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Mobile Ecosystem& Sizing ReportVietnam 2017/81

ForewordAs in many countries around the world, mediaconsumption in Vietnam has changed radically, andthe influence of mobile and digital consumers cannotbe denied. The consumers are forcing digitaltransformation with the use of mobile devices and withthe demand for personal mobile experiences.Consequently, brands need to reinvent mobilemarketing that will help serve the expectations of anincreasingly mobile first population via thistransformation.For marketers, mobile is the biggest opportunity of ourtime to give consumers the exceptional discovery,engagement and purchasing experiences theydemand – all while gaining a competitive edge. Forpublishers and technology providers, mobile is the greatenabler, allowing brands and agencies to reach andtarget their consumers and build profiles and datapoints to ensure their mobile marketing workseffectively.Smartphone is the singular device which helps ruralareas of Vietnam to access the internet; this will drivemobile ad spend growth in sectors like FMCG, ecommerce, auto and mobile wallets to tap the newconsumers coming on board. The growth of data-ledsmartphones is also likely to lead to an inclusiveeconomy in rural parts of the country, wheresmartphones will act like a bank, a school, a shop andmuch more for people.With this unprecedented mobile growth, we also seedramatic lifestyle changes. It’s hard to imagine a daywithout uploading/sharing a photo with friends/family,navigating the streets without a mobile map, watchingyour favorite shows at the time and place that youwant. And this change in lifestyle is making brands andadvertisers in Vietnam create immersive experiences fortheir consumers on mobile using several technologies(Programmatic, location data, audio beacontechnology, video, re-targeting, analytics and muchmore.)With so much action, it’s sometimes hard for marketersto keep pace and comprehend the possibilities ofmobile as a marketing medium. Through this report, ourattempt is to create the first single source of the mobilemarketing ecosystem in Vietnam that can helpmarketers, students, tech enthusiasts and journalists togain meaningful insights on the entire ecosystem thatdrives the mobile story in Vietnam.Hope you enjoy the read!2

TABLE OF CONTENTSKey Trends and InsightsPage 4Part I: Introduction to Mobile Marketing in VietnamPage 5Part II: Reach of mobile among consumers in VietnamPage 19Part III: Mobile adspends in VietnamPage 25Part IV: Optimizing advertising creative for mobilePage 29Part V: Mobile phone consumer behavior and persona in VietnamPage 34Part VI: Mobile App ecosystem in VietnamPage 39AnnexurePage 47AcknowledgementPage 65DisclaimerPage 663

Key Trendsand InsightsGrowing penetration and data usage in both urban andrural is fueling significant growth in mobile ad spend:With the dominant role of mobile in digital mediaconsumption in Vietnam, a high and still growingsmartphone penetration in both urban ( 80%) and ruralareas ( 60%), and with 4G coming into real service in2017 (with about 3.5 million users so far and continuingto grow), there has been a significant growth in mobilead spend volume. The proportion of mobile spend as a% of total digital spend for clients is as high as 50-60%,even up to 80% for some specific clients/brands whichhave a target audience who are mobile heavy users.This shows an impressive growth (almost double) vs lastyear where mobile ad spend often accounted forabout 20-40% of total digital spend of eachclient/brand. This growing trend is expected tocontinue in the coming years.Increase in 3G/4G penetration in Vietnam will help toenrich user’s content consumption on mobile, andaccordingly, will continue potential growth for diversemobile ad solutions:High smartphone penetration in both urban ( 80%) andrural areas ( 60%), and the launch of 4G in 2017 alsomean users are having a better chance to consumericher and more diverse content on mobile.Accordingly, there is a significant potential of higherconsumption for video, audio and streaming contenton mobile and the mobile content platforms(e.g. local Zing) will certainly grow, as well as socialplatforms that provide video, audio and streamingcontent like Facebook, Youtube, Instagram, etc andhuge potential growth for diverse mobile ad solutions(mobile video, native advertising) follows.Mobile app usage in Vietnam will continue to grow,especially with a developing e-commerce landscapeand more active online payment market joining byAlipay and Samsung Pay in 2017:Growing and more engaged app usage backed byburgeoning smartphone and mobile internetpenetration, is leading to a growing community whoare favouring a mobile app economy in Vietnam.Whilst music, games, chat/instant messengers, socialnetworks and photography are noted as the mostpopular app categories installed by Vietnamese users,currently about 30% of Vietnamese online shoppingusers shop through mobile apps. There is high potentialgrowth for online shopping apps with the currentincreasing attention for e-commerce development inthe market among industry players and especially thearrival of Alipay and Samsung Pay 2017 to enrich thedigital payment options in the market.4

Part I:Introductionanddefinition ofMobileMarketing inVietnamObjective of the Research2017 has been a very exciting time for mobile marketing in Vietnam and 2018 looks set to continue thatjourney for the industry. We have seen a surge across various dimensions of the mobile ecosystem – beit smartphones, mobile subscribers, mobile data penetration, native advertising on mobile, advertisingspends on mobile, video content and much more. There have been several reports written to datethat talk about mobile marketing in Vietnam. However, we felt there has been no single report whichcomprehensively covers the mobile marketing ecosystem in Vietnam and provides insights tomarketers to help them better understand the medium. This report by MMA Vietnam in collaborationwith GroupM, Google, Facebook, Kantar Media, Gameloft and Zalo Group is our attempt to addressthis gap.Our objective through this report is to give readers a comprehensive view of the mobile marketingecosystem in Vietnam and the various factors that influence its growth in recent years such as the riseof mobile and smartphone users, mobile internet users, mobile app users, the development of mobileinternet infrastructure like 4G service introduction, the increasingly diverse mobile marketing channelsand solutions, etc.5

A bird’s eye view ofwhat’s instore forour readers"Rohit Dadwal, Managing Director, MMA Asia Pacific"The future of advertising in Vietnam is taking shape with mobile at the centre ofthis growth. Today, Vietnam is one of the strongest growth markets for mobile adspending in the region, and is set to double mobile ad spend due to heavysmartphone adoption.I'm heartened that this is the first time the industry is coming together in Vietnam topull together this report, and I believe it will set the benchmark for upcomingdevelopments in the industry.MMA remains highly committed to this market, and we look forward to building astronger and bigger MMA in Vietnam. The efforts and collective stewardship of ourmembers are commendable, and I would like to thank all business leaders andespecially the co-chairs for advancing Vietnam's mobile agenda.Ed Thesiger, Co-Chair MMA Vietnam and CEO GroupM Vietnam & IndonesiaDue to the extraordinary pace of change impacting the industry at present, and in orderto remain relevant, this Mobile Ecosystem and Sizing Report will by definition be aconstantly evolving reference guide. In this first edition of the report, multiple datasources have been utilized in addition to commentary from key stakeholders from acrossthe mobile ecosystem in Vietnam. The picture painted depicts mobile as a vibrant,dynamic and rapidly evolving communications tool, yet at the same time also highlightsmany of the challenges, such as 3rd party measurement and brand safety, that still needto be overcome if it is to truly fulfill it’s potential.6

Methodology of theResearchThe report is based upon both primary and secondary data and information sourced from its keycontributors: GroupM, MMA, Kantar Media, Google, Facebook, Gameloft and Zalo Group. Below is thelist of all reports that have been referred to:1.2.3.4.5.6.7.Vietnam Telecommunications Authority reports 2016-2017Ministry of Information and Communication reports 2016-2017GroupM TYNY (This Year Next Year) report 2017GroupM 3D research 2013-2017Ericsson Mobility Report 2017GSMA Intelligence Report 2017eMarketer- Mobile Ad Spending Share of Digital Ad Spending Worldwide, 2016-2021- Ad Spending in South East Asia, new forecast for an emerging digital region, 20178. Kantar Media VN National MHS 2104, 20169. Kantar Media Vietnam TGI Q1201710. Ericsson Consumer Lab Analytical Platform – 201611. Global Web Index 201612. TNS/Google Smartphone Apps Research Vietnam13. Millward Brown Ad Reaction Study14. Newzoo 201715. DI Marketing 201616. W&S Group, May 201617. Adtima Audience Insight and Appota 201718. Google Barometer 20177

Channels thatdefine MobileMarketing/AdvertisingSMSA standard for telephony messaging systems thatallow sending messages between mobile devicesthat consists of short messages, normally with textonly content.Benefits:1. Crisp – Explains purpose & user responseexpectation in 160 characters2. Economical - Cheaper than many other digitalmedia vehicles3. Ease of use – All mobile users are aware of howSMS works4. Mass reach – 100% of mobile phone users can bereached via this medium5. Save for later – An SMS gets stored in phone forlater referenceLimitations:1. Linguistic challenge: There are challenges indelivering customized language (script) messages2. Targeting: Third party databases are not a reliablesource for reaching a specified TG3. Passive communication: Requires user involvementfor a CTA fulfilment4. User Pays : Cost implication for end userP/S Anti Cavity – Helping Vietnamese Rural changebrushing habit to prevent cavity Focus on rural area applying “micro-targeting at scale” insms Reached 50% total TA in Mekong delta and South Eastacross mobile advertising network (1.3 million users) CTR of 3% with 30 times higher performance(engagement and response rates) vs industry averagebenchmarks. Brand equity score of 300bpt or 3% on the attribute of“helping families improve their brushing habits” and 100bpt or 1% towards “preventing cavities” ascompared to 2016. Rural uplift of 240bpt i.e. 2.4%.8

Mobile AppSoftware solutions that power the business logic formobile marketing initiative(s).Benefits:1. Seamless user experience2. Can serve utility or innovative/experientialengagement3. Long sustaining customer relationship andsustenance via offers and content4. High TOM - Users download app for a specificpurpose therefore their top of mind recall for theapp is highLimitations:1. Multiple Operating Systems2. Costly application development3. Driving traffic and downloads requires additionalmarketing budgetsPEPSI - SING YOUR OWN MUSIC MOMENT WITH REAL LIFETARGETING Reach 60% Pepsi-ers.Top 1 social buzz. 200,000 app installs (45% achieved organically)Nearly 100,000 contestants join Karaoke Idols challenge 6 points TOM, 4points brand love vs year ago. 4 points Refreshing 7 points MUSIC ASSOCIATION9