x Abu Dhabi, UAEWednesday 26 July 2017

Google says Middle East online advertising to grow

The move to the internet will create a viable revenue stream for new web-based businesses.

Google expects Middle East online advertising to surge as marketers look for cheaper alternatives to traditional media.
Google expects Middle East online advertising to surge as marketers look for cheaper alternatives to traditional media.

A Middle Eastern economic slowdown is expected to accelerate the growth of online advertising in the region, as companies opt for less expensive web ads over pricey traditional media. Google, the world's largest internet advertising company, is seeing regional demand grow faster as ad buyers look to increase their reach while decreasing spending. "In an economically cautious environment, people need to continue to grow their business, making people aware of their product while also cutting costs," said Mohammed Gawdat, the managing director of Google for the Middle East and North Africa. Advertising online costs just a fraction of promoting via traditional media. The industry typically uses a "pay per click" system that only charges advertisers for the users who click on their ads and are redirected to their website. The market now accounts for up to 20 per cent of total ad spending in developed economies, and is the driver of virtually all growth in advertising spending. Internet entrepreneurs frequently cite the embryonic state of the Middle Eastern online advertising sector - spending is estimated to be as low as US$50 million (Dh183.6m), or less than 1 per cent of total advertising spending - as a major force holding back the growth of web businesses targeting the region. But Mr Gawdat believes this is changing, in a process that will be further stimulated by an economic slowdown. "Every technology adoption follows an 'S' curve: it starts slow, then grows exponentially, peaks and tails off," he said. "The Middle East is definitely in the hockey-stick part of that curve right now. Our numbers show that it is growing at a tremendous pace." Mazen Halawi, the corporate sales manager of Ayna, an Arabic search engine, recently said that large corporate advertisers in the region planned to put a larger percentage of their advertising budget into online media next year, with some planning for almost 10 per cent of total ad spending to go to the internet, up from just 5 per cent last year. "Has the Arab world reached a mature internet economy? Not yet," Mr Gawdat said. "But if you look at the UK in 2001-2002, or Poland in 2005, this is where the region is. We're starting to see increased demand and it can only accelerate from here." Globally, total advertising spending is predicted to grow by approximately 5 per cent next year, driven almost entirely by the online market, which will grow by 15 to 20 per cent according to some estimates. tgara@thenational.ae