I've written a lengthy response to an article in AdNation titled "digital is doomed without ecommerce...
You can read the full article here but my response is detailed below.
“Right, a few thoughts from my hotel room in Riyadh, since I have little else to do tonight:
1) ECOMMERCE Ecommerce will never work in this region, and people's fear of credit cards is the least of our worries. The main obstacles to growth are fulfillment and our shopping culture.
2)FULFILLMENT: My agency has developed numerous ecommerce portals, but the biggest hurdle to sales has been the shipping infrastructure. Shipping to PO Boxes via normal postage is slow and unreliable, and shipping via traditional couriers (a la Aramex) is too expensive to be viable when ordering a pair of slippers, a t-shirt or a DVD box set.
3) SHOPPING CULTURE The UAE has 10x the amount of mall space per resident as the USA - we like to go shopping, and get a Starbucks, and see a movie - we do not need to sacrifice that for the convenience of shopping online.
Ecommerce is alive and well in the ME, but it's not with purchases in the ME. The only real volume of ecommerce transactions is purchasing intangible items (like plane and concert tickets), and shopping overseas for items that are unavailable here (books, DVD's) or for cost savings (cameras, etc.) - the increible success of Aramex's Shop&Ship service is testament to this.
ECOMMERCE IS NOT THE ONLY REASON TO GO ONLINE I fundamentally disagree with Azhar's opinion that ecommerce is the sole driver of justifying digital spend.
While we might not be able to directly link every banner ad to the sale of a chocolate bar or SUV, we can certainly do a lot more to measure, track and report these online campaigns than any Pan-Arab TV campaign can (and with far less wastage).
Oh, and while we're on the subject of Pan-Arab TV, it's important to note that a key market like Saudi Arabia now has 2 times as many homes with broadband internet access as Pay TV, but I highly doubt that many regional advertisers (especially FMCG) have woken up to this reality.
The onus is on us as an industry to educate and inform regional marketers of what the web can realy deliver. None of us plan to get rich on 3% commisions on a regional digital market of $30 million in media spend, but this number will grow exponentially with time. However, banner ads are not the answer to every problem, and the old business model of being "Mr. 3%" is under threat.
Social media, search-engine marketing and consumer engagement through communities and one-to-one communications are proving to be far more than just the Buzzwords for 2009, and we all need to accept this reality.
Regional advertisers (and their traditional agencies) are now being dragged kicking and screaming into the digital age, and those that are ready to embrace these new channels and recgonize that this is not Rocket Science, but a new and more effective way to engage their consumers will be the beneficiaries of change, and not its victims..”