The launch of the Droid by Motorola–which runs Google’s Android 2.0 operating system–is the latest smartphone to be tagged “game changing iPhone killer.”  We prefer to view it as simply a quality choice in a growing line of smartphones rather than something that will stifle the competition. With only 10,000 applications available in the Android market and more than 100,000 available for the iPhone, the Droid–or any Android phone–won’t be killing the iPhone anytime soon. What the Droid will do is advance the use and adoption of web content to a connected device. Android’s integration with popular and widespread Google applications such as Gmail, Google Calendar and Google Voice is a big help as is its ability to run multiple applications (up to six on the Droid). Most users do this on their computers so being able to listen to music while browsing the web and sending email makes a multi-tasking smartphone an appealing option.

The Competition to The Competition

The mobile marketplace is not just a faceoff between the iPhone and Droid; over the next few months, there are at least six new devices on deck that will have large screens like the Droid, keyboards (the Droid has both a virtual and physical keyboard), and an ever-increasing number of applications.

Nielsen’s data from Q3 2009 suggests that if you buy an Android phone, you’ll likely use more of the data features more often than if using any other smartphone.

Also, for the first time in Q3, Nielsen saw more users accessing the Internet on smartphone than that of feature phone users. If this trend continues, we’ll see more than 80% of the devices accessing the Internet being these advanced phones.

The Mobile Universe is Expanding

In Q3 2009, historically the slowest phone sales quarter, more than 25% of all phones sold were smartphones. Expect Q4 to have more than 40% of the new phones sold be smart devices. This is important to watch as smartphones are on track to be the majority of phones in the U.S. by 2011. Projecting Nielsen data out through 2010, we see smartphones crossing 50% of the market by the middle of 2011, roughly equal to 150 million users. This shift could happen much faster with the right conditions such as continued competitive price points on devices, lower “all you can eat” data packages and the increasing consumer need to be connected anytime, anywhere.

By mid-2011, the U.S. should be just over 300 million mobile subscribers. If we assume that we will have over 150 millions uses of smartphones (based on our projections) and that 80% of these users will access the Internet and 60% will access video (given the current data trend these assumptions may actually be low), this means that over 120 million mobile users will be on the Internet and 90 million will be watching video. What we have typically called the “third screen” is quickly becoming an extension of the first and second screens (TV and desktop viewing) especially in some key demographics. Note how Hispanics and African-Americans over-index on Mobile Video and Internet Usage.

Overall, we see mobile media growth accelerating over the next year with more users paying for video and premium content. Remember,  the mobile phone is the one media device that is always within reach. The trend in the U.S. is more interaction, more consumption, and more connected devices. While not a competition killer, the Droid is the next logical step in a market with a wide array of rich media devices. As that trend continues, the battle for better smartphones with better access to content will wind up seeing the consumer as the clear winner.

Michael Mancini, Vice President of Data Product Management, Nielsen Claritas

SUMMARY: All customers are not created equal. Now, market segmentation models are enabling business-to-business marketers to develop more efficient strategies for identifying and reaching high-potential clients. From prospecting to sales territory mapping, from advertising channels to collateral messaging, segmentation models help analysts pinpoint high-value customers and marshal resources where they’ll be most effective.

For business-to-business (B2B) marketers under increasing pressure to better target customers and prospects, segmentation can be a powerful tool for strategic and tactical applications. Although marketing segmentation systems have enjoyed widespread acceptance in the consumer world for decades, B2B segmentation systems have languished due to the limited availability of accurate data, marginal technical expertise, an inability to develop high quality leads and poorly differentiated advertising.

Enhanced datasets and segmentation techniques developed by Nielsen are helping companies create informed strategies for prospecting new customers, re-aligning sales territories, cross-selling existing customers and predicting future opportunities.

Segmentation solutions
The challenge for marketers has always been the same: know your customer. But with limited information on most companies—especially small- and mid-sized firms—marketers traditionally have concentrated their efforts in the consumer world where ample data exists to craft effective target marketing solutions.

But for B2B marketers, getting to know their end-buyers is not so simple. Unlike demographic data, accurate information about businesses—so-called firmographic data such as addresses, financials or staff titles—have been harder to come by due to the number of business start-ups, closures and unpublished information for private firms.

Fortunately, B2B marketers are now getting their due. Comprehensive databases give marketers access to accurate and current data within a consistent framework on 13 million business establishments—critical information such as a company’s total headcount and industry classification. By appending these data to its business customer file, a company can create a robust business segmentation approach to guide prospecting, sales territory mapping, advertising and target marketing.

Classifying info
In a typical segmentation analysis, business customers are sorted into categories based on company size and industry, though other defining characteristics could also be added. Using figures from a proprietary database and their own information, analysts calculate sales per employee within each business, estimate its market potential value, and rank it against all other customers and prospects.

Business segmentation can also drive changes to marketing communications and advertising. Instead of relying on intuition and tradition—using the same channels and messages that have been around for decades—marketers can develop initiatives based on hard data that address the needs of their business customers and reach them in the way they will be most receptive.

Valuing prospects
Acquiring new customers is a perennial challenge for most companies, but it is vital for growing the business. Windstream Communications, a telecommunications company serving three million customers, didn’t have a systematic way to prioritize prospects, a strategy for packaging its services, or even a protocol for initiating contact with companies.

This catch-as-catch-can approach didn’t allow Windstream to develop an understanding of the prospect’s profit potential or its potential wallet share.

Divide to conquer
To improve that understanding, Windstream worked with Nielsen to create a segmentation system that classified business customers into segments and determined the opportunity of each segment. Windstream’s existing customer records were first matched against the Business-Facts database to identify each company’s Standard Industrial Classification (SIC) code and employee count. Analysts then divided the companies into three buckets based on size and further segmented into seven industry segments using SIC codes. Finally, analysts looked at the preferred products and revenue associated with each business to determine the potential demand for each segment—and the sales potential per employee in that segment.

Setting priorities
Comparing Windstream’s customer base to a universe file of all businesses within its service area, marketers prioritized all the prospects for every business segment, taking into account the estimated value and prior success at landing a similar account. The segmentation analysis then drove Windstream’s marketing strategy, determining the number and type of sales contacts from direct mail to in-person visits. Windstream also differentiated its marketing messages, product offerings and delivery method by industry segment.

In the year since Windstream adopted segmentation analysis, direct mail response rates have risen 50% to 70% and telemarketing sales have jumped nearly 500%. The direct marketing group even hired a campaign manager and began devoting more resources to B2B marketing.

Bright prospects
New segmentation applications are being developed all the time for B2B marketing. Nielsen recently unveiled a “business density model” that allows users to map the number of businesses and their employees in one-, two- and three-mile rings anywhere in the country. Developed for site selection support, the model can help a company determine whether a commercial area offers enough of the right kinds of customers—with few competitors—to support a business expansion. In the past, that kind of information was known only by local commercial real estate agents. The business density maps can be linked to any business segmentation analysis so companies can score site locations based on the surrounding business segment density—and their establishment and employee counts—for any U.S. trade area.

Achieving success
The growing list of successful business segmentation projects suggests principles that any company can adopt for B2B marketing success:

• Leverage the value of two pieces of basic company information: size and industry classification.
• Make sure your segmentation model classifies customers into segments of similar businesses—so the science drives the strategy. A business database can help compare customer files to a known universe to calculate market penetration by size and industry segment.
• Use data on existing business customers to score profit potential, prioritize acquisition, retention and cross-selling initiatives.
• Measure the effectiveness of segmentation-based sales and marketing programs using metrics like quarter-over-quarter sales, cost to convert prospects into customers and direct mail response rates. Then fine-tune marketing based on these metrics.

Just as innovative applications drove the acceptance of segmentation systems in consumer marketing, successful B2B programs will lead more marketers to explore how information products can help them gain an edge in an increasingly competitive world. The data is out there, and your business customers are waiting.

Read the full white paper report B2B Segmentation Solutions on Nielsen.com.

Doug Anderson, SVP, Research & Development, The Nielsen Company

SUMMARY: The U.S. added nearly 1.2 million persons of Hispanic origin to the population between 2007 and 2008, raising the Hispanic population from 15.1% to 15.4%. And new Hispanic immigrants are expected to continue to come in large numbers for the foreseeable future. Since a large share of the Hispanic population in the U.S. will continue to be new immigrants and their second generation children, the acculturation process may not happen has quickly or as thoroughly as with past immigrant groups. Marketers need to be acutely aware of both language and acculturation matters when crafting marketing strategies.

Marketers looking to tap into high-growth population segments should turn their attention to the U.S. Hispanic segment, which grew at a rate 3.4 times higher than the total population between 2007 and 2008 and nearly ten times higher than the non-Hispanic white population. Over half of all U.S. population growth during this time came from Hispanics, raising Hispanics to 15.4% of total U.S. population—a year-over-year growth rate of more than 2.6%.

Continued growth
In fact, that trend is expected to continue. Projections show the Hispanic population will reach nearly 20% by 2020 and over 30% by 2050—making Hispanics no longer a niche market, but a mainstream one. And unlike immigrant populations from the first part of the 20th century—when immigration laws stopped the inflow of people from countries such as Italy, Ireland and Poland—new Hispanic immigrants are expected to continue to come in large numbers for the foreseeable future, making the acculturation process much slower than it was for previous generations.

For marketers, careful attention around both language and acculturation are essential to success. While these concepts are closely related, they are quite different. Language may be necessary for acculturation, but even Hispanics with excellent English-language skills may still respond more favorably to advertising that is in the Spanish language or messaging that shows various aspects of Hispanic culture. Marketers must shift their focus from thinking about whether Hispanics can understand their advertising to creating campaigns that speak to the heart of the Hispanic consumer in the U.S.

Language and acculturation
To accurately understand acculturation matters, language and acculturation need to be analyzed separately in ways that can be applied across categories and geographies so the purchasing behavior of both Hispanics and non-Hispanics can be compared and contrasted. Nielsen has created a measure of behavioral acculturation that tracks purchase data across nearly 700 different categories to determine how similar the purchases of Hispanic households are to the purchases of non-Hispanic households with the same overall demographic characteristics. Hispanic households are considered “behaviorally acculturated” when purchasing patterns match the behavior of non-Hispanic households.

The chart below shows the index of the behavioral acculturation measure for U.S. Hispanics with varying language preferences. A low index shows high acculturation—purchasing behavior is similar for Hispanic and non-Hispanic households. The higher the index, the more dissimilar Hispanic behavior is as compared to non-Hispanic behavior and the more behaviorally unacculturated the segment is. Not surprisingly, households that only speak Spanish are the least behaviorally acculturated.

Additionally, when U.S. Hispanic members of the Nielsen Homescan Hispanic Panel were asked to rate their personal level of acculturation, those who defined themselves as following only Hispanic or Latino culture purchased products very differently from demographically similar non-Hispanics. In this survey, the word “American” refers specifically to United States culture.

Other predictors of behavioral acculturation include:

• Length of time in the U.S.—recent immigrants are the least behaviorally acculturated, while those who have been in the U.S. for more than 20 years are just as behaviorally acculturated as those born in the U.S.
• Language at home—those who speak Spanish at home are less behaviorally acculturated than those who commonly speak English, but even those who prefer to use Spanish at home are more behaviorally acculturated than those who only speak Spanish. For many Hispanic households who speak English well, but still use Spanish at home, Spanish-language advertising may resonate better.
• Relationships—those whose friends are also Hispanic are less behaviorally acculturated than those with mainly or solely non-Hispanic friends.
• Education—those with higher levels of education are more behaviorally acculturated than those with lower levels.

Closing the gap
The income distribution of Hispanics compared to the non-Hispanic population of the U.S. is marked by large gaps at the top end of the income spectrum. While Hispanics are more concentrated in the lower annual income ranges below $50k, there is parity between Hispanic and non-Hispanic households in the $50-75k annual income range.

Levels of educational attainment also lag for Hispanics in the U.S., but there is evidence among younger Hispanics that these levels might change substantially in the future. According to the Pew Hispanic Center, 86% of Hispanics between the ages of 16 and 25 are either in school or in the labor force—both skill-building activities that will pay dividends in income further down the road. Overall, Hispanics are nearly four times more likely to have no high school (9th grade or less), and over two times more likely than average to have dropped out of high school.

And while the incidence of advanced college degrees for Hispanics is 60% below the national norm, this level has been on the increase for decades—driven substantially by changes in the behaviors of young Hispanic women. In 1980, 35% of Hispanic women between the ages of 16 and 25 were in school (with 40% of those in school and working). By 2007, this level had increased to 50%. There has also been a marked decline in early pregnancy among young Hispanic women—24% were not in school or the labor force and were mothers in 1970. By 2007, only 9% had the same status. Young Hispanic men have also seen increases in the percentage in school, but not nearly to the degree as for women.

When it comes to education, the intent of Hispanic youths is often sidetracked by economic realities. According to the Pew Hispanic Center, nearly 90% of Hispanics between the ages of 16 and 25 believe that a college education is important to success in life—versus 74% of the general public. That sentiment is echoed by parents with more than three-quarters agreeing that college is the most important thing to do after high school. However, just under half of Hispanics plan to get a college degree versus 60% of the total population in the same age ranges.

Much of this gap can be explained by differences between U.S.-born Hispanics and the foreign-born young Hispanics who make up around one-third of this age cohort. Less than half of foreign-born Hispanics plan to go to college—often citing the need to work to support family either in the U.S. or in their native countries. Nearly two-thirds of foreign-born Hispanics sent money to family in their native countries versus 21% for those born in the U.S. And a much higher share of foreign-born young Hispanic women are mothers—29% versus 17% for U.S.-born Hispanic women.

Seize the moment now
The pace of Hispanic acculturation in the U.S. will depend on many factors. However, it will likely never mirror the same assimilation patterns of immigrants from past generations. The ready availability of Spanish media (television, radio, newspapers, websites, etc.) and the easy ability to communicate with friends and family who have not come to the U.S. slows the pace of acculturation, as does the continuing influx of new immigrants who reinforce the native cultural experience in Hispanic communities. Unlike immigrants from earlier in the history of the U.S., Hispanics today can participate in society while still retaining strong aspects of their Latino culture—including a preference for speaking Spanish at home or with their families and friends.

While Hispanics will become more acculturated over time and over generations—particularly in their purchasing behavior—they are not likely to leave their Latino culture behind. Marketers who wait around for Hispanics to acculturate rather than actively reaching out to this growing market now will be left waiting.

Sources:
The Nielsen Company, Homescan Hispanic Panel
Pew Hispanic Center—Latinos and Education: Explaining the Attainment Gap (October, 2009)
Pew Hispanic Center—The Changing Pathways of Hispanic Youths Into Adulthood (October, 2009)
U.S. Census Bureau Current Population Survey Annual Social and Economic Supplement 2008 (released September 2009)

SUMMARY: Throughout the world, the economic power of women is growing. As education levels are rising, incomes are following. Broadly defined, the global middle class will at least double in the next two decades and much of that growth will be spurred by two-income families as women enter the labor force in greater numbers throughout the less-developed world. While women in the more developed world will continue to find opportunities, developing nations will have the largest impact.

Over the next five years, the Boston Consulting Group (BCG) estimates that the global incomes of women will grow from $13 trillion to $18 trillion. That incremental $5 trillion is nearly twice the growth in GDP expected from China ($4.4 to $6.6 trillion) and India ($1.2 trillion to $1.8 trillion) combined. Globally, women are the biggest emerging market ever seen. Overall, men earn nearly twice as much money as women today, but that gap will shrink as more women enter the labor force and at higher wages than ever before. The vast majority of new income growth over the next ten years will come from women.

In control
According to BCG estimates, women control or substantially influence 65% of the world’s annual consumer spending—about $12 trillion. As today’s younger women enter the labor force at higher rates, they bring with them higher levels of education than any generation of women who have come before them. As they advance in their careers, their share of spending will grow, making women an even more important target for consumer marketers.

Global surveys of women, however, show that women feel vastly underserved by marketers. “Despite the remarkable strides in market power and social position that they have made in the past century, they still appear undervalued in the marketplace and underestimated in the workplace. Few companies have responded to their need for time-saving solutions or for products and services designed specifically for them”, says Michael Silverstein and Kate Sayre in the Harvard Business Review. In many cases, rather than truly listening to their female consumers, marketers have opted for the “make it pink” strategy.

Future income states
The United States provides a good case study for how the growing influence of women will eventually play out across many countries in the developing world in the near future. Almost all income growth in the U.S. over the past 15 or 20 years has come from women—while men have seen flat or even declining incomes. By around 2028, the average woman is projected to earn more than the average man in the U.S. A study reported in the Gotham Gazette shows that in some large markets, younger women are already out-earning younger men.

The average wages of 20-29 year-old women are higher than same age men in New York, Los Angeles, Chicago, Boston, Dallas and Minneapolis. In New York, young women earn 17% more than young men and 20% more in Dallas. In 1970, New York women in their 20s made about $7,000 less per year than men in their 20s. This gap had closed to parity by 2000 and today, young women make $5,000 more on average. As women age and grow in their careers, the overall gap between women and men will continue to shrink.

Career paths
Although there is still much to be done, women have made many other strides in the U.S. For the decade ending 2007, women increased their share of many prominent career positions: lawyers from 25% to 30%, physicians from 22% to 29%, and university faculty from 32% to 39%. Women’s participation in the military during the same period also grew from 12% to 14%. While these shares are far from parity and women are still significantly underrepresented in senior jobs—as the chart below indicates—there is continued progress.

Growth in incomes and career levels in companies is driven at least partly by education and the continuing removal of gender-based barriers to employment. Globally, half of all college students are now women. And in the U.S. and in the European Union, the majority are women (57% in the U.S., 55% in the E.U.).

Fundamental right
Literacy rates for women overall lag those of men across much of the less-developed world by 15–30 points. However, younger women have much higher rates than all women as shown in the chart below. As literacy rates have continued to improve for women across the board, the gap between younger women and younger men is in the single digits across almost all countries. For many developing countries, enrollment at the primary and secondary school levels is nearly equal for girls and boys. The gap at university level is still larger, but should continue to shrink as today’s young children grow older and are better prepared for university when they leave secondary school.

Changes in influence and spending
The battle for equality in the labor force for women is far from over, and a few years of a repressive régime can undo decades of progress, as can be witnessed now in some parts of the less-developed world. However, even small gains in education and incomes can have significant impacts on the marketplace for consumer products. As the incomes of women grow, so does the influence in how families allocate spending. And the services and products that women choose to purchase are substantially different than those purchased by households where the woman has less economic impact.

A number of studies in the more developed world have shown that women’s decision making power within a household varies based on her share of total household earnings, in particular her lifetime earnings. Women are more likely to purchase for the household and for the children, including food, healthcare, clothing, education, and personal care products. In households where men dominate the spending decisions, much higher shares are spent on alcohol, tobacco, and high status consumer goods. As women’s share of assets increases, the share of the family budget spent on alcohol, tobacco, and recreation tends to fall. The table below shows who controls spending for certain categories in the United Kingdom.

Increases in income in a family, whether coming from a man or a woman, tend to help the children, but the benefits are greater when a larger share of the increase comes from women. Children tend to enter school at an earlier age, especially girls. Nutrition improves and access to, and the quality of, healthcare increases. Savings rates also increase. All of this serves to better prepare the next generation, which reinforces economic growth.

In the developing world, Goldman Sachs’ The Power of the Purse: Gender Equality and Middle-Class Spending outlines a number of key categories that will see incremental growth from increases in spending autonomy for women—growth beyond what would be expected just given the size of their income increase. These include food (particularly higher quality and protein intensive foods), healthcare, financial products, education, childcare and consumer durables. As spending grows in these areas, growth in other categories—such as alcohol and tobacco—will be negatively impacted. Marketers who listen to their female consumers and create products that really meet their needs within these key categories will be able to reap substantial rewards.

Sources:

• The Real Emerging Market by Rana Foroohar and Susan H. Greenberg in Newsweek September 12, 2009
• The Female Economy by Michael J. Silverstein and Kate Sayre (Boston Consulting Group) in the Harvard Business Review September 2009
• No Quick Riches for New York’s Twentysomethings by Andrew Beveridge in the Gotham Gazette June 19, 2007
• The Power of the Purse: Gender Equality and Middle-Class Spending by Sandra Lawson and Douglas B. Gilman, The Goldman Sachs Group, Inc., August 5, 2009

In August, women made up 56.1 percent of the Web traffic to music sites. Overall, music sites pulled in 42.5 million unique female visitors in August.

While it might seem like young girls would be scouring sites for the latest news on the Jonas Brothers, it is actually women 35-60 who make up about a third of visitors to music sites.

Females age 35-49 make up the largest group. More than 14.5 million women within that demographic visited online music sites in August. This made up 19.2 percent of all visitors to music sites during the month.

Less than a fifth (15.6 percent) of U.S. females 18 or older said they purchased music online within the past six months. Sixteen percent said they bought a music offline during the same span, per Nielsen@Plan Fall 2009 Survey. Slightly more than 8 percent of women watched or listened to music online.

The top two sites visited by women for the month of August were: AOL Music (11.8 million unique visitors) and Yahoo Music (9.9 million). MSN Music was a distant third with a unique audience of 3.9 million.

“As with other forms of Internet technology, more men were early-adopters of the mobile Web and still make up a slightly larger presence today,” commented Chris Quick, client services manager, mobile media. “Now that the technology is more mainstream, women are quickly embracing the benefits as ‘connected consumers,’ tapping the convenience of Web access on mobile phones to network, browse the latest shopping deals and get ideas for dinner, all while on the go.”

Mobile and gender

From celebrity news to shopping, mobile Web usage by women traversed a variety of subjects and actions in July, including online shopping and social networking. Women were 1.4 times more likely to visit People.com and use AT&T search via a mobile Web device in July.

In July, men’s mobile Web interests centered on news, sports and online games. Men were 1.8 times more likely to visit Gizmodo – the technology news site – via a mobile phone, making it the No. 1 Web site visited by men on their mobile devices in July in terms of unique audience composition.

Teen take

Teen usage of mobile phones focuses heavily on texting, both sending and receiving. In Q2 2009, the top-ranked mobile activity for teens was messaging, with 84 percent of teens sending a text message and 55 percent of teens sending a picture message.

“Nielsen’s online data shows that about half of the U.S. population visited a social networking website in the last year and that number grows every quarter,” said Wils Corrigan, AVP, Research & Development, Nielsen Claritas. “The rising popularity of these sites and the deep engagement consumers have with them has advertisers and marketers asking for more and more detail as to which lifestyles should be targeted for their online advertising and promotions.”

Facebook vs Myspace

Through Claritas, Nielsen defines U.S. households in terms of 66 demographically and behaviorally distinct segments like “Young Digerati” or “Beltway Boomers.” When those segments are overlaid with the activity of Nielsen’s online panel of more than 200K, we see a marked difference in the demographic makeup of the two largest social networks, Facebook and MySpace.

• Facebook users have a largely upscale profile. The top third of lifestyle segments relative to affluence were 25% more likely to use Facebook than those in the lower third.
• The bottom third segments related to affluence are 37% more likely to use MySpace than those in the top third.
• Users of Facebook were also much more likely to use LinkedIn, a network geared towards business and professional networking, than those who use MySpace.

Bloggers more urban as well

According to Nielsen Claritas, the blogging and tweeting community at large isn’t necessarily more affluent, but bloggers and tweeters do live in more urban areas such as New York, Los Angeles, San Francisco, and Chicago. The penetration rates of the top two most visited blogging platforms (Blogger, Wordpress) and the most popular micro-blogging platform (Twitter) show that Nielsen’s 12 Urban lifestyle segments are more likely to blog and tweet than Nielsen’s 22 Town & Rural segments.

Not surprisingly those lifestyle segments most likely to blog and tweet also tend to use Facebook and LinkedIn more often than those segments that typically don’t blog or tweet. Case in point, the Urban lifestyle segments for Blogger are 18% more likely to be Facebook users and 140% more likely to be LinkedIn users than the below average segments.

About the methodology

Nielsen examined the seven most-visited social networking websites and platforms: Facebook, MySpace, Blogger, Twitter, WordPress, ClassmatesOnline, and LinkedIn. Website penetration by segment was calculated by dividing the number of unique visitors to the website per segment by the total number of households in each segment.

The data analysis examined the distinctive consumer patterns and marketing appeal of women who work fulltime and have one or more children at home. The study includes information on their shopping habits, media patterns, demographics and lifestyles. “The Working Mother is the gatekeeper for purchases related to clothing, feeding and making a home for her family. Her high spending on cellular services together with her propensity to download content via her cell phone imply that mobile marketing could be an important platform for reaching her with product announcements, offers and other promotions,” said Howard Goldberg, Senior Vice President of agency services, Scarborough Research.

Download Shopping Insights on Today’s Working Mom, from Scarborough Research.

We have seen that the mobile industry is on a fast-track, with massive growth in mobile marketing, advertising and paid-content for users. But what is really leading this growth is the increase in quality devices and fast, affordable data. While smartphone ownership was once just a business tool, more consumers than ever are using smartphones in their everyday lives. In the past year alone, the total number of smartphone subscribers increased 72% quarter-over-quarter, growing from 15 million subscribers in Q2 2008 to 26 million in Q2 2009. While the penetration level of smartphone users is still fairly low – nearly 17% in Q2 2009 – they make up half of the mobile Web audience.

Italy Leads in Smartphone Adoption

Despite America’s reputation as a nation of big talkers — the U.S. is not setting the pace in smartphone adoption — ranking third when ranked by penetration. Italy has the largest percentage of smartphone owners at 28%, while Spain is not far behind with 23%. France has the most room to grow, with an 11% penetration level.

Smartphone Gender Gap Continues

With the continued expansion of smartphone ownership in the U.S. and the availability of more affordable devices, the market is opening up to a wider range of consumers. However, we continue to see similar demographic profiles for smartphone owners as we did a year ago. While smartphone usage is shifting from purely business use to both personal and business use, owners are still more than two times as likely to own a smartphone for business usage only. Smartphone owners continue to be predominantly male, are 65% more likely than the average mobile subscriber to be between the ages of 25 and 34, and nearly two times as likely to make more than $100,000 a year.

What’s Next?

So while more people are buying smartphones and penetration levels are increasing, the demographics are not significantly changing yet. There is a lot of untapped potential available to marketers to reach a whole new generation of smartphone users. Is your mobile marketing strategy as smart as your phone?

This demographic—those aged 25-34 who are making over $100,000 annually—is also prevalent in the high-density areas of San Francisco, New York City and Chicago.

The study reflects the subtle but significant shift of the demographic to the larger metropolitan areas as well as a slight shift to the East.

“In 1990 you had a lot more concentration of this demographic in the heartland and in Texas, likely driven by the oil economy, and some of the agribusiness,” said Michael Mancini, vice president of data product management for The Nielsen Company. “But now, there’s a densification of young money into the major metros.”

Over the last two decades, the D.C. area has surged in popularity with the young and moneyed. Back in 1990, top-ranked Loudon County was in 24th position. By 2000, it had moved up to fourth place. Arlington, now second, was eighth in 1990 and third in 2000.

Arlington’s reputation as a place for rich young professionals has even inspired a recent mock-rap video on YouTube.

While D.C.’s rise has pushed San Francisco County from the top position it held in 2000, the percentage of young and wealthy households in San Francisco has increased, from 7 percent of the total in 2000 to 7.83 percent in 2009. In 1990, the young and wealthy accounted for only 1.29 percent of San Francisco’s total households.

In fact, there has been a significant increase in the concentration of the young and wealthy across the board in the top counties. While in 2009 Loudon County boasts 10.06 percent of its households are in the young and wealthy demographic, back in 1990, the top county only had 3.22 percent of its population in that bracket, which would not have even landed them in the top-50 this year).

Quick Facts

• Young and wealthy households make up only 2.15 percent of the total U.S. population.
• Only 15.9 percent of households are headed by persons aged 25-34, and only 13.48 percent of those in that age group make over $100K.
• The median household income of that age group is $49,750.