The global online branding market is expected to surge to an estimated US$20 billion (Dh73.46bn) this year as Middle Eastern advertisers migrate to digital platforms.
The prediction from a Deloitte report released yesterday reflects growing dissatisfaction among advertisers with traditional mediums that lack accurate measurement tools.
Digital advertising has mushroomed in the Middle East in the past two years, driven by smartphone and broadband development, the growth of social media and the region's youthful population.
"There is a lack of audience measurement systems in the Middle East," said Santino Saguto, a partner in Dubai at the global professional services firm Deloitte. "Digital platforms, on the other hand, offer a more quantifiable return on investment."
He estimates that digital advertising accounted for as little as 1 per cent of overall spending in the Middle East only two years ago. Since then, digital advertising's share has been doubling year on year and now accounts for about 4 per cent of total advertising spending.
Still, that trails a long way behind digital's estimated 16 per cent share of the global advertising market, which suggests the industry still has significant room for growth - albeit from a much lower base. That has been reflected by a flurry of recent mergers and acquisitions as global and regional media players seek to boost their footprint in the Middle East.
Publicis Group, one of the world's biggest advertising entities, bought the Dubai digital agency Flip Media last month.
Yousef Tuqan, the chief executive of Flip Media, told The Nationalthe deal sent a statement to the industry.
"It shows that global brands see the value of digital in the region," he said.
One of the most significant deals in recent years was Yahoo's acquisition of the Maktoob portal for $164 million in 2009. Gulf states are also investing in digital media through initiatives such as Abu Dhabi's twofour54 media free zone, which aims to position the emirate as a regional media centre of excellence.
Three Gulf countries feature in the top 30 of the World Economic Forum's latest network readiness rankings covering 2010 and last year. They are the UAE (24th), Qatar (25th) and Bahrain (30th).
The predicted growth of the digital media industry in the Middle East contrasts sharply with the overall performance of the region's advertising industry, which has remained flat over the past year. Total advertising spending in the Arab world was estimated at about $7bn last year, according to the Pan Arab Research Center. However, accurate data on the real size of the market is not available.
The Deloitte media predictions report says that more sophisticated methods for measuring the success of online branding campaigns have given a big boost to the industry. An example is so-called real-time bidding, which allows companies to specify exactly where and in what context their advertisements will appear.
"The digital advertising market in the region is expected to grow dramatically in the coming years due to emerging digital platforms, representing a big opportunity for advertisers and overall industry development," said Deloitte's Mr Santino.