With approximately 2.9 billion mobile subscriptions, the Asia-Pacific region accounts for half of the world’s mobile population. It includes the world’s largest mobile market, China, the fastest growing, India, the most advanced, Japan and South Korea as well as some of the most undeveloped. Almost certainly, no other medium rivals mobile as the medium for marketers to reach their audience. Because the online Web is less advanced in Asia than in North America or Europe, mobile is THE mode of communication across key Asian markets. Millions more Asian consumers can be reached through mobile than through TV, for example. Even in the most developed Asian countries, such as South Korea and Japan, there is a non-trivial proportion of people using mobile phones who don’t ever touch a PC.
As the mobile channel becomes an increasingly popular mode of interactions between firms and consumers in Asia, newer strategies for mobile advertising and marketing may need to be implemented in this environment compared to traditional methods. This requires deep knowledge of consumer behavior in the mobile world. Given the prolific adoption of the mobile Internet in parts of Asia, firms need to understand similarities and differences among Asian consumers. A fundamental change brought forth by the advent of smart phones has been the widespread adoption of mobile phone based applications (apps).
Professor Anindya Ghose, from NYU Stern School of Business, and his team, examined the drivers of demand for mobile apps and also investigating the dynamics and interdependencies between web advertising and different kinds of mobile advertising on smart phones and tablets. In doing so, their research aims to help mobile advertisers improve the success of targeted ad campaigns by understanding not only who to target and where but also with what ad and in what form. They used two unique datasets consisting of mobile app usage and transaction records across a massive panel of users in South Korea encompassing their behavior and responses to mobile advertisements.
Mobile apps are now being used worldwide to perform a variety of tasks – access social networks, read ebooks, play games, listen to music, watch videos and so on. According to IDC, in 2011 more than 300,000 applications were downloaded 10.9 billion times and in 2014 global downloads are projected to reach 76.9 billion downloads worth approximately US$35 billion. In addition, a second key trend is that advertisers have been increasingly using the mobile Web as platform to reach consumers. Mobile advertising comes in a variety of forms, including display, SMS/text message, location-based, and rich media. Of these, mobile banner images displayed on top of the screen in a Wireless Application Protocol (WAP) browser constitute the most common form of such advertising. Recently, this advertising unit has also been embedded in various mobile smartphone applications (apps), which has afforded app developers with another potential source of revenue.
According to Gartner (2011), $3.3 billion was spent globally on mobile advertising in 2011 and this will sky-rocket to $20.6 billion by 2015. Gartner (2011) projects that brand spending on mobile advertising will grow from 0.5% of the total ad budget in 2010 to over 4% in 2015. These developments call attention for the need to better understand the emerging mobile app and advertising markets, with a focus on what aspects of mobile apps most influence economic outcomes in mobile commerce and how users respond to mobile advertising.
Professor Ghose and his team ranked, ordered and quantified the driver of user demand for different apps in Asian markets. The results show:
- Demand increases with the file size of apps, the age of apps (time since release), the length of app description, and the number of screenshots.
- Functionalities and maturity of apps play an important role in consumers’ app purchase decisions.
- It is important for app developers to provide customers with sufficient amount of textual information about their apps in order to increase their app demand.
- The number of screenshots does not have statistically significant impact on app demand.
- With regard to the number of reviews variable, they found a positive sign for its linear form and a negative sign for its quardratic form. This finding indicates the economic impact from the customer reviews is increasing in the volume of reviews but at a decreasing rate, as one would expect.
- User rating is also positively associated with app demand. The positive estimate of interaction between app price and consumer age suggests that while the average consumer is sensitive to the price of apps, older consumers tend to be less price sensitive than younger consumers.
- Similarly, negative estimate of interaction between app price and consumer gender indicates that male consumers tend to be more price sensitive than female consumers.
- In terms of age-restriction, compared to “everyone” (or 4+) apps, “low maturity” (or 9+) and “medium maturity” (or 12+) apps have lower demand.
- Compared to lifestyle apps, games, entertainment, social, multimedia, and utility apps are positively associated with demand.