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Digital advertising spend 'extremely low' in region

The disparity between smartphone users and advertising spend on mobile and digital in the Middle East and North Africa region is one of the highest in the world according to research from Deloitte.

Most companies in the region allocate 15 per cent of their advertising budget on digital of which 12-13 per cent goes towards internet advertising. Stephen Lock / The National
Most companies in the region allocate 15 per cent of their advertising budget on digital of which 12-13 per cent goes towards internet advertising. Stephen Lock / The National

The disparity between smartphone users and advertising spend on mobile and digital in the Middle East and North Africa (Mena) region is one of the highest in the world, according to the research from Deloitte.

The Telecoms Media and Technology Predictions 2013 report states that mobile advertising spend will reach $8.3 billion this year globally, with $4.9bn geared towards smartphones and $3.4bn on tablets.

Digital advertising in the region accounted for about 6 per cent of total advertising spend across the Middle East, a figure that is "extremely low, not just from a benchmark point of view when compared to the UK at 32 per cent but from a logical point of view as well", said Emmanuel Durou, the director of strategy consulting at Deloitte.

The Middle East accounted for 6 per cent of global smartphone shipment last year, but less than 0.1 per cent of mobile advertising is coming to the Middle East, according to the report.

In the UAE there are 3 million users of digital apps and 3.6 million internet users, yet mobile advertising revenues are just $7 million while internet advertising revenues are $280m. In the United States, where they have 220 million app users and 245 million internet users, mobile advertising revenues are $3.4bn according to Deloitte.

"Mobile advertising spend was $8m last year and this year we see it growing to $15m," said Elie Khouri, the chief executive of Mena at Omnicom Media Group.

"This will grow in the foreseeable future, but it is still well below the level it should be at. Monetising mobile is not just a local or regional issue, it is a global issue with even the likes of Facebook and Twitter facing problems."

In the Middle East, people spend on average two hours a day on the internet and three hours on TV, but the gap between digital and TV advertising spend is substantial with more than 40 per cent of advertising budgets spent on television.

"The digital era started late in Mena," said Gregory Bolle, the strategic planning head at BPG Group. "For some brands they have only just 3 or 4 years of online existence. In 2008 we just started selling internet and digital opportunities."

According to Mr Bolle, there are three critical phases for digital advertising. The first is a robust telecoms infrastructure and high smartphone and tablet penetration rates. The second is high quality local content and the third is e-commerce.

"We are only just entering phase two in the region," said Mr Bolle. "We are not late, it is just that the traditional channels [TV and print] are still doing very well in the region, also the mindset is different from the US and Europe."

Advertisers in the region are still relying on push strategies when it comes to digital advertising instead of pulling customers into their brands.

Generally most companies in the region allocate 15 per cent of their advertising budget on digital of which 12-13 per cent goes towards internet advertising and 2-3 per cent on mobile and tablet. About 60 per cent of this is spent on displays like banners on websites, 30 per cent on direct messaging, like SMS and 20 per cent on search. Globally, however, search accounts for 62 per cent of digital advertising budgets, 10 per cent on direct messaging and 28 per cent on display.

"Mobile advertising is a huge opportunity that is still untapped in the region," said Mr Durou.

 

thamid@thenational.ae