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Challenges for traditional ads in developing markets

To digital natives, the ad-supported internet is something that is pretty much taken for granted; it’s simply how the online experience works. In fact, for anyone living in the developed world, digital advertising is a fact of life; sometimes it’s useful and engaging, other times it’s intrusive or irrelevant, but regardless, it’s always there. In the developing world, though, an ad-supported internet might not be tenable.

The next few years will see billions of new people get connected, and there is no guarantee that traditional advertising models will translate to these markedly different contexts. Here are just three obstacles facing advertisers in emerging digital economies:

  1. Connectivity is still expensive. Using the mobile web and engaging with ads in the developing world is a vastly different experience than it is in Western Europe and North America. While smartphone ownership is going up in India and sub-Saharan Africa, there are still financial barriers to widespread access to mobile data, which means that many consumers are sticking to feature phones with limited internet functionality.
  2. Targeting is trickier. Individuals in newly connected markets are generating less of a digital footprint than advertisers have become accustomed to in the UK and US, as volumes of search engine queries and online purchases remain low, making it more difficult to build customer profiles and forecast ROI.
  3. Ad blockers are everywhere. Due to slow network speeds and the price of data plans, a large number of consumers in developing regions are opting to use proxy mobile browsers such as Opera Mini in order to have a quicker, cheaper, ad-free experience. Of the 309 million people who used mobile ad blockers last year, it is estimated that a third were based in India (according to data from PageFair).

Research published last month by Caribou Digital indicates that advertisers will need to change their thinking if they want to grow revenues in emerging markets and avoid the kind of Western monopoly (or duopoly) that can result in stagnation at a local level. Income levels in India will not support the scalability of the models we’ve seen work in the US, and if the next billion digital citizens are to enjoy uncompromised access then tech companies must acknowledge that a one-size-fits-all approach is insufficient.

“This assumption that Silicon Valley business models will transfer seamlessly to emerging markets in Africa and South Asia has concerned us for some time,” write the authors of the report Paying Attention To The Poor — Digital Advertising In Emerging Markets. “Equally, we’re concerned that the global platforms these revenue models require are based in developed markets and are not fit for purpose in emerging markets–and if they are, will only be viable if provided by the global giants who can offset losses in developing markets with profits from developed countries, tilting the balance of power even more further in their favour and preventing local innovators from competing against them.”

Fortunately, there are media brands who have recognised this and are investigating alternative models; Boston-based Jana incentivises users to download apps, play games and use services by paying for the mobile data (and currently has over 30 million users in India), while Kenyan startup BRCK shows pre-roll video ads in exchange for free Wi-Fi access.

It is entirely possible that innovation in newly connected markets will stem from a FinTech-driven, transactional economy, à la Tencent or Alibaba rather than the attention economy of Facebook or Google. Either way, tech companies and advertisers should be working with developers at a local level to ensure that the services and content they provide are relevant and experience-enriching to these nascent digital citizens.

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