Mexico hits the internet Tipping Point

18/07/2007

mexico%20article.jpgInsight & Analysis | By Danny Meadows-Klue | This article was written for IDM

Coming back to Mexico, I’m coming to a new country. The billboards from the airport are shouting out web addresses, WiFi internet access seems to be just about everywhere, and it’s not just the USA websites people are logging onto; Mexico’s home grown online media is in boom time. There are 22 million online users in México, with a big slant to upmarket professionals. The web is now about 1% of brand advertising spend in Mexico, and it’s focussed on a narrow group, but this is a gap that will close in the next 18 months. The demographics are broadening fast and the web is no longer just a high-end office worker tool, but thanks to the collapsing price of broadband is opening up to Mexico’s middle classes. 3.4 million people are banking online, and e-commerce is at record levels.

Prodigy/MSN top the audience charts among portals and destinations, with a massive 88% market share of the country's internet users. Having just picked up the media industry’s award for ‘Best Mass Media Recognition’, it’s clear that the balance of media focus is changing, even if the print and broadcast media have been slow to respond.

Prodigy/MSN’s Mariate Arnal is clear that the big change is now here: “we’re seeing a new way that people consume their media, and that means a new way they consume their advertising. Mexicans are choosing to spend lots of time in these new spaces, getting their news, chatting with their friends, taking part in their community”. For Arnal, it’s clear that the marketers are realising this: “The progressive marketers understand this and harness it, they can look around the world to see the models for engagement that have worked best and apply them straight away.”

Time tells all
Time online remains one of the key metrics to watch. It reveals the true picture of the depth of the internet in people’s lives. If you break down the time people spend with media (about 8.9 hours a day are being spent with media in Mexico), then the internet now stands out as the lead media channel among those with access. That’s a staggering leap in just a couple of years.
· 3.9 hours per day for using the internet
· 2.4 hours per day for using the TV
· 1.4 hours per day for using the Radio

Mexican internet users: Consumers 2.0
The latest wave of consumer research from Yahoo paints a stark picture of a society in transition. Mexico, right now, is a laboratory of when worlds transition. For those not connected, their media experience has changed little. For those who have made the shift, the consumer experience of media is as profoundly different in Mexico as it is among the leading clusters of internet users in North America, Western Europe or the Far East.

Here in Mexico consumers lives are changing fast thanks to the new technologies. “Mexican families are absolutely using technology,” explains Cammie Dunaway, Chief Marketing Officer of Yahoo. The average Mexican family owns a staggering 12.2 technical devices (DVDs, TVs etc) and mobile penetration is running at 93% - one of the highest levels in the world.

Yahoo has been investing in research to probe what this means in practice and it reveals that the behaviour of older online users remains very similar to the behaviours of the younger audiences.

Mexicans are big on the ‘Web 2.0’ applications and communication models. They’re particularly highly indexed for using the internet in several key ways:
· 71% Share photos
· 67% Look for health information
· 64% Research daily
· 50% Researching products
· 34% listening to the radio through the internet
· 33% said that’d made an online purchase in the last 30 days

As for what ‘Web 2.0’ means in practice, Dunaway is clear that it’s not about the technology, but instead “it’s about using the tools of the internet to help consumers collaborate with one another and help them share, As marketers it’s important to not get bogged down in the complexity, but to simply look at the consumers. What they’re doing, how and why.”

Kids and education
The role of the internet in the family is emerging fast in Mexico. In education 79% of parents see the internet as helping their kids with schoolwork and 76% see the internet as helping expose their kids to other cultures. 30% of parents see that instant messenger has improved parent child relationships.

A long journey in short time
Two and a half years ago, over a long working lunch in a quiet restaurant in Mexico City’s Santa Fe district, seven of us talked about the idea of creating a digital marketing trade association. In the café next door I could hardly get a WiFi connection, Google hadn’t yet opened up shop, MSN and Yahoo were the only web media of note, and the agencies were really struggling with where online fits in the media mix.

That recent past is now a very long way away. At Digital we were tracking several of the Central American markets, and it seemed likely that across Central America the uptake of internet access at work and then home would suddenly accelerate during the next few years, passing a tipping point in the way we’d seen in the US and Western Europe behave in the late nineties. The dampening effect of the high cost of access (vs wages) would be easily offset by the disproportionately vast choice of entertainment, services and tools available today. Right on track, the growth has been explosive and the ad dollars have followed the audiences, and that young internet trade association has been at the heart of it all.

Where next?
Looking back at the growth models in Western Europe, our money is on the market now accelerating even faster. It’s a genuine Tipping Point moment and one not just fuelled by the explosive growth of broadband access. It’s true that costs are plummeting and the hardware technology costs are becoming affordable to the mass market. But in Mexico there are two extra supply-side factors; one to the North and one to the East. North American websites get a lot of Mexican traffic, and the same is true in Spain. Mexico’s audiences get the benefit of access to a massive supply of great sites that they have a natural affinity to use. There’s a cyclical relationship between supply of the cool newly popular interactive applications like Flickr and Blogger et al, and the amount of online activity. Let’s face it, once you’ve loaded in your address book, uploaded your whole photo library, built your blog and your social profile, you’re locked in and hooked; and that’s where Mexico is today.

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Comments (2)

Strategist - Danny Meadows-Klue:

Returning to Mexico in October 2008, it's clear as soon as you arrive in the airport that the impact of the internet has grown. More and more advertising carries web addresses and when you visit the sites it's clear that these websites are delivering real value to consumers. The way businesses have turned the web into a core communications channel with their consumers is all part of this story. Travelling around Mexico City it becomes clear that certainly for the office workers the internet has become an essential tool. The latest data from AMIPCI also confirms how people are spending more time online at home and how the use of the internet for entertainment is rising.

Analyst: Danny Meadows-Klue:


NEED PERSPECTIVES FROM DIFFERENT MARKETS?

Thinking about the issues all this raises, here are a few comparisons about market growth and online adspend. They’re from articles or papers where I’ve tried to contextualise what is really happening (most recent first)…

US boom just keeps on coming
http://www.digitalstrategyconsulting.com/articles/2007/10/us_online_adspend_new_records.html

UK spend shows the transition between media
http://www.digitalstrategyconsulting.com/insight/2007/10/uk_digital_advertising_market.html

Mexico starts late but accelerates fast
http://www.digitalstrategyconsulting.com/articles/2007/07/mexico_hits_the_internet_tippi.html

Switzerland lags behind where it could be:
http://www.digitalstrategyconsulting.com/articles/2007/09/sizing_the_gap_swiss_marketers.html

Central & Eastern Europe rising quickly
http://www.digitalstrategyconsulting.com/insight/2007/05/digital_central_and_eastern.html

Spanish internet use and spend starts to accelerate
http://www.digitalstrategyconsulting.com/insight/2007/04/spain_understanding_the_online.html

Denmark: always out in front
http://www.digitalstrategyconsulting.com/articles/2005/01/danish_awards_put_internet_in.html

Some horridly wrong predictions in 2005 about where the market might be heading
http://www.digitalstrategyconsulting.com/insight/2005/04/digital_advertising_futures_th.html

The first attempt to track European online adspend for 2005
http://www.digitalstrategyconsulting.com/insight/2006/02/digital_europe_tracking_the.html

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