Digital media in mena

2011
Digital Media in MENA

Paritosh Kashyap

1/1/2011


Introduction

The competitive dynamics of the media industry is getting transformed throughout the world.

All across the globe, the popularity of traditional media channels such as print media, TV

broadcast and Radio broadcast is going down and is getting replaced by the digital media.Not

only is the digital medium encroaching upon the space of the traditional media but also

changing the dynamics of revenue model so far enjoyed by the traditional media.

In the digital media itself lot of changes are happening. The traditional boundaries between

media companies, telecom operators, handset manufactures and internet service provider is

getting blurred. Everyone is encroaching upon each other’s space.

The digital media in the Middle East and North Africa (MENA) is still in its nascent stage, as

compared to other developed parts of the world such as Western Europe and North America

however given the fact that huge investments are made in ICT infrastructure- internet and

mobile penetration are increasing at a rampant speed and a new wave of political change is

happening all across the region- digital media has a huge potential to grow in the coming time.

The following reportintents to do an analysis of Digital media, its present state and its future

prospect in the MENA region.

Advantages of digital media:

Digital media offer some unique advantages which traditional media such as TV & Radio

broadcast and print media cannot offer. Some of the unique advantages are:-

Economical: Digital media is very economical. Having a brick and mortar shop will cost

a lot; in contrast having a web presence is much cheaper. It does not cost much to

develop and market a website.

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Curtails geographical barriers: One very remarkable feature of digital media is its

accessibility from any part of the globe. Geographical barriers often create challenge for

traditional media sources such as newspaper and magazines in disseminating

information, but digital media with virtual presence could be accessed from any part of

the world.

Content can be consumed as well as produced at the same time: With the help of web

2.0 platforms, content can be viewed/consumed as well as produced at the same time.

Web 2.0 provides two way communication platforms. Not only does it communicate

directly to the end users but also allow the consumers to share their opinion, feedbacks

etc.

Consumer Insights: With the help of web based analytics, digital media can give a lot of

detailed insights, pertaining to consumer behavior and consumer demographics-

consumption pattern, duration, geography etc. One remarkable feature is that, all such

valuable data could be obtained at a negligible cost.

Target Marketing: Digital media helps in capturing the target audience.

Disadvantages of Digital Media:

Along with advantages digital media also has its own disadvantagessuch as

Revenue from advertisements is not easy in the digital media. It’s easy to have a web

presence/ digital presence, but it is as difficult to generate revenue out of it.

Monetization of digital media is a challengethroughout the globe.

Generating revenue always takes a large amount of time. Revenue follows after creating

a sizeable customer base. For instance even Facebook took five years to break even. The

revenue from marketing could be generated only after securing huge customer base.


Not everyone is very comfortable with digital media, especially when it comes to money

transaction. A large number of individuals are wary of transferring money over the

internet. More over the web medium has also been the source of lot of frauds.

Consumers expect a lot of free content on the web. When it comes to paying for the

content, many individuals are not very willing to pay. They just want stuffs for free.

DIGITAL MEDIA: Global trends

Globally more than 50% of the internet consumption comprises of 5 nations: USA, China, India,

Brazil and Russia. As described earlier a lot of creative rearrangements are happening in the

media sector across the globe. Some of the major global trends in the digital media are as

follows (Morgan Stanley, 2009)

E-commerce: major products which are purchased online globally are- computer

products, electronic items, event tickets, hotel bookings, tour packages, books,

music/video etc, toys etc.

Consumptions of internet on mobile are catching up fast with consumption on desktop.

According to Morgan Stanley report, by 2013-14 more users will be consuming internet

via mobile devices rather than desktop computer.

Social Media: Social media users are surpassing the regular email users. People refer

spending more time on social media rather than on regular emails.

Adoption of newer and better telecom services such as 3G will further consolidate the

stronghold of mobile medium.

Digital media in Middle East


In contrast to other parts of the developed world, digital media in MENA region is still not very

matured; but is surely one of the sectors, which is poised for a high growth in the coming time.

As a region MENA has its own advantages andchallenges. Presently there are 65 million

internet users in the MENA region which is expected to increase to 80 million by 2012. (AMIR,

2011) Other than global heavyweights such as Google, Yahoo, Facebook and regional players

such as Kooora, Maktoob etc; the region is also witnessing the arrival of online marketing firms

such as Al click, Eastline Marketing etc.

Advantages of Middle East

The Socio Economic structure of the entire Middle East has lot of inherent advantages, which

can boost the growth of online media companies in the region. Some of them are (Booz &

Company, 2009):

A uniform, homogeneous market: The Middle East might have many small nations,

across the region but all share the common Arab heritage and enjoy high degree of

commonality across various socio-cultural dimensions. The Middle East could be

considered as a homogeneous mixture of around 300 million individuals. The idea of

uniformity becomes more apt in case of digital media because; unlike regular media

such as print and broadcast which are restricted to national boundaries due to

regulatory barriers; online media can have a pan Arab presence.

High mobile penetration: Large amount of digital contents are being viewed with the

help of mobile devices. MENA region enjoys a high degree of mobile penetration with



states like UAE and Saudi Arabia enjoying a mobile penetration of 200 and 125

percentages.

High literacy rate: Many of the MENA states are taking education, high up on their

agendas. Some of the MENA states enjoy a high degree of literacy. For instance:

collectively the six gulf state enjoys a literacy rate of more than 75 percentages.

Several MENA nations are extremely rich: Many of the oil rich MENA nations,

especially Gulf States are extremely rich and enjoy high GDP per capita. For instance:

Qatar, where per capita GDP is around US $ 78,000. By 2015, Gulf States and Egypt are

expected to have 13 million households in middle to high income brackets.

Investments in the ICT infra-structure: MENA nations are realizing the urgency of

economic diversification. One thing which is high up on their agenda is ICT

infrastructure. All across the MENA huge investments are being made to develop state

of the art ICT infra structure.

Demographics: Younger generation is more inclined towards the digital media.

55percentages of Arab population is less than 25 years of age which shows that there is a

huge potential for the digital media to flourish in the Arab world.

Challenges for digital media in Middle East

Along with advantages, Middle East also has lot of challenges providing hindrances to the

growth of digital media in the sector.



Low broad band connectivity: It is expected that broadband connectivity will increase

in the coming years; but the present penetration of 12 percentages is much lower than

other developed parts of the globe.

North America 64%

Western Europe 61%

Eastern Europe 23%

Latin America 20%

Asia Pacific 19%

MENA 12%

Africa 2%

0% 10% 20% 30% 40% 50% 60% 70%

Fig 1: broad band penetration in different geographies. Source: Arab Media Outlook 2009-13

Dissimilarity in ICT infrastructure across the region: Notwithstanding thecommon

socio cultural heritages, there is a high degree of economic asymmetry across the whole

region. There are various economic entities- cash rich small Gulf States, North African

bigger states like Egypt and Morocco which are comparatively more integrated with the

world economy, developing states like Jordan and Syria with almost no oil and reserve

and states like Libya and Algeria with high oil deposits but high population as well. This

asymmetry is also reflected in a wide range of economic parameters such as mobile

penetration, internet penetration, broad band connectivity, kind of network technology

being used etc. For instance, in emerging markets like Syria and Sudan broadband

penetration is less than 1 percentage; in Morocco and Jordan it is 12 and 15 percentages



respectively where as in rich Gulf States like UAE and Qatar it is 69 and 84 percentages

respectively. This inherent heterogeneous nature of the ICT infrastructure across the

region makes it difficult for organizations to adopt a single digital marketing strategy.

(Arab media outlook 2009-13, 2009)

Gap between presence and revenue: business models do not make any sense, until

unless it cannot guarantee constant stream of revenue. In the MENA region, companies

are finding it tough to en cash their digital presence. For instance: 85 percentages of

Arab newspapers have digital presence but digital media constitutes just 2 percentages

of their advertising revenue.

90
232
Mobile Content
Online Content
753 Mobile Advertising
7
Online Advertiisng

Fig 2: Shows the breakup of digital media revenue (in US $ million) in the MENA region, for

2009. (Source: Booz & Company)



6%
8%

Rich Media
25% Email
61%
Search
Display/ Sponsorship

Fig 3: Percentage wise break up of online advertisements in MENA region. Source: Booz &

Company, 2009.

7%

Display
SMS/MMS
93%

Fig 4: Percentage wise break up of mobile advertisements in MENA region. Source: Booz &

Company, 2009.



Online shopping activity is abysmally low: according to a research conducted by

Neilson (comprising of 1,246 individuals from four countries- UAE, Egypt, Lebanon and

Saudi Arabia) less than 1 percentage of individuals prefers engaging themselves in

online shopping. (Arab Media Outlook 2009-13 , 2009)

Monetization of the online content, which is somehow a challenge all across the globe, is

quiet challenging in the MENA region. The prevalence of a cash based culture and low

penetration of credit & debit card penetration makes it more difficult. (Arab Media

Outlook 2009-13 , 2009)

Internet consumption behavior of MENA users

In order to analyze the prospect of digital media in MENA region brief overview of internet

consumption behavior of people from the region, might be helpful. In order to realize the same ,

research conducted by Effective Research in conjunction with Spot on PR have been refered.

(The research was conducted over a base of 2587 individuals, out of which 69 percentages

comprised of Egyptians and 20 percentages comprised of individuals from GCC. )

News Content 43%
Chatting 15%
Social Networking 14%
Emails 8%
Online Games 6%
Watching Videos 4%
VOIP Calls 3%
Downloading 3%
Listening Radio 1%

0% 10% 20% 30% 40% 50%



Fig: shows the common activities on internet in the MENA region. Source: Neilson, the survey

comprised of 1,810 individuals from 4 countries- Egypt, Saudi Arabia, UAE, and Lebanon.

Education level of individuals surveyed:

Percentages of respondents
57%
60%
50%
40%
30% 23%
20% 12%
10% 5%
1% 2%
0%
No Primary Secondary Graduate Post Trade
Education Graduate Certificate

Fig 5: shows the education level of respondents surveyed in terms of percentages. Source:

Effective Research and Spot on PR.

Place of internet access

Percentages of Respondents
77%
80%
70%
60%
50%
40%
30%
14%
20%
5% 2%
10% 1%
0%
Home Work Internet Education On the
Café Institution Move



Fig 6: shows the place of access of internet of the respondentsin percentages. (Source: Effective

Research and Spot on PR, 2010)

Respondent’s, Usage of Social Media Platform:

koora.com 22%
Maktoob 13%
twitter 9%
Linkedin 5%
Jeeran 5%
NETLOG 18%
Facebook 70%
Other International Sites 15%
Other Local Sites 13%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Respondent’s daily consumption of other media channels.

Mobile Application 54%

Internet 88%

Magazine (weekly) 47%

Newspaper 43%

Radio 27%

TV 71%

0% 20% 40% 60% 80% 100%



Fig 7: shows percentage of correspondents consuming various media channels on a daily basis

(in case of magazine, weekly figures have been taken.) Source: Effective Research and Spot on

PR.

Disposition towards Internet Marketers:

Highly Negative 6%

Negative 9%

Neutral 36%

Positive 32%

Highly Positive 17%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Fig 8: respondent’s disposition towards internet marketers.

Important Conclusions:

Important conclusions, drawn from the report are as follows:

Majority of internet users from the region seems to begraduate or above. Hence it

indicates a strong correlation between education and internet consumption.

Internet is primarily used from home.



Facebook seems to be very popular across the region. The tremendous popularity of

Facebook is followed by other local brands such as Kooora, Maktoob etc.

Internet users from the MENA region simultaneously use a wide range of other media

channels as well, such as newspaper, magazine, radio, TV, mobile applications etc

simultaneously .

Challenges for Digital Media:

Less ad spending on digital media: So far digital media contribute a miniscule share of

just 2 percentage of overall ad spending in the MENA region. In 2008, the digital

advertisement investments per capita in the MENA region was just US $ 2 compared to

the global average of US $ 27. (Booz & Company, 2009)

Per Capita Investment in US $

UK 96
USA 64
France 22
Russia 4.9
Brazil 2.2
MENA 2
China 1.9
India 0.15

0 20 40 60 80 100

Fig 9: shows per capita digital ad spend across various countries in 2008. Source: Booz &

Company, 2009.



Internet penetration is comparatively low: internet penetration is increasing in the

Middle East region at a very fast pace and the present penetration of 28.8 percentages is

higher than the global average of 26.6 percentages. Although when compared with other

developed parts of the globe, it appears to be very low.

Internet Penetration in
Percentages

North America 76.2

Europe 53

Latin America 31.9

Middle East 28.8

Asia 26.6

Africa 8.7

0 20 40 60 80

Fig 10: shows internet penetration in various geographical regions (Source: Internet World stats,

2010)

Social media angle

The report on digital media in the MENA region will be incomplete without understanding the

“Social Media” angle. Social Media is one of the fastest growing segments of media in the

MENA. Not only it is essential for business in present as well as in future; but also plays a

pivotal role in socio-political sphere of the region. The best exemplar could be the latest Arab

revolution, which started from Egypt & Tunisia and spread across the entire region. Social

Media sites such as Facebook and Twitter played a major role in the revolution, eventually

forcing the incumbent governments to step down. In a wide range of activities such as- creation



of popular pages such as “We are all Khalid Said”, were aimed at- addressing political concerns

of the common people, communicating across the user network to stage a mass protest on 25th

January to post revolution analysis and public opinion building on key issues.

Facebook

Facebook or FBis themost popular, social media in the MENA region, very much in line with

the general popularity, it enjoys across the globe. The region has somewhere around 15 million

FB users, with GCC countries accounting for some 5 million users (Spot On, 2010) Other than

English, other popular versions of FB are French and Arabic.

2%

23%
English
French
50%
Arabic
Other

25%

Fig 11: Shows the percentage wise break up of FB users in the MENA region. Source: Spot On

The Arabic interface has been added in March, 2009. It helped FB capturing a whole new range

of user segment. With a year of its inception, it added 3.5 million users to the existing base. The



French version of FB has a total of 3.7 million users and is more popular in francophone

countries such as- Algeria, Morocco and Tunisia etc. The top five user communities of FB in the

region are- Egypt, Saudi Arabia, Morocco, Tunisia and UAE. These five countries comprise of

70 percentages of FB’s market in MENA region.

22%
Egypt
30%
Saudi Arabia
Morocco
UAE
15%
Tunisia
10%
Others
11% 12%

Fig 12: percentage wise break up of FB using population of various MENA nations. Source: Spot

On

Conclusion

As discussed earlier, the online media/digital media segment in Middle East is in its nascent

stage but the future seems to be bright. The following factors will drive/influence growth of

digital media in the future:

Young Demographics will influence growth: one of the biggest advantages of MENA

region is its young demographic. More than 55 percentage of population is aged less



than 25. This young generation will be heavily influencing the growth of digital media

in the region.

Broad band penetration: broad band penetration, especially in comparatively bigger

states like Egypt and Saudi Arabia will drive growth of digital media in the region.

Europe could be a role model: Digital media has enough presence in both social as well

as economical spheres of the region however the advertisement revenues are still not

very high. In this regard Europe of 2000s could be perfect role model, when the

advertisements revenue where low there as well. But the growth of broadband and

mobile penetration pushed it further. With increasing broadband penetration and

adoption of better mobile technologies, MENA can undergo the same growth

trajectories.

360 degree branding: Like other parts of the world, the future of media in the region,

lies in having a 360 degree presence- communicating with the audience at a wide range

of touch points, such as print, TV, radio, outdoors, mobile, web etc. The brands need to

continue communicating through regular media channels but at the same

timeweb/digital presence is required as well.

Arabic and local Content: in order to digital media (as well as other media sources to an

extent) to succeed, it is essential to develop local content. According to survey conducted

by Neilson, 62 percentages of respondents prefer browsing the web in Arabic rather than



English; but the region has dearth of Arabic/local digital content. (Unlike newspaper,

where 90 percentages of content are local in nature). In spite of the fact that international

brands like Yahoo and Facebook enjoy a high degree of popularity in the region due to

their brand value and 1stmover’s advantage; penchant for local content both on and off

the web cannot be discounted.In order to succeed in the coming future, it is essential to

emphasis on the development of more and more local content. This requires funding,

govt. support as well as developing local talent. (Arab Media Outlook 2009-13, 2009)

Creating right cultural environment for web entrepreneurs to succeed: In order to

develop the online media sector in Middle East, a possible step could be developing

something similar to Silicon Valley. This will help nurturing young talents to develop

web based start ups. In the MENA region one possible role model could be Jordan,

which is taking similar initiatives. Jordan is transforming itself into a knowledge

economy by- generating 6000 ICT graduates every year, attracting venture capital for

web based start ups and taking a comparatively tolerant stand on media sector

including the blogosphere. (Arab Media Outlook 2009-13, 2009)

Nurturing Talent: one of the most essential pillars for developing the digital media in

the region could be having the right talent base. Though many of the Arab/ Gulf

countries are taking initiatives, there are further room for improvement. The students

from the region need to be trained on a wide range of subjects such as- digital media,

gaming, animation etc.

References

1> Morgan Stanley, 2009, Internet trends report



2> Arab Media Outlook 2009-13, 2009, simulating local content in Arab Media Industry, p-

169

3> Arab Media Outlook 2009-13, 2009, simulating local content in Arab Media Industry, p-

172

4> AMIR, March 2011, P-3

5> Booz & Company, 2009, Winning in MENA new media scene, p-

6> Booz and Company, 2009, Winning in MENA new media scene, p-17

7> Arab Media Outlook 2009-13, digital media, p-68

8> Spot On, 2010, Middle East and North Africa Facebook demographics.

9> Arab Media Outlook 2009-13, digital media, p-169.

10> Arab Media Outlook 2009-13, digital media, p-181


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