Gulf Business April 2011 | Digital Landscape

2011

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CONTENTS 40/ The digital tipping point How far has the region progressed with its digital ambitions, relative to the rest of the world?

49/ Ones to watch The pioneering digital companies to watch over the next year in the UAE and the Gulf .

56/ Can your company afford not to be on twitter?

Knowing how to exploit – and protect your brand online is a must for success.

62/ Gadget Galaxy Apple, Samsung and HP tablets are battling for domination globally and in the region. Who will win?

66/ Connecting Social networking is revolutionising consumer behaviour and business opportunities.

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DIGITAL ISSUE

2011

The Gulf’s

DIGITAL REVOLUTION

Photo: Istock photo

Driven by business, entrepreneurs, hungry consumers and a restless youth population, the region’s passion for digital has accelerated past the tipping point. Egypt recently highlighted the internet’s breathtaking power; its unrelenting momentum for driving, assimilating and realising change. The future is here.

Welcome to the other kind of Gulf revolution, writes Laura CollacotT.

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Raja Trad, CEO of Leo Burnett, MENA

T

he figures say it all.

Today the Middle East is standing on the cusp of a digital revolution. The region boasts around 65 million internet users – fuelled by a webuser growth rate of 1,648.2 per cent between 2000 and 2009.

While North America already has a penetration rate of 77.4 per cent, it is forecast that around 60 per cent of the region’s population will be online by 2020, up from 19 per cent today.

That equates to 260 million users.

In Saudi Arabia alone, 9.8 million are internet users, and 2.5 million are hooked up to Facebook – out of a population of 25 million.

As growth areas go, this is it. But with this gaping opportunity come many challenges.

“Digital marketing looks like a dinosaur in this region,” says Bébhinn Kelly of Hellwa Fashion, an hautecouture blog. “It still shocks me how far behind the vast majority of marketing departments in this region are. Marketers in every sector, but particularly in retail, need to get themselves up to speed. We only have to look at Egypt to understand the kind of impact bloggers and online tools are having on the region.”

And it’s true. Ask anyone and they’ll tell you that the Middle East has long lagged behind the rest of the world in online. Not for much longer.

Sim Whatley, co-founder of online classified site Dubizzle, is enthusiastic about the unexploited potential in the region: “The Gulf region is not Silicon Valley, but there is a great deal of talent and entrepreneurial

spirit here. I meet and am encouraged often by new businesses and websites that have local, creative ideas. There is still plenty of room to grow, and that is the exciting part.”

There are key areas of growth. Social networking is huge in the region; people are turning to the net for career advancement and job searching; mobile phone apps are big business; auction and classifieds sites are gaining traction; digital marketing is the subject on everyone’s lips; e-commerce is a nascent concept with stellar growth potential.

Alexander McNabb of Spot On PR, a veteran in the Middle Eastern digital scene remembers back to 1995 when internet was first introduced to the region, spurring debate on whether it was good, whether it was anti-Islamic, whether it would swamp the Gulf with foreign content. “One journalist thought it was a passing fad,” he smiles, “now we’re having the same debate regarding social media.

“Our relationship with internet content is deeper than with more passively generated content. We choose.

It’s the huntergatherer instinct.

The Tarzan effect.”

“Our relationship with internet content is deeper than with more passively generated content. We choose. It’s the hunter-gatherer instinct. The Tarzan effect.”

Ramzi Nakad, managing partner of Brag, a live marketing agency, is every bit as emphatic about social networking developments. “Social media is no longer a nice to have within a marketing mix but a must. Big advertising and media buying agencies need to realise and accept this or risk going out of business.”

Modern marketers are under pressure from the still relatively small digital sphere. Firstly, they must create dedicated web content to supplement traditional marketing channels.

“What used to be a repurposed print ad plastered on a website, has become a potential source for a campaign-wide idea,” says Raja Trad, CEO of Leo Burnett, MENA. “There’s still lots of room for improvement, and the contribution of social media to the recent political events are teaching brands a good lesson; digital has the power to impact your business from the onset. It is not just another medium.”

Alexander Rauser, CEO of UAEbased digital agency Prototype, agrees that the medium needs to be more adaptive, “breaking away from the traditional ways of communicating information to consumers” and become more focused on meeting customer needs. “It’s about creating experiences for users that are engaging and result in referrals and recommendations,” he says.

However, at the moment, in this region, referrals and recommendations are as high as

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Lex BradshawZanger, Regional Director, Digital Strategy & Innovation

digital marketers need to aim.

E-commerce is relatively tiny compared to developed regions, in large part because of the low penetration level of credit cards.

In a region devoted to the humble cash and cheque book, driving sales online is a formidable task. But one set to change as mobile-phone payments begin to be introduced, hop skipping over the credit card requirement. With practically every Middle Eastern palm clutching a mobile device, it stands to revolutionise online shopping here.

As marketers seek to disseminate their messages and charm customers, they must do so in a more targeted, less ‘scattergun’ fashion.

“Today’s advertisers have budgets that are under much closer scrutiny; they need to ensure their campaigns are hitting exactly the right

(for example, GM’s in-market search program) or adds value, utility and fun to the online experience (Kellogg’s banner games, for example).

In fact, he believes that gaming is another growth area for the Gulf.

“It’s waking up in the Middle East.

Over 38 per cent of online gamers worldwide are located in the region and this can be an enormous platform from which to start. Egypt and KSA in particular have massive populations.” Creating internet applications that serve a function, especially entertainment, will be key in the future to driving traffic and those crucial advertising clicks.

A faster growing sector online has been that of online recruitment and professional networking. Linkedin has 101 million members worldwide, of which 2.6 million are in the Middle

audiences every time, especially as online consumers are ever-more discerning about the relevance of the advertising content presented to them,” notes Ahmed Nassef, vice president and managing director of Yahoo! Middle East.

It’s a requirement well suited to digital. “The beauty of digital is being able to measure precisely who listens and when they listen,” says Steve Pulley, director of ARN Digital. This can mean anything from ROI tracking to syndicated country surveys and sophisticated reports that measure the benefits of digital marketing precisely.

There is a lot of so-called ‘clutter’ that companies should avoid. Lex Bradshaw-Zanger recommends avoiding simple, easily ignored banner ads, and instead develop web tools that either serve a purpose

Internet users in 16 arab countries By end of 2009 there were 41.8 million users



INTERNET USER PENETRATION % 60%

40%

20%

0%

0

3,000

algeria

11.8%

bahrain

36.3%

6,000

6,829 1,039

KUwaiT

1,395

lebanon

28.0% 1.5%

maUriTania

1,110 47

morocco

18.9% 13.1% 11.5%

oman palesTine QaTar

25.6%

5,941 391 459 417

saUdi arabia

39.9% 16.3%

syria

15.9%

TUnisia Uae

51.3% 9.9%

yemen

12,000

4,207

Jordan

40.0%

9,000

420

egypT

8.8% 17.4%

INFoGRAPhIcs: tARAk PAREkh

INTERNET USERS (1000s)

10,000 3,284 1,656 2,371 2,261 soURcE: ARAB ADVIsoRs GRoUP

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ld or w he se n of t an a i c ne i t s m a b r s es e a p ru r g ar Ja 99.1m 65.4m 72.5m 350.6m 59.7m english (in millions)

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INFoGRAPhIcs: tARAk PAREkh

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East. Curiously, the site seems to have curried more favour with male members of the population, with 77 per cent of Middle Eastern profiles being held by men.

“We have seen tremendous change in the ways and speed with which job matches are being made as enabled by the internet,” says Lama Ataya, chief marketing officer at Bayt.com.

“Jobseekers can reach a wider audience of top employers and vice versa and recruitment matches can be made directly via the jobsite without the need of or interference of an intermediary. They are now able to refer to Bayt.com salaries to compare their salaries to their peers before making job change decisions; they can read the industry’s latest literature derived from our polls and surveys.”

Not only this, the company has also noticed a trend towards greater employment opportunities in the digital realm. Analysts anticipate that digital skills will be very much in demand in 2011 – students take note.

Take note, too, of the demand for Arabic language content. The Arab Media Outlook 2009-2013 report, released by the Dubai Press Club in conjunction with PricewaterhouseCoopers (PwC)

153.3m

number of internet users by languages

points clearly to a demand for Arabic-generated content. “There is undoubtedly a dearth of Arabic content,” says McNabb, pointing out that Wikipedia is said to be opening a regional office to encourage the development of more content.

The report suggests that the ever-increasing internet penetration and use of social platforms will be key mediums of growth. Using the Arabic language, in business, helps to influence the right decisionmakers in the region; socially, it facilitates dialogue between governments and communities.

But this same cultural advantage can also function as a negative factor says Omar Christidis, the vice president of the International Business Alliance Group and founder of ArabNet. He says that an inherent Arabic fear of failure, in a business that has a fairly high risk of failure at the outset, and of losing face is a limiting factor. So, too, are family ties to business and an apparent reluctance to break out alone.

Internet censorship is a barrier of perception, more than practice. Nakad rejects suggestions that it

Arabic is the 7th most popular language on the internet soURcE: MccoLLINs MEDIA

discourages innovation by reminding us that it fuels creativity, especially online where political borders almost cease to exist.

“Censorship has its own wellintentioned purpose,” muses Mohammed Areff, managing director, Gulf & Pakistan at Avaya, pragmatically. “Innovation on the other hand allows one to explore new ways of doing things.

As long as this is within certain boundaries, it can flourish.”

Few see why censorship should affect innovation. “It encourages it; life is full of constraints, be they about what we can do, how we can do it, or even with whom,” says Bradshaw-Zanger.

“Alcohol and tobacco marketing the world over is heavily controlled but this doesn’t stop some of the most creative marketers from developing one-to-one programmes that can communicate with consumers.

“The digital landscape has changed a great deal over the last two years,” nods Kelly.

“The change is slow and frustrating but we are getting there.

Twitter used to be blocked and flickr

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Omar Christidis, Oraganiser of ArabNet Digital Summit

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in Lebanon abound. Gone are the days when you needed a fixed line at home and a computer UAE, Bahrain and Qatar lead broadband adoption in the Arab world* tied up to it. Today we have wifi and wimax and a number of new devices to get connected.”

With the fast improvements in 20% infrastructure and the swift growth in users, the region finds itself almost at the critical mass for substantial development.

15% 14.6% For companies, in terms of advertising and 11.6% media, “digital media is very close to tipping Note: * The figures for the 10% point,” according to Bhargava. “There is a 8% countries are for end of 2009. clear trend towards digital; it’s the time when 5.8% 4.7% consumption of digital picks up to an extent 5% 3.4% 2.3% 1.5% that it starts cannibalising traditional media.”

1.4% 1.3% The trick will be for companies to 0% manage their branding messages across the diverse, mixed platform, timing the change in budgetary requirements to fit with the evolution of the media. No easy task.

Doors are already beginning to open.

Christidis is enthused about the level of soURcE: ARAB ADVIsoRs GRoUP innovation and entrepreneurship visible in the current climate. For the youthful, techsavvy population of the MENA region, there is learning to use the internet for was only unblocked in the UAE in is a great deal of opportunity to break – and the first time on an iPad,” says late 2010. Unblocking them was a exploit – the digital realm. good move.” So censorship barriers Omar Christidis, organiser of He pinpoints the mega-deal of 2009 are arguably being eroded.

ArabNet digital summit. “There when Maktoob, one of the region’s most Infrastructure has, however, are going to be more than 50 popular portals, was purchased by undoubtedly been a barrier to million new internet users in the online giant Yahoo! as a pivotal moment progress. Compared to other next few years. These people will in the Arabian online revolution. regions of the world, bandwidth come through mobile devices “The deal energised the private sector,” he is slow – “far below global because they are comfortable says. It certainly demonstrates to young colts standards”, as Jayant Bhargava with them.” what can be achieved with some grit and Observers believe that the of Booz & Company puts it – and determination. region will soon be competitively connections are expensive.

Christidis has nominated 2011 the year of connected. “Changes are going to That is changing, not just the entrepreneur and hopes through his and happen overnight, particularly because the infrastructure is other schemes to incubate more start-ups. in markets that are still heavily being steadily upgraded, but “Interest in entrepreneurship, the web and controlled by monopoly operators,” also with the advent of internetstart-ups has skyrocketed,” he says, “both in says Bradshaw-Zanger. “Rumours enabled smart phones and mobile of upgrade to 3G mobile broadband the public and private sectors. It is critically internet devices. “My grandmother important that we take this opportunity to harness this wave of innovation and optimism, “Participants described feeling fidgety and kept reaching for their mobile to sift out the best ideas and truly get behind phones even when they weren’t there.” — Dr Gerodimos of Bournemouth University comments on new research showing that students who stayed them with the financial support and an away from social networking, emails and phones for 24 hours suffered ecosystem that lets the best of these many withdrawal symptoms similar to drug addicts. ideas thrive and flourish.” ■

FAST FACT

INFoGRAPhIcs: tARAk PAREkh

Fixed broadband internet

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