Rising internet penetration sparks shift in ad spend as MEA SMEs embrace the Web

Once viewed as the sole preserve of large organizations with significant resources and large addressable markets, the world of advertising is undergoing a seismic shift across the Middle East and Africa (MEA).

Internet advertising is playing a key role in this transformation, with IDC forecasting a 27% compound annual growth rate (CAGR) for spending in this area by MEA businesses between 2013 and 2018. The consulting firm’s latest research paper, New Media Market: Internet Advertising Spending in Middle East and Africa in 2013 and 2014–2018 Forecast, attributes this dynamism to rising Internet penetration and the growing economic affluence of the region’s consumer base.

Continuous developments within the Internet advertising market are driving increasing numbers of organizations to leverage low-cost options such as Google Adwords or Facebook Ads to target their customers in a more efficient manner. These wide-reaching platforms offer a much more cost-effective entry point than traditional advertising, making them particularly relevant for emerging markets such as MEA, where burgeoning economies and concerted government initiatives are spurring a rise in the number of small and medium-sized enterprises (SMEs).

“The innovative new advertising models facilitated by rising Internet adoption are enabling organizations with limited advertising budgets to more fully participate in the advertising market,” says Sony John, program manager for telecommunications and media at IDC Middle East, Turkey, and Africa. “In this sense, the Internet has ‘democraticized’ advertising, as it is no longer absolutely necessary for businesses to have huge funds at their disposal in order to hire expensive advertising agencies or marketing firms. And while this has inevitably resulted in some cannibalization of traditional media advertising, particularly print, the widening participation of smaller organizations in the advertising space has more than made up for it.”

But which factors in particular are driving the proliferation of Internet use throughout the region? The overall improvement in economic activity across most parts of MEA has meant that an increasing proportion of people are seeing their disposable incomes rise. This growing affluence is not only enabling consumers to purchase more mobile devices with Internet connections, it is also attracting more advertisers to target these consumers.

Falling data tariffs — the result of declining voice revenues and heightened competition — are also helping to accelerate Internet use on mobile devices, and crucially, the MEA region is characterized by a young demographic with an average age of 20–28 years (WHO, 2012). This young population is driving a connected culture whereby a large proportion of the population instinctively (and increasingly) chooses to go online for their information, social networking, and entertainment needs.

IDC’s newly published report indicates that advertising formats such as ‘mobile search’ and ‘mobile display’ are expected to grow the fastest between 2013 and 2018, clocking CAGRs of well over 50%. Meanwhile, the ‘online display’ and ‘online search’ formats will continue to attract the highest levels of spending over this period. But despite this positive outlook, IDC believes there is plenty of scope for even more growth.

“There remains an overall lack of clarity among organizations around the different Internet advertising options that are available to them,” says John. “Bearing this in mind, ad publishers can help drive this growing phenomenon even further by investing more in generating awareness of the different advertising possibilities that are available online, particularly in relation to the flexible pricing and payment options that can be tailored to meet an organization’s specific budget and needs.”