Razorfish Study Highlights Latin America's Emerging Digital Class
A new middle class embracing digital media and technology is rising in Latin America with implications for global brands focusing on the region, according to a new study by Razorfish and Internet company Terra Networks.
The report, titled "The Stampede," focuses on the so-called "Classe C" of Latin America's socioeconomic class system, which ranks households from Class A (rich) to Class E (homeless). This group is the fastest-growing and majority segment across the three countries featured in the study -- Argentina, Brazil and Mexico -- comprising 53%, 62% and 60% of each nations' population.
It's also a young demographic, with most members ranging in age from 12 to 35. Household income is from $542 to $2,892. And within this emerging group, digital trumps television as the main media platform and women are the chief household decision makers. The study found, for instance, that 63% of Brazil's 28 million families with a computer at home are Class C compared to 23% for Class A/B and 14% for Class D.
Internet use is also growing for the Class C population, up to 42% in 2009 from 29% in 2004 in Brazil. The same trend is playing out in Mexico and Argentina.
The report identifies six subsets within what it calls the "new digital middle class" in Latin America: "digi-natives," or kids growing up with technology as part of their lives; mobile-centric "enthusiasts"; "climbers," parents with small, tech-focused businesses; "e-advantantagers," those with IT jobs; and "hardworkers" and "strugglers," poorer segments striving toward greater technology adoption.
With mobile penetration at 80% in Latin America and the Caribbean, the report says the new digital class favors "Net-phones," Web-centric, touchscreen phones such as the Motorola Cubo, Samsung Star, the LG Scarlet and Chinese iPhone knock-offs. Concern about theft, among other factors, limits sales of the actual iPhone and other high-profile brands like BlackBerry.
Overall, about 35% of cell users have Web access on their devices in Brazil, 22.5% in Argentina and 25% in Mexico.
The cost of data plans is the biggest barrier to mobile Web use and people use Bluetooth technology to avoid carrier charges and share content like games, MP3s and videos. Razorfish also projects mobile banking will take off in the region, pointing to apps like Transfercel, an app that lets users transfer money for $5 instead of the usual $35 through a bank.
The report also highlights the key economic role of women in the rising middle class. In addition to making the key household purchase decisions, women are more likely to start their own business than men and are the breadwinners in 30% of Brazilian homes and income contributors in 60% of Mexican ones. They're also active online and in e-commerce. "Women are breaking down the generation gap and bringing down the digital divide by actively using the Web and being the primary economic engine of the emerging classes," according to the study.
"Businesses that want to succeed in Latin America must devise a strategy to build relationships with the New Digital Middle Class, as they become an ever more significant economic block," said Fernando Madeira, CEO of Terra Networks, one of the largest online media companies in Latin America, in a statement. To that end, marketers should look to online and mobile channels to reach this audience, and women in particular.