Everybody talks about online these days, but some are better positioned than others
Ari Kesisoglu, managing director-Middle East North Africa at Google, and Hussein Freijieh, commercial director at Yahoo! Maktoob, each answer three questions on the evolution of digital in the Middle East. Their companies compete fiercely, but they make similar assessments and set a path for online regional development: content will remain the key; video is the format to look into; the market is poised for massive ad spend growth online.
How is digital evolving in the region?
HF: When I used to sell online [ten years ago], the message was “Online is getting bigger”. Now we’re saying “Online is big”. There are 80 to 100 million people online, 56 million people come to Yahoo every month, almost 1.2 million a day. So the scale is here; now you can compare online to mass media. Secondly, there’s a complexity in the medium itself: more research platforms, measurement tools, integration between multiple platforms and screens. The story is becoming complete and it’s resonating more with brand managers. [So] the good news is we’re over the discussion of whether to go digital or not. The question is how. [Another] change is that every objective to be achieved [now] needs a strategy. Before, the industry had it all figured out. Now, you need to sit down, do your research, get the data, set your target. It’s complex and so are the platforms we are talking about. But there are good people who can figure it out. The key here is for clients to choose their partners.
AK: We’re going through a period of really big changes. The number of users moving online has been growing at an amazing pace of 40 percent year on year over the past four years. Infrastructure is getting better across the region, so people are using high broadband services such as video. Everywhere else, Google has more search queries than videos played per user; in the MENA, it’s the opposite. It’s hard to guess why; maybe people have more affinity toward online entertainment, and the lack of content in general is also playing a role. Last year, our YouTube views in the region more than doubled. People want to access content at their convenience. TV is surely going to be an access channel, with the introduction of smart TV. We launched Google TV pretty quickly last year, as Google always does, to understand how the market reacts. We got the feedback and now launched a second version with different additions, such as the Android market, better user interface. People want to be in control of what they consume, and Google TV is going to be one step toward [solving] that problem.
How do you see the MENA online ad spend evolving?
AK: The market stood at approximately $170 million dollars in 2011. Growth rates are showing no signs of slowing down, so in two or three years we’ll reach very significant numbers. It is [now] two to three percent of total regional ad spend. This is where Poland and Turkey were five years ago. Today that ratio is at 10 to 15 percent in these two countries. We’ve seen this happen in more than 50 countries, I don’t see why it wouldn’t here. There are five to ten million SMBs in the region; when they’ll go online, they will slowly see the benefits, realize that online advertisements are much more targeted, and they will spread the word.
HF: We don’t announce numbers because we don’t know if we are hitting it accurately; one of the main challenges we have is industry measurement. But we know the market for display advertising grew by 15 to 20 percent. We are expecting [it] to grow at approximately 25 percent this year. Unlike any other market, display advertising in the region is bigger than search advertising. It’s actually double. We expect by 2015 an equilibrium between search and display [advertising] in the region.
What are your plans and priorities for the Middle East in 2012?
HF: [One of our priorities is] how to leverage the investment we did in the past two years, package it, and make sure it’s available this year. Education is another big challenge; we will be focusing on partnerships with agencies to make sure we have the right people on board delivering the Yahoo story. From a product perspective, the game is to get the best content online in Arabic and English, and make sure we have it packaged in an experience across all platforms. Even though it has a smaller broadband penetration [rate], the Middle East is one of the major regions in terms of consumption of video. This is a huge opportunity. [Lastly] we want to cover as much of the Arab world as we can and make sure we have the right content packages for every market. Our strategy is focused on core markets [such as the GCC], but we always balance that with new opportunities: Lebanon is one of the major markets we’re looking at, and you’re going to hear about a couple of announcements soon.
AK: We follow users’ needs. First, search: when you are searching online [here] you are not getting the results that you would get elsewhere in the world, simply because a lot of data has not moved online. We’re trying to fix this problem by giving people the tools to [do that]. The second part clearly is video. It’s a big area of demand; we’re going to invest much more in that, [with] a lot of improvement in YouTube and also more advertising there. The third area is social [media]; we’re experimenting with Google +.