mobile content/sites, whether that is information, entertainment, sports or m-commerce, and also their brand identity to suit consumer culture at a country level.
Q5. What should companies be doing to engage this audience via mobile?
Two or three years ago, regional markets were flooded with unsolicited promotions and subscription clubs focused on commodity infotainment content which neither brought value to the customer, nor respected their privacy. This generated alarming levels of complaints to both MNOs and government agencies.
These sharp practices threatened the entire LatAm VAS market. MEF LatAm has done a lot of work to deliver the message that companies must only send messages to the handsets of people who given their permission, i.e. opted-in to receive messages from them. This started in Brazil with the launch of the Unified Code of Practice, first in 2010, then updated in 2012, which sets the standard for regulatory best practice that mobile content aggregators must follow in order to offer VAS services in partnership with Brazilian carriers.
As with the rest of the world, companies need to put the customer at the heart of their approach and focus on creating products and services that really bring value to the end user across every mobile device (whatever operating system it might run) so that the customer experience is consistent and where transactions are involved, based on trust and transparency.
Products and services that follow this central proposition and actually add value to their users such as mobile security and cloud services will generate traffic and revenue with fewer customer care issues.
Q6. What are the most common mistakes made by brands in targeting this audience? (e.g. forgetting that only a fraction of phones are smartphones?)
The most common mistake made by companies and brands in Latin America is coming to market with unclear communication to their specific audiences, generating confusion and customer complaints. That’s why a trade association like MEF is so important because, through its initiatives, forums and research reports it assures standard practices, creating a business framework for both local companies and new market entrants, allowing companies across the mobile value chain to monetize their mobile services and providing support to the market as it grows.
It’s also a mistake for a brand to target only smartphone users since the majority of handsets are typically feature phones or even more basic models. This will change, of course, in the longer term as smartphones become the norm.
Q7. To what extent should companies segment Latam audiences? Is a mobile site/app/campaign in Spanish and Portuguese going to cut it or do you need a dedicated site/app for Brazil, Argentina, Mexico, Chile and so on.
The Spanish language is pretty much the only similarity in Latin America. Different cultures, likes and dislikes, traditions and even regulations are specific for each country. Service providers need to be aware of these differences to deliver relevancy for each country, regardless if it is for a mobile site, app, SMS or promotion.
Brazil is different, not just because the national language is Portuguese, but also because it is a country of continental size, this means companies need to consider the different flavors and accents from north to south to be successful.
Q8. What are the barriers to mobile taking off in Latin America? What needs to happen? E.g. standards, infrastructure, regulation, cost, spam etc
Take off has already happened in Latin America (no doubt about this), but there are still barriers:
• Cost is a big issue for the end user, but this is constantly evolving with more attractive data packages from mobile operators across the region, making it cheaper and cheaper to use the mobile device for everyday functions.
• Standards and regulation are also something now well-established so growth can continue within a fair and sensible framework. Of course new issues and barriers to growth will continue to arise such as consumer trust and anti-piracy that we need to tackle collaboratively as an industry.
• Infrastructure is a worldwide issue, but improving telecoms networks is a focus across Latin America, especially Brazil, which has a huge focus on network capacity and quality because it is hosting both the soccer World Cup in 2014 and the Olympic Games in 2016.
Q9. What role do you see MEF playing in Latin America?
Prior to MEF launching in LatAm, the VAS market, particularly in Brazil, had some serious problems around customer care and complaints which was threatening the future of the industry. MEF was able to bring together VAS players and MNOs to collaborate on, then subscribe to, a Code of Conduct which is designed to protect consumers and support mobile growth. MEF successfully coordinated the adoption of the Code of Conduct as the industry standard in Brazil, and the LatAm Chapter is already discussing the Code’s third iteration to ensure best practice is maintained as the industry continues to evolve.
Our focus for 2013 is to replicate this success in other countries in the region starting with Mexico, because of its status as an important mobile market and looking at pan-regional initiatives. We are also leveraging the global network of MEF to support local LatAm members with international business development including a trade mission to China later this year.
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