Small and medium enterprises (SMEs) in the UAE, Saudi Arabia and Egypt are missing out on a huge opportunity in tapping online commerce, a study conducted by Google showed.
The UAE is the regional leader with 18 per cent of SMEs having an online presence, followed by 15 per cent in Saudi Arabia and just 7 per cent in Egypt, according to the research.
Companies with fewer than 250 employees are termed as SMEs.
The study goes against internet user data that show smartphone penetration is the highest in the world in the UAE at 74 per cent and more people watch YouTube in Saudi Arabia than anywhere else on the planet.
“The business side of the equation does not follow the argument,” said Tarek Abdalla, the head of marketing at Google in Mena. “While the digital advertising market is growing really fast – it went from 1 per cent of total advertising spend four years ago to 6 per cent at the latest reading – it’s still low compared with Europe, which averages 40 per cent of spend on digital. For SMEs budget is tight, so the choice of channel to advertise is key, but a lot of SMEs are turning to a media that cannot be measured such as print or outdoor.”
The research showed that 92 per cent of SMEs in the UAE did not understand how being on the web could help them grow their business, with more than two thirds in the region not considering having a website.
In sharp contrast, Cleartrip, a UAE-based online travel agency, claims the return on investment from its online advertising versus traditional advertising could not be more different.
“Our mobile ad campaign saw a 45 per cent increase in bookings generated over the phone through call centres and a 61 per cent increase in calls handled just in the UAE and Saudi Arabia,” said Hijazi Natsheh, the deputy general manager of Cleartrip.
“Online advertising data is something you can measure and make decisions based on it. All our performance-based marketing activities are based on online data. Our offline activity is more about branding, like putting a billboard on Sheikh Zayed Road, just to build our brand.”
Online advertising is currently at 6 per cent of the total advertising spend in the Mena region, according to the Arab Media Outlook. However, internet users in the region are expected to reach 141 million by end of the year, representing more than 35 per cent of the population.
Google says the challenge for the region’s SMEs is to realise that the sprawl of the internet. And the stretch of logistics companies means they are now fighting global companies who have a strong and growing web presence. SMEs without online visibility are that much smaller.
In another related development, Google this week said that it would lower prices on cloud services as it looks to take on IBM, Microsoft and Amazon in the intensifying battle of supplying internet services for corporations.