Asia’s Mobile-First Economy and How the West is Feeling the Effects
What does a mobile-first economy look like and how is Asia's approach to this model effecting the western countries? Read this article by TechCrunch to learn more!
By Matthew Dibb as written on techcrunch.com
Asia Pacific leads the global digital infrastructure as home to half of the world’s mobile phone subscribers and the largest number of wireless Internet connections.
However, the region also has historically attracted less than one-third of global mobile marketing spend — making its role in the digital economy largely underrepresented amongst its Western counterparts.
The potential for that role to change was galvanized by a late-2014 Google survey, which highlighted that mobile penetration in Asia was far greater than any other region in the world, even surpassing computer use, thus ushering in Asia’s “mobile-first” consumer.
As we approach the 10-year anniversary of the smartphone era, are there further lessons to be gleaned from Asia’s mobile-first economy?
East versus West
The mobile-first consumer has fueled double-digit annual sales growth over the past five years for Asia Pacific tech companies — twice the pace of traditional retailers in the region. Although the growth trajectory is similar to the North American experience, differences in underlying drivers have the potential to elevate Asia Pacific’s sphere of influence in the digital economy.
While North American technology players have traditionally relied heavily on advertising, the Asian tech scene is more diverse. The West’s largest online companies — Alphabet and Facebook — generate more than 90 percent of their revenue via advertising.
By comparison, Asia’s largest player, Alibaba Group, doesn’t even operate on an advertising model, and the region’s next largest incumbent, Tencent Holdings, relies on advertising for less than 20 percent of its income.
As a result, popular consumer mobile apps in the region, such as WeChat, Line and KakaoTalk, are synonymous with multipurpose functionality, incorporating e-commerce, payments processing, games and other digital goods and services.
Their success has been a recent source of inspiration among Western counterparts, with Pinterest, Twitter, Instagram and Facebook all launching actionable “buy it” buttons in their platforms during 2015.
“Value adding” not expanding
Are these initiatives set to open new rivers of gold for the West’s social media incumbents? To date, the West’s foray into social commerce remains in the experimental phases.
To soften investor curiosity, industry leader Facebook has promoted its new functionality as a mechanism to enhance the value of existing advertising services rather than as an independent monetization strategy.
While Facebook and Alphabet command half of all mobile advertising dollars, the pursuit of alternative revenue strategies may remain a covert affair.
The region’s two most active private equity houses — Sequoia and Tiger Global — have together during the last six months helped anchor for local tech startups funding rounds nearing $2 billion.
If their portfolio allocations are a proxy for near-term trends in the region, enterprise software, agency and financial services are set to become a greater part of the East’s mobile commerce mix.
Future forces in Asia’s tech economy
Accounting for 40 percent of recent deals in the region, on-demand services are driving a boom in agency funding. Also referred to as online to offline (O2O) businesses, the likes of Uber and Airbnb have pioneered this model in the West.
However, in a hallmark characteristic of the East, local incarnations are not just relying on the pure agency model to drive revenue.
Indian car hire provider Ola marked the region’s most significant agency deal over the past six months with a $500 million funding round in September from a consortium that included Tiger Global. Proceeds are helping the company broaden its horizons with the launch in November of a new payments service, Ola Money.
A reverse situation appears to be transpiring at Practo Technologies. After operating an enterprise management platform for doctors and medical clinics since 2008, the business now has an ancillary opportunity on the consumer side to facilitate on-demand medical bookings and advice.
Practo attracted $90 million in August from a consortium that included Sequoia, Tencent Holdings and, interestingly, Google Capital.
Jack of all trades or master of none?
Practo Technologies represents the largest Asia Pacific tech deal in which Google has participated (to date). It also is the largest deal involving Google outside the U.S. and U.K. As smartphones approach their 10-year anniversary, could this be a sign of even larger deals ahead?
Horizontal integration is poised to become a critical theme in the West as the value of North American tech IPOs reached a three-year low during Q1 2016. As competition for funding and users ultimately tighten, one-dimensional consumer applications that are characteristic of the West may pave the way to multiple functionalities in the pursuit of additional revenue.
The “buy it” buttons experiments embarked on by Pinterest, Twitter, Instagram and Facebook during 2015 have yet to reach a verdict. The risk facing multi-revenue pursuits is a complication of the user experience. However, could hesitations from consumers to utilize the multiple functionalities, e.g. “buy it” buttons, create opportunity for more nimble, focused players?
Such players to enter the space, specifically in the Asia Pacific region, include on-demand services and e-commerce startups, including ServisHero, which has three locations in South East Asia and RedMart in Singapore.
These startups are shaping revenue pursuits based on a deep understanding of the audience, catering to localized consumer services. While we are seeing startups engineer products around defined markets, it’s still a nascent trend in the West for consumers to engage in multi-dimensional platforms.
However, as opportunity beckons for masters of their audience, this new wave of engineering could provide a natural stepping-stone for consumer apps in North America.
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Goodyear brings spirit of innovation to every facet of product development and delivery
It’s been said that the best way to predict the future is to invent it. At The Goodyear Tire & Rubber Company, that’s never been truer—innovation is an integral part of the culture at Goodyear. From the continual evolution of our tires, manufacturing processes and information systems, innovation is present just about everywhere in our business. We have a market-oriented innovation strategy, which means we combine the needs and desires of our tire consumers with technology to create tires and service solutions that add value and distinguish our branded products from our competition.
In fact, we made the tire-buying process easier for consumers in North America when we recently launched an e-commerce program where consumers can purchase tires online. We’re the first tire manufacturer in North America to offer this kind of service, which is just another example of the continuous evolution of our sales program.
Sustaining this level of innovation throughout Goodyear depends on three essential elements: our people, processes and technology. Hiring the right people with the right skills at the right time is a critical component to ongoing innovation. We work hard to attract talented associates. Once they’re on board, we want them to succeed, so we make sure to put them in positions where they can be challenged and they have opportunities to grow and contribute. We also bring modern technologies to bear, providing our associates with useful solutions like Microsoft Office 365.
As a global company, we need to ensure that our associates are able to work effectively together as a team from anywhere. The better the communication and collaboration mechanisms that we give them, the more productive they can be. To that end, it’s never been easier for our associates to connect than it is today. With Office 365, they conduct meetings with geographically dispersed team members using Skype for Business Online, exchange instant messages for quick issue resolution and participate in enterprise social networking to bring creative ideas to the surface.
We’ve also made mobile productivity easier, supporting our associates with greater flexibility in how they handle their work. In the past, associates could take a laptop and work from home or elsewhere once they logged on via a virtual private network. But what we’re finding now is that associates are collaborating from home and elsewhere, using Office 365 to work closely with decentralized teams. We’ve always seen a certain amount of remote working, but now that associates are tethered even less to their laptops, they feel they can connect and get things done from anywhere.
One of our associates told a story about how he was driving to work on the way to an 8 a.m. meeting. Suddenly someone in front of him got a flat tire, so he pulled over to help the person, knowing that it would cause him to be late for his meeting. Then he realized that he had his phone with him and all he had to do was click the Skype for Business URL and join the meeting on time from his parked car after helping out. It was that easy for him. He wouldn’t have been able to do both in the past. Since road safety is one of our primary tenets of civic responsibility at Goodyear, we were happy he was able to help that individual and still participate in the meeting from his roadside location.
Taking advantage of Office 365 to give our associates that sort of flexibility helps us accommodate the current convergence between personal and work life. It’s more and more natural now for someone to handle a personal item while at work and a work-related item from home.
Simplifying associate collaboration is the most important way Office 365 supports innovation at Goodyear. Whether it’s co-authoring a document in Microsoft SharePoint Online, brainstorming with a team using Yammer or Skype Meetings or using presence to see who’s online to answer a question quickly—the way we use Office 365 services to streamline the collaboration process is a key contributor to our enhanced ability to innovate.
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Leaked Pinterest Documents Show Revenue, Growth Forecasts
As written on by Katie Roof (@Katie_Roof), Matthew Lynley (@mattlynley) on Techcrunch.com
TechCrunch has obtained documents that show Pinterest has been forecasting $169 million in revenue this year and $2.8 billion in annual revenue by 2018. Pinterest was also expecting to grow its monthly active users to 151 million by the end of 2015 and 329 million by 2018.
Andreessen Horowitz used this information to solicit limited partners to invest in its special investment fund for Pinterest earlier this year, valuing the social media company at $11 billion.
The venture firm said that Pinterest is “striving to build a platform with the scale and engagement of Facebook and the purchasing intent of Google.”
The documents say that based on the fourth quarter of last year, Pinterest’s “revenue run rate” stood at $90 million. As the WSJ noted in June, this means that Pinterest brought in less than $25 million in revenue last year because the company first introduced its “promoted pins” in late 2014.
The papers show that Pinterest is generating $1.44 per active user, based on its 2015 projections. It expects this number to grow by $9.34 by 2018.
While Target is already a confirmed partner for some of Pinterest’s e-commerce initiatives, the company was “in discussions” with Burberry, Walmart, and Nordstrom as of February 2015.
The documents also reveal that over half of U.S. women between the ages of 18-54 have signed up for Pinterest. The social media service showed strong growth amongst male users, growing 133% last year.
Pinterest is seeing its strongest growth outside of the U.S., accounting for 60% of new users. The fastest growing markets last year were the UK, Japan, France, Germany and Brazil.
The data also shows that roughly half of Pinterest users log in. As of January 2015, the company had 176 million registered users, but only 88 million active users. (In September, Pinterest confirmed that it had surpassed 100 million active users).
Related Articles
Pinterest Expands Buyable Pins To More E-Commerce Platforms, Reaching Thousands Of Merchants
Pinterest Brings On A New Head Of Its Advertising Partner APIs
Pinterest’s primary advertising product is Promoted Pins, which gives marketers a way to get their pins in front of more users. It uses traditional advertising models like cost-per-click advertising, but can also charge marketers based on “engagement” — such as a re-pin, a close-up or a click on that pin.
The primary reason Pinterest is so valued by advertisers is it hits almost all points in which people can be targeted on the web. Pinterest users casually browse for ideas or inspiration, which can help drive brand awareness and justify purchasing promoted pins. But they also search on Pinterest for specific things, giving marketers a way to capture that intent and drive traffic — and potentially sales — using Promoted Pins. Promoted Pins give marketers a way to capture that intent or get visibility, while other platforms are generally good at capturing specific moments — such as Google with search.
Pinterest is also still releasing new products for marketers. For example, the company released Cinematic Pins — its take on a video-based advertisement that essentially plays only when the user scrolls — in May this year. It also released a new pricing model at that time that allowed marketers to pay based on engagement with their Promoted Pins. And it also earlier this year released Buyable Pins, a way for users to purchase things directly through Pinterest — and while merchants keep 100% of the sales, it gives them an incentive to promote pins on Pinterest in order to further drive sales.
All of this taken together gives advertisers a gold mine of sorts that might not necessarily be available in other outlets. Given the high engagement its users have, part of the sales pitch is that they have a much higher conversion rate than other platforms. Pinterest is super sticky and people wander around on it at basically all points of the funnel.
The social media site has raised over $1.3 billion in capital from notable investors including SV Angel, Rakuten and Bessemer Venture Partners.
Pinterest declined to comment. Andreessen Horowitz did not respond to a request for comment.
