With the current financial crisis, no one can doubt that we are in the middle of the digital age's first serious slowdown. We still do not know how long and how deep it will be and the impact will be immense for almost every family and business. Yet in these challenging times, the online sector represents a giant opportunity.
Consumers will turn to the mobile Web for household purchases and for information on comparative products in order to make shilling count. Businesses will leverage the Web to develop new products and cut their costs. We are only at the beginning of the transition to the digital age.
The new generation of mobile phones is enabling more people to access the Internet when on the move. Already, young people in many places spend more time watching, listening, reading and talking to friends through the Internet than they do in front of the TV. While emerging markets are behind the developed world in getting online, their gap offers the tantalising, attractive possibility of exponential gains. Rich countries must accelerate through a slowdown.
Emerging markets only need to get online. About 42 percent of Europe's total population enjoys broadband connections. Some 150 million of the 491 million European Union citizens shops over the Internet. In contrast in Kenya, total number of internet subscriptions is 5.42 million, which represents only 27.33 percent of the 40 million Kenyans (CCK, July-September 2011/2012).
Yet this lag hints at giant opportunities for growth. Kenya reported its highest rate of Internet growth last quarter, up 14.06 percent to 14.3 million, according to according to the CCK Quarterly Report.
Most of this growth came from mobile subscriptions which experienced a 20.2 percent increase representing 4.46 million new subscriptions. This growth is attributed to aggressive customer acquisition strategies and intensified competition in the market. Better telecom networks and fierce competition is fueling this impressive growth.
A new undersea cable went into service last year, increasing Kenya's bandwidth. At the same time, the government has granted telecommunications licences to many new service providers. This is bringing down the cost of access for both consumers and business. Consumers with less money to spend can find an increasing wealth of entertainment and content online-- staying in is the new going out. Having more time and less money means families are more determined than ever to spend wisely.
With the cost of Internet access falling and its speed accelerating, the Web is becoming an increasingly powerful tool for consumers. But it is not just consumers who are desperately trying to ensure they get value for money in these cash-tight times. So are businesses. And it is here that the Internet comes into its own, enabling companies to market themselves to their potential customers in a way that is flexible, targeted and cost-effective.
To put it bluntly, it allows firms to get more bang for their bucks---which is more important than ever when every cent counts.Many small companies that may previously have been able to afford to advertise in yellow pages or other directories, if at all, suddenly have a new, inexpensive and effective option.
It is no wonder that despite global overall growth of 5.7 percent for the advertising industry in Q2 2011, ad spending fell in nearly half the world's key markets in the second quarter of 2011 as economic concerns continued to impact the advertising industry, according to Nielsen's quarterly Global AdView Pulse report.
Advert spend
According to Synovate research company, the total ad spend on all media is $600 million. Of this, 95 percent is by less than 100 companies out of over 200,000 companies in the country. This means that 199,900 companies account for the remaining five percent ad spend.
What is striking in Kenya is the number of small and medium enterprises that are not yet online. Yet 1.3 million small businesses employ five million people in Kenya. But only 1.9 percent of the these are online despite Kenya's current internet base of 5.42 million (CCK). Google is doing its part as a catalyst to change this situation. Getting Kenyan Business Online is a Google-led initiative dedicated to driving economic growth by providing local businesses with free and easy tools and resources to get online and grow .
Small businesses get a free and professional website, a free subdomain name on www.kbo.co.ke and hosting for one year www.kbo.co.ke/mybusinessname as well as free online support. We are of course in uncharted waters.
There has not been such a long and serious downturn since the Internet took such a major role in our world. It is clear that businesses which do not respond to changing consumer behaviour and the new opportunities opening up risk falling even further behind their competitors. Those that invest in building and expanding their online presence will win.
Mr. Mucheru is Google's Regional Lead for Sub-Sahara Africa.
