Kenyan Social Network Market Research

November 12, 2010

Agenda•Objective and Methodology•Executive Summary•Market Landscape • Kenyan Population Demographics• Internet Usage in Kenya• Mobile Telephone Usage in Kenya

•Demographic Makeup of Kenyan Internet and Social Network Users•Comparative Analysis of Social Networks•SWOT Analysis•Recommendations and Conclusions

Objectives•Provide a comprehensive market landscape that analyzes the Internet and mobile telephone markets in Kenya

•Determine the demographic makeup of Kenyan Internet and social network users

•Identify and analyze similar social networks in Kenya and other nations

•Conduct a SWOT (strengths, weaknesses, opportunities, threats) analysis of creating a social network for Kenyans

•Provide recommendations based on research findings surrounding the creation of a social network for Kenyans

Methodology

Social Focus Marketing employed secondary research tools to collate, analyze and summarize publicly available information from various sources. All sources are cited. It should be noted that the conclusions and recommendations in this report are based on research findings and on the interpretation of those findings by Social Focus Marketing. These conclusions may or may not represent the views of Mr. Leparan. Since this market research report is based on secondary sources instead of qualitative or quantitative primary sources, the information and recommendations in this report should be considered directional rather than conclusive.

Executive Summary•Kenya has become a model for socio-economic development in East Africa as it enters a new phase of social, economic and technological growth. It has a committed government and motivated private sector are aggressively investing resources

•Kenyans are eager to communicate with each other, access information, develop social relationships, purchase goods and services online, network, and utilize digital technologies.

•Kenyans primarily use the Internet for email, social networking, for entertainment purposes and to collect information to stay informed on events, politics and sports.

Executive Summary•Much of the Kenyan population is not a regular user of mobile phones and the Internet.

•Many Kenyan and regional social networks have simply tried to copy Western social networks, which has not attracted users away from the large social networks like Facebook and Myspace

•The potential for a Kenyan social network is very promising if it incorporates certain realities of the current Internet market landscape. A successful social network needs to be unique, relevant, and appeal to a broad demographic.

Market Landscape

Kenyan Population Demographics •Population - 40,046,566

•Median Age -18.9

•Kenyan Diaspora – 2 Million worldwide (est.)

•Kenyan Diaspora Remittance – Ksh 150 B

•Education Median – 10 years

•Population Below Poverty Line - 50%

•Unemployment – 40%

Internet Usage in Kenya•Internet usage is rapidly rising, growing 87% from 2009-2010

•Internet penetration is less than the world average, but higher than the African average

•Mobile phones provide cost effective means to access the Internet, high-speed bandwidth and DSL is still too expensive

Kenyan Internet Penetration

Mobile Phone Usage in Kenya•19 M Kenyans have mobile phone subscriptions , talking on average 86 min. a month

•Four main mobile phone providers are fiercely competing for consumers

•M-Pesa account holders transfer Ksh 33 M a month

•Mobile platforms are available to send and receive emails from SMS

Kenyan Mobile Phone Penetration

Demographic Makeup of Kenyan Internet and Social Network Users•Synovate – Digital Divide Study – 2009• 1,000 random Kenyan adults over the age of 15 surveyed about Internet

usage and preferences• Boost sample of 500 Internet users from major urban areas

•TNS Group – Digital Life Study – 2010• 50,000 consumers from 46 countries interviewed about online

preferences and usage• Kenya included in survey

•Facebaker.com • Online resource that measures Facebook usage statistics

Demographic Makeup of Kenyan Internet and Social Network Users

•Kenyans are accessing the Internet to email, social network and for entertainment purposes

•The majority of Kenyan social network users are in the 18-35 age group

•Kenyans want to have more access to the Internet

5%

43%

36%

9%

2% 1% 1%

13-17

18-24

25-34

35-44

45-54

55-64

65+

Kenyan Facebook Users by Age

Demographic Makeup of Kenyan Internet and Social Network Users

•Facebook, Myspace and Twitter are the most commonly accessed social networks

Most Commonly Access Social Networks by Kenyans

Comparative Analysis of Social Networks - Regional

•Mashada• 61,000 users from Africa and across the globe• Focuses heavily on blogging, but has chat functions, game room and

users can upload pictures• Simple, clean, “uncluttered” interface

•MyGamma• Mobile, SMS social network• Users can access mobile blogs “moblogs”, chat rooms, games• Advertising model that pushes out ads to users mobile phones

•Whive• East Africa social network very similar to Facebook• Users can send free SMS text messages through network

Comparative Analysis of Social Networks - Kenya

•Kasarani• Approximately 4,000 Kenyan users and 1,000 from across the globe• Blogging, message boards, friend finders and users can upload photos• Doesn’t seem to be used frequently by users and there is no advertising

•GotIssuez• Social network for Kenyans to express their viewpoints on issues• Very little user interaction on social network, but GotIssuez Facebook

page has over 3,000 users who “like” the page and has frequent posts

•Sokopal• Kenyan social network/website that offers discounts and deals to local

businesses to be purchased through website• Simliar to Groupon in the US, but unable to maintain daily deals

SWOT Analysis•Strengths• Increased government and private sector spending in high-speed bandwidth

access

• Greater competition and reduction of data rates from mobile phone providers

• Sustained growth of Internet users and total overall Internet penetration of population

• Partnerships between organizations to provide low cost Internet-ready technology to lower income Kenyans

• Familiarity of Internet users with current popular social networks such as Facebook, Mashada and MyGamma

SWOT Analysis•Weaknesses • Preexisting Kenyan, regional and worldwide social networks

• Creates onus to create a unique Kenyan social network

• Must be able to attract users away from current social networks

•Opportunities• No other social network besides Mashada has gained foothold in Kenya

• Six million Internet users in Kenya and an exploding mobile phone market

• Opportunity to evaluate other social networks and pull features that are successful and discard features that are not

SWOT Analysis•Threats• Internet businesses/social networks operate in a competitive environment

• Advertisers – or lack thereof

• Continuing to stay relevant and fresh for users is difficult and time consuming• Myspace used to be the world’s number one social network, now it

pales in comparison to Facebook

Recommendations and Conclusions•Resist the urge to develop a social network that is a Kenyan version of a successful “Western” social network

•Develop a social network that is either scalable on a mobile phone, while not losing any functionality, or has a mobile version of the main social network

•Develop portions of a social network that can be accessed by SMS

Recommendations and Conclusions•Tap into the mobile phone operators as partners, not just advertisers

•Take advantage of the Kenyan Diaspora’s remittance back to family and friends by integrating M-Pesa, YuCash and Zap or other marketplace options into a social network

•Consider the possibility of targeting a niche Kenyan population

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