UK offers a crystal-ball to the Middle East’s online future
Recent research from the UK (IAB / PwC Adspend Study)gives some clues to the future for online in the Middle East
It was about this time last year that I first put the idea to Martin and Dinesh that an offshoring operation in London might work. To back my case I used IAB / PwC statistics showing the UK to be the most developed online advertising market in the world, ahead of even the USA in digital spend per capita. The same report for 2007 (link given below) has recently been released showing that the extraordinary growth continues with a 38% like-for-like increase in revenues to $5.6B (yes, billion!) last year. On current trends, online will overtake TV adspend by the end of 2009.
The key drivers for this continued growth are worthy of comparison to the Middle East. The similarities are sufficient to support the belief that accelerated growth will occur in online spend.
- Online audience in the UK is now 32.5M with an average of 16 hours per week spent on the web.
ME: Here, the GCC market falls well short with just 8M, however, when the Levant markets and Iran (18M) are included the region’s online market (excluding North Africa) is very similar at 33.5M. - Cheap laptops mean more machines in the home and therefore more usage across young and old generations.
ME: Also true of the Middle East markets so this driver equally applies. - Catch up TV - great services such as BBC’s iPlayer and Channel 4’s 4oD which make their most popular TV shows available online for free have brought a whole new - and often older - audience to the web.
ME: Not yet a reality in the region. Even those TV channels who own their own content are not yet savvy enough to launch such a service. It will happen but don’t hold your breath. - Broadband - with penetration now over 90% of the online population the UK is no longer about ‘have you got’ broadband but ‘how fast’ is your broadband. 54% of UK broadband users have 2MB or faster. Wireless and 3g laptop cards are also widespread encouraging more people to go online, more often and at anytime.
ME: Some way to go I’m afraid. Only 2% of KSA have broadband. Even in the UAE, few have speeds of more than 512KB. Again, this will improve but YTT’s hair probably grows faster than most ME regional telco’s change management structures. - Social networking websites - already a massive audience driver and expected to drive adspend significantly in 2008 from a small base in 2007.
ME: Varies by market but also a big audience driver. Its value to advertisers will need to be pushed by the online industry in the ME which basically means Flip has to lead the way
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All things considered, the prospects for rapid acceleration in online marketing in the ME look pretty good. Search should come of age over the next 24 months (accounts for 57% in the UK compared to just a few percent in the ME) and this will add to online revenues rather than take away from online display. As Yazz famously sang in 1988 , ‘The only way is up’.
This is London signing off. Masalam.
