Internet access is rapidly expanding its reach in Latin America, providing more opportunities and a better economic future for many.
Latin America now has more than 200 million Internet users – just over 10% of the world’s total (while it has 5% of the population). This translates into an overall penetration of 38%, with Chile as the highest penetration country at 50%. Like elsewhere in Emerging Markets, Internet access is growing rapidly; in 2010 the growth of Internet usage was 37% in Colombia, 25% in Venezuela, 22% in Argentina, 20% in Mexico, 19% in Brazil and 16% in Chile. Securing Internet access is high on the priority list of the LatAm consumers – in fact the escape of the poor into the lower middle economic classes enables them to use the Internet, which in turn acts as a trigger for further economic improvement through easier access to information, education and business opportunities. Getting connected, therefore, serves as a tipping point for movement into a better quality of life.
In Emerging Markets, we see a very mobile-centric view with many consumers leapfrogging the fixed line, and going straight to mobile access to the Internet (as we also see in another article in this issue on Indonesia). In developed markets, average users spend 6 hours a week using mobile Internet; the figure is nearly twice as much at more than 11 hours in Emerging Markets. Additionally, often the Internet quickly overtakes television in terms of consumer preference. Young people spend more of their time on the Internet than any other medium and emerging markets often lead the way.
While digital access in Emerging Markets is new, the usage is more impactful – almost transformational in nature. The proportion of Internet users who agree with the statement: “I can better express my feelings in the online world” is highest in countries where most people have just started accessing the internet: 81% in Africa, 65% in India and just 19% in developed Asian countries. Like the overall economic picture, Latin America features in the middle between the least and most economically developed countries: 34% agree with this statement. In Brazil the overall percentage is 35%, whereas among the BOP (Base of the Pyramid) class it increases to 53%. Once the BOP has the opportunity to access the Internet, their level of engagement with the medium is particularly high as they rely on it for a much wider range and criticality of applications than the upper income consumers.
For the emerging world, digital access is new … % online users who started using the Internet less than two years ago
…And Brazil is in this leapfrog trend
A Snapshot from Salvador (Brazil)
Salvador da Bahia was the first colonial capital of Brazil and also one of the oldest in the New World. For many years, it was known as the capital of happiness, owing to the easygoing nature of its population and countless outdoor parties. Nowadays it is also the Brazilian capital of the emerging middle class, people who have been able to leave the favelas (shanty towns) and now live in government-subsidized social housing. Salvador has the feeling of a boom town, with building cranes providing a jarring contrast to the old historical city. We spoke to some emerging consumers in their twenties and early thirties.
It is striking that they all have great expectations of the future, a future which is very concrete and short-term (i.e. their focus is on the next 3 years). When asked what are their hopes and dreams, they usually refer to a better house, a car and especially a better job. For all of them, digital is at the centre of their lives: it is giving them more contacts, opportunities, and a sense of inclusion that they could only have dreamt of just a few years ago. Broadband access is expensive in Latin America, and many people can only access the Internet via cyber cafés or LAN houses. Alternatively, the emerging lower middle class share a router between 4 or 5 families. The use of LAN houses, or public Internet cafés, continues to be huge in Brazil; there are more than 90,000 LAN houses.
For all of them, digital is at the centre of their lives: it is giving them more opportunities, and a sense of inclusion that they could only have dreamt of just a few years ago. And use Social Media as much or more than higher classes. It is not just all work for the Latin Americans on the Net – they are well-known for their sociable nature and it is not a surprise that they have embraced social media like no one else. For social networks, Brazil continues to be the leader in the use of almost all forms of social media, not just in Latin America, but the world. Orkut (Brazil’s dominant social networking and discussion site, operated by Google.), the most popular social network in Brazil, reaches 72% of all Brazilian Internet users, and 70% are younger than 34 years old.
Brazilians have more friends on social networks than anyone else in the world: an average of 231 (and for those accessing the Internet via their mobiles this number increases to an incredible 357) vs. an average of 176 in Latin America and 120 globally. Brazilians also use social media heavily to make purchase decisions.
Overall we see in Emerging Markets that social networks are a key source of information for brands, as much as the Internet has become a key element in the lives of Emerging Consumers.
Wander Meijer is Global Head of International Research at TNS, responsible for the design and execution of TNS’ largest multi-country projects. Prior to this global role, Wander was CEO for Latin America region from 2007 to 2010 where he was responsible for the strategy and executive management of TNS in Latin America which has operations in 11 countries. He has been in the research industry for twenty years, specializing in research and consultancy in Emerging Markets, with special attention to the ‘Base of the Pyramid’, the growing socio economic lower middle class. Wander graduated in methods and statistics of social research and the economic development of Latin America at the University of Amsterdam and conducted his doctoral thesis in Bolivia.