x Abu Dhabi, UAEFriday 19 January 2018

Middle East feels Google's full force

The rapid adoption of technology in the Middle East has made it an extremely important region for Google, which is starting to see a growing return on its investment.

Larry Page, left, and Sergey Brin, the co-founders of the internet search giant Google. Stephen Higgins/ Bloomberg News
Larry Page, left, and Sergey Brin, the co-founders of the internet search giant Google. Stephen Higgins/ Bloomberg News

When Clark Kent quit his long-time gig at The Daily Planet newsroom in a recent issue of the Superman comic book series, the disgruntled reporter joined one of the strongest forces to have ever rocked the field of journalism: Google.

Well, sort of.

Mr Kent left to run a blog, the success of which will likely depend on how many hits he can get through the search engine giant and how much he might be able to charge for online adverts. If Google's latest earnings are any indication of the potential for digital ad revenue growth, then the mild-mannered reporter should have a strong shot at keeping up his day job.

"Google is a powerful force," writes Hal Varian, Google's chief economist, in an opinion piece the company passed on to its public relations team for possible distribution within the Middle East and North Africa (Mena).

In the article, seen by The National, Mr Varian notes Google sends more than 6 billion clicks, or visits - every month - to news sites around the world, "generating hundreds of millions of euros in ad revenue".

During its latest quarter, Google reported US$14.42 billion (Dh52.96bn) in revenues, which was up 36 per cent from the same period a year earlier.

All told, last year, the tech company hit $50bn in revenues for the first time. "Not a bad achievement in just a decade and a half," said Larry Page, Google's chief executive, in the company's earnings statement released last month.

As boastful as Mr Page's comment may have seemed, it was still somewhat of an understatement. In the first half of last year alone, Google gobbled up $20.8bn in gross advertising revenue, compared with $19.2bn from newspapers and magazines that sold print adverts across the United States, according to Statista, a data company consisting of statisticians, analysts and editors.

Put another way, as Statista has stated, a company created just 15 years ago earned more from advertising than did an entire sector that has been in existence for more than a century.

Part of Google's success, of course, stems from the proliferation of devices where digital adverts can be placed, including tablets, smartphones and more traditional computer screens. The company's market share of smartphone subscribers with its Android software in the US stood at more than 53 per cent at the end of last year, which was greater than any other company's platform, including Apple's, according to research data from comScore.

Most people who now get their news on a mobile device in the US - 78 per cent - turn to their mobile phone. While a growing number of readers are reading text online, fewer are flipping open traditional newspapers: just 23 per cent of Americans surveyed last year by the Pew Research Center said they read a print paper, down from 41 per cent a decade earlier.

In the Middle East and North Africa the rapid adoption of technology has made Mena "extremely important" for Google, says Mohamed Mourad, the regional manager for Google in the Arabian Gulf.

"We have 350 million people in Mena - 100 million today are online," Mr Mourad says.

"We try to get more people to actually adopt the internet."

At the same time, Google has been trying to deliver more sophisticated adverts to viewers in Mena.

In the past, random adverts were often displayed on a news site or next to online search results. Yet so-called interspace targeting is now "the most powerful" kind of audience pinpointing within Mena, says Mr Mourad.

It works when someone is searching for a new vehicle, for example, and they may start seeing an influx of adverts targeted specifically at car buyers.

"If we give you a car ad, and you're more likely to engage with a website, the advertiser is more likely to pay a higher per-click rate for these ads," says Mr Mourad. "It's good for everyone. Everyone wins."

Especially Google.

Yet the company, based in Mountain View, California, has only recently started seeing a return on its investment within Mena, as it has gained a larger share of advert revenue from the print publishing sector and the television industry.

One of the company's biggest selling points when it comes to pitching commercials to accompany videos on YouTube is that viewers must watch the whole clip before an advertiser gets charged. When uninterested viewers opt out, by clicking the "skip" option even 29 seconds into a 30-second spot, for instance, advertisers do not have to pay a dirham, says Mr Mourad.

"The format is actually selling like hot cakes in the Middle East," he says. "The advertiser is only paying for fully-viewed ads."

Mr Mourad insists Google is not "cannibalising" the TV advertising market by shifting budgets away to YouTube. Rather, he argues, the company is offering advertisers an opportunity to pay a lot less for a different kind of marketing that provides incremental growth in the number of viewers.

In any case, the company has continued to increase the amount of content that is available in Arabic for the Mena region, most notably during Ramadan when online viewership tends to spike.

In the past, these kinds of efforts generated more eyeballs - but only recently have they started to bring in additional business for Google.

"We've been around and doing a lot of programmes that don't always generate revenue," says Mr Mourad.

"Now we're doing both.

"We're still doing all the user-generation stuff but also generating a lot of revenues because of the importance of advertising in the region."

 

business@thenational.ae