Log on to the web’s potential

The Middle East may be behind the rest of the world when it comes to the internet, but as more people come online, advertisers are beginning to see the benefits, writes Richard Abbott

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By  Richard Abbott Published  July 24, 2005

Log on to the web’s potential|~|Wadhwani,-Kunal200.jpg|~|‘It is the cheapest form of advertising. It is instantly measurable. If you put a picture in a magazine, how do you know who has seen it?’ Kunal Wadwhani, senior vice-president and head of sales at Zawya|~|At first glace, the figures don’t look good for the Middle East’s online advertising market. From a population of more than 259 million people, just 19 million are classed as web users by Internet World Stats. In other words, less than one in ten. So it comes as little surprise that the vast majority of advertisers’ cash is ploughed into TV and newspapers, with their wide distribution and universal popularity. The internet, meanwhile, is blighted by the region’s lack of technology and computing skills, along with issues of regulation and censorship. Not to mention the fact that online content in the region still remains fairly basic. So why would any advertiser choose to use a medium that offers them such low penetration when compared to the mass appeal of TV or the frequency of the printed press? Again, the figures don’t lie. Internet advertising commands up to five per cent of advertising budgets in established online markets. Here in the Middle East it has not yet reached the one per cent mark. Christel Whelan, managing partner of online specialist agency 121, admits that the Middle East is about five years behind established Western markets but is “catching up fast”. “If you talk about Dubai — Dubai is not behind Europe at all. Approximately a third of the UAE is online,” she says. Kunal Wadwhani, senior vice-president and head of sales at online news provider Zawya, is similarly optimistic: “It is a bit of a generalisation to say that we are that far behind in terms of internet penetration. “The Middle East as a whole is lagging, but the UAE, Saudi and Egypt are all growing fast. The UAE is on a par with France.” Growing it may be, but the breakthrough has not yet arrived. Most observers agree that three factors are holding back the internet. The first is the cost. The Middle East is one of the most expensive places in the world to get online. As is usually the case with new technology, the price remains high for the early adopters until the operators — in this case, the internet service providers — obtain the critical mass necessary to reduce the cost. In the UAE, for example, there is just one telecoms operator, Etisalat. When the government eventually gives the green light to a second operator, the competition will inevitably force internet prices down. Simon Lewis, eVentures’ group manager at Emirates Group, who runs travel portal mytravelchannel.com, says the internet in the Middle East is between three and five years behind more established Western markets. “There needs to be greater access and for it to be more flexible for users. The introduction of more competition will drive the cost down,” he says. The second problem is censorship. At a time when freedom of expression is encouraged, internet service providers block sites that might be deemed offensive, causing frustration to users. And a general lack of trust in the internet means that paying by credit card is not seen as a safe option yet, preventing online retailers from growing. Online credit card payment in the Middle East is not as secure as in other parts of the world, which means the transaction often takes place over the phone after the reservation has been made online. Finally, there is the content. To be frank, many of the region’s websites aren’t very good. As Wadwhani puts it: “If you don’t have the right content, why would anyone go online in the first place?” There are a few leading market forces in the Middle East — names like Maktoob, AME Info and MSN Arabia — but, on the whole, content quality is not especially high. A few websites are raising the standard though and creative web designers are beginning to emerge in the region. The breakthrough may be just around the corner. “2005 is the big year,” says Whelan. One of the websites attempting to make waves is My Travel Channel, run by Emirates airline’s eVentures group. Like international brands such as Expedia and Travelocity, it offers users a facility to find the best fares for their hotel or flight. Year-on-year sales through the website are up by 232%. My Travel Channel has deals with other websites that enable them to use its facility as a travel sub-site, therefore increasing the value for both sides and giving My Travel Channel thousands more potential users. Lewis urges people to look beyond the figures for a more upbeat view on the internet. “It may be a low share but it is generating a lot of revenue,” he says. “We can monitor and measure it. It is dynamic. We can put a banner ad up that can click through to a website that can give you more information than just an advert on a page.” And he is sceptical about the impact of more mass market media opportunities. “TV is limited in its advertising, and not watched that much. Ads on TV cost a lot. With newspapers, the benefit that you get compared to the cost is questionable,” he says. “Because the internet is an emerging advertising medium, advertising is very overpriced. But it does offer far more accurate data for the advertiser to see if it was a worthwhile initiative. With newspapers, you don’t know how many people saw your ad.” It’s a similar story at Zawya.com, a subscription-based website that gives its users global content from sources including Dow Jones, Reuters and the Financial Times. Kunal Wadwhani believes the success of his company is down to linking desirable content with a target audience. “We saw what was happening in the US. We saw the dotcom failures. We realised that to provide quality information we actually had to go out there and get it. Because of that we charge a premium,” he says. Zawya obtains most of its revenue from subscriptions — unlike other news sites like AME Info, which are free — but advertising still plays an important part. Wadwhani continues: “It is the cheapest form of advertising. It is instantly measurable. If you put a picture in a magazine, how do you know who has seen it? Where is the click-through button to transfer you to the company website?” The 121 Agency is so confident about the effectiveness of online advertising that employees have a top ten of reasons why it works to hand should anyone need convincing. “We have the data on the net that you don’t get offline. And by communicating via e-mail and SMS we get to know consumers better,” says Whelan. “Remember that the users of the internet are usually a wealthier audience too. It is still in its early stages but it is growing. It is only a rumour, but we hear that companies are starting up, doing exactly what we are doing, so clearly there is a momentum.” Ahmed Nassef, general manager of internet portal maktoob.com, is another who waxes lyrical about the potential of the internet. “We are experiencing dramatic growth,” he says. “It is not a tough pitch because the internet is a tremendously targeted opportunity. Publishers can profile the community they have. It’s an amazingly results-orientated opportunity. We can target Saudi women over a certain age, and that’s a hard to reach market.” Online is also practicing what it preaches, with AME Info the first ||**||Log on to the web’s potential|~|Whelan,-Christel200.jpg|~|Christel Whelan, managing partner of 121|~|website known to apply for an audit of its user figures. Klaus Lovegreen, CEO of AME Info, has now urged other online sites to follow and bring even greater levels of transparency to the medium. Whelan adds: “The key is not just having the traffic but also the metrics to show advertisers that it is worth it. Even if they think a campaign is not working, we can adjust it in the middle of the campaign. That’s the beauty of the internet.” But there are still major hurdles to overcome before the internet becomes a serious contender to TV and newspapers. Nassef agrees with Whelan that 2005 is the all important year. “We are at a critical time for the online industry,” he says. “Things have changed dramatically in terms of access. We are looking at a forecast of 10 million users a year going online across the region. But there are all kinds of logistical challenges. “There is a partnership that needs to take place between publishers and ad agencies about the benefits of online.” One of the key challenges is the lack of quality Arabic content that will unlock the door to the millions of Arabic-speaking nationals in the Middle East. Indeed, a survey carried out by YouGov showed that only 9% of respondents felt there was ‘plenty’ of information available in Arabic on the net. “The challenge for publishers is to offer content for Arabs,” says Nassef, adding that three-quarters of the visitors to his website use the Arabic interface. “Quality Arabic information is going to be the key. If you do a survey of regional websites there are huge holes of areas that have not been addressed with Arabic content.” Whelan agrees: “We see a lot of English websites but Saudi Arabia is 50% of the market. You have to have Arabic. It is still too much English. Most companies have the technology to mirror languages and it should be done wherever possible. “The challenge is to convince advertisers that we can reach women in Saudi Arabia over the net. They do use the net quite a lot. The problem we have is the lack of information to prove that. “We need to do much more education about the benefits of the net.” Arguably the biggest opportunity may lie in tapping into the current global obsession with blogging, which is where an internet user creates their own diary page on the internet. Nassef says this is where demand will come from: “There is not a regional offering. We are looking to launch it very soon. People know what they want from the net and they know where to get it.” Online media owners may be doing their utmost to bring the medium to the masses in the Middle East but do media agencies — the guardians of the advertiser’s purse — fully understand the potential of the internet? Wadwhani thinks they do. He said: “15% of business comes through media agencies. Most media agencies know what they are doing. Their job is to make the best investment for their client. To do that they have to understand all of the media markets.” Whether the net is getting the share of the advertising pie it deserves is another matter. For now, few media can match the growth of the internet.||**||

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