What’s holding back the mobile market in Europe?
At BI Intelligence, Business Insider’s tech research service, we’ve often noticed the paradoxical nature of the UK and European smartphone markets. These markets boast high rates of smartphone ownership and usage, but have fallen behind in other ways.
Smartphone bills are much lower than in the U.S. or Korea, for example. So who picks up the money left on the table? Mobile advertisers? App developers? Judging by the data, it doesn’t seem so. The European smartphone user is simply under-monetized compared to the U.S. user.
It’s true that Europe’s economies and their consumers have been through a rough patch. But given the wealth and highly developed infrastructure in the U.K. and continental Europe, one would expect their mobile economies to drive better monetization metrics.
We’ve prepared some charts to shine a light on this monetization gap, part of our coverage of global mobile trends.
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First, let's set the scene. Smartphone penetration is comparable to the U.S. across the major European markets. So we're not talking about immature, soft, or early mobile economies.
The smartphone hardware landscape is diverse. There are a handful of manufacturers vying for market share, and Nokia still managing to remain a significant part of the mix.
In usage, or the proportion of Web page views accessed from a tablet or smartphone, continental European countries like France begin to lag the U.S. just a bit (though the UK actually far surpasses the U.S. in this area).
Smartphone bills are significantly lower than they are in the U.S. and Korea. That's an indicator that smartphone consumers in Europe are spending less on mobile than their counterparts in other mature smartphone economies, and might be coaxed to spend more.
But per-capita downloads are extremely low in continental Europe's largest economies, France and Germany. They're lower than in the UK, Australia, and the United States. That means the app economy in these two European lynchpin economies hasn't taken off yet. Note that these are total downloads, including free downloads. Penny-pinching is not the issue here.
Conversion rates from paid search ads on mobile are lower. Note how in the U.S., conversion rates are much more even across smartphones, tablets, and PCs. Meanwhile, in the UK, there's a huge drop-off once users move from desktops to mobile. In the Eurozone, smartphone conversions are less than one-sixth of what they are in the U.S.
The price for mobile search ads, known as cost-per-click, is pitiably low on smartphones in the Eurozone and the UK, far lower than in the U.S. Granted, the European economy has been the pits lately. But there's no reason for these monetization gaps to be so dramatic, given the UK and Euro economies have large consumer markets and per-capita household incomes comparable to, or higher, than those in the U.S.
Here's final proof of the Europe-U.S. monetization gap. Mobile ad spend per mobile subscriber in Europe is less than one-third what it is in the United States. Surely, that gap can be closed somewhat. It's a great opportunity for savvy mobile players.