VAS Latin America: Finding Opportunities in a year of Economic Uncertainty
"Nothing is more expensive than a missed opportunity." -H. Jackson Brown Jr.:
Participants at the Mobile World Congress in Barcelona this week got a chance to discuss new and exciting trends in mobile services like Location Based Services, Mobile Entertainment, Mobile Advertising and Advanced Messaging services. However, the single topic that stole the show is the economic uncertainty that mobile operators and technology companies are facing. The keynote conference that opened the congress on Tuesday says it all: "Sustaining Growth in Challenging Times"(1).
No one can argue that these are tough times but doing nothing seems to be the current modus operandi of the industry. My friend Mark Pendergast referred to me a great article by Professor John A. Quelch of Harvard "Marketing Your Way Through a Recession". Published almost a year ago, it is even more relevant today: "In a recession, consumers become value oriented, distributors are concerned about cash, and employees worry about their jobs. But a downturn is no time to stop spending on marketing".
With this in mind, I'd like to follow up on recent posts where I shared my thoughts on the best opportunities and top predictions for Latin America in 2009 and why some of the services presented in Barcelona have a good probability for success in the region, despite the current economic downturn.
In this article I will focus on the key factors that can contribute to their success and will follow up with a more detailed market analysis for each service:
- Leveraging existing infrastructure can help operators introduce new services with minimal CAPEX. MMS, for example, has not taken off and other services like Voice Mail delivery to MMS and Mobile Advertising can leverage existing platform capacity. Similarly, SMS based services like Voice to Text and Call Completion can be launhced with existing infrastructure; even if they might require expanding capacity, every additional text message will translate into additional revenue.
- In an economic downturn, subscribers will spend less and ARPU will fall, but operators have other options for generating revenues from third parties. Mobile Advertising is the perfect example, operators can also consider sponsored Ring Back Tones as well as revenue share business models for Location Based Services and Entertainment.
- Data services and 3G have not delivered on the hype but the infrastructure is there; even though data still represents less than 15% of total ARPU in the region, this might be because operators are not offering the services the market wants.
Operators are caught in a difficult position, with limited CAPEX and with subscribers limiting spending; but as Professor Quelch points out, the key is ... "to understand how the needs of your customers and partners change, and adapt your strategies to the new reality".
A year ago, companies and consumers alike were in a state of denial despite clear signs of a recession. The new reality is very clear for everyone to see; the moment requires everyone to get over the shock, roll up our sleeves and get back to work.
(1) "Sustaining Growth in Challenging Times", GSMA World Mobile Congress 2009. Participants: Rob Conway, CEO GSMA; Cesar Alierta, Telefonica; Vittorio Colao, Vodafone; Jon Fredrik Baksaas, Telenor; Alexander Izosimov, VimpelCom
Getting costs right during an economic downturn is paramount to success. Advocate Networks helps its customers reduce telecommunications expense. Both for enterprise companies and for telecommunications servce providers, this represents a significant part of cost of goods sold. Please see our website at www.advocatenetworks.com and if we can be of assistance, please contact me at gerry.carson@advocatenetworks.com. Thanks!
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