The Middle East's online media industry was abuzz with the news of Yahoo's historic acquisition of Maktoob, but behind the pride in a local business that had done good were some concerns about the deal's effect on ad pricing. Online advertising is still a fledgling industry in the region, making up little more than 1 per cent of total advertising spending, and some industry players looked warily at the tie-up between Yahoo, a major global player with a reach of 44 million unique users in the Middle East, with Maktoob's already sizeable reach of 16 million.
"On one hand, they will be controlling more of the market audience and they will have more leverage," said Dimitri Metaxas, the regional executive director for digital advertising at Omnicom in Dubai. "When you have a large player who needs to monetise and [an] extremely large amount of traffic, you can get away with lower cost because your competitors might not be able to match that." Mohamed el Fatatry, the founder and chief executive of Muxlim.com, an English-language online portal for the international Muslim community, said the pattern elsewhere in the world was for big players to push ad rates down when entering emerging markets.
"When big players like Google, Yahoo and Myspace enter any market, they drive CPM [click per thousand] prices very, very low, because banners effectively become commoditised," Mr el Fatatry said. "I'm not sure if something like this will happen instantly in the Arab world but this is a cycle that tends to happen anywhere because of the market, and it's just a question of how soon that will happen in the Arab world."
Zeid Nasser, the founder of mediaME.com, an online community for advertising and media professionals in the Middle East, said it would be interesting to see how Yahoo integrated Maktoob's inventory and advertising options into its plans to offer advertisers global display campaigns based on performance, or the number of clicks, rather than page views. "Yahoo's acquisition of Maktoob is part of its focus on growing its reach in the display, content-driven advertising business following its agreement with Microsoft to handle all it's search advertising business," Mr Nasser said.
"Yahoo also owns Right Media Exchange, an online advertising auction and exchange market, and it will probably offer some of its Middle-Eastern inventory there. This deal is fuelled by Yahoo's evolving models of online advertising which will, inevitably, change the pricing models." But the wider reach of the new union between Maktoob and Yahoo can also offer major advantages to the region's advertisers, particularly in their ability to better target consumers, according to Fawzi Raha, the regional communications director of the digital division at Grey Group in Dubai.
"One of the challenges with Maktoob is that we are always limited by the fact that it hasn't really changed what it offers in terms of categorisation lately, which is something that advertisers are always looking for. "The more categories you have, the more targeting you have. I think the segregation of the different elements that Yahoo provides will improve this a lot." email@example.com Maktoob in web of history, b3