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MENA Mobile Advertising 2013 Predictions & Analysis
Round Table with the PressDubai Media City
16/05/2013
TMT Predictions 2013Focus on Mobile Advertising
© 2013 Deloitte LLP. All rights reserved.3
• A fragmented smartphone user base
• Two emerging categories of mobile advertising – tablet vs. smartphones
• Mobile advertising has gained momentum but still remains under-monetized – particularly in the region
Technology, Media & Telecommunications Predictions, 2013#tmtpredictions
Key themes
© Deloitte LLP and affiliated entities. 4
“In 2013, Deloitte predicts that global shipments of smartphones,
defined as any device perceived by consumers as being a smartphone, will likely exceed one billion units for
the first time.
As the base grows, usage is likely to stratify further. The proportion
and absolute number of those using only the basic functionality of a smartphone – voice, text and photos – is also likely to rise.”
Technology, Media & Telecommunications Predictions, 2013#tmtpredictions
Smartphones ship a billion but usage becomes simpler
© Deloitte LLP and affiliated entities.
Even if smartphones were created equal, users are not
Q. Which one of the following best describes you?
“Late adopter” profile UK: “Early adopter” profile UK: Average number of devices: 3.5 Average number of apps
downloaded / month 1.87Average number of devices: 7.9 Average number of apps
downloaded / month 3.65
Number devices connected to the internet: 32%
Monthly expenditure on apps: £0.67
Interested in NFC: 12%
Number devices connected to the internet: 49%
Monthly expenditure on apps: £1.70
Interested in NFC: 45%
Phone ownership: 75% feature phone users
Age: 50% aged 55+ Phone ownership: 85% smartphone users
Age: 25% aged 18-24
Average number of smartphones owned 1.25
Sex: 60% female Average number of smartphones owned 1.51
Sex: 69% male
Tablet ownership: 5% Next phone 4G capabilities: 2% Tablet ownership: 37%
Next phone 4G capabilities: 33%
Late adopter
Early adopter
5
Technology, Media & Telecommunications Predictions, 2013#tmtpredictions
In Western Europe ~30% of smartphone users are not internet connected
© Deloitte LLP and affiliated entities.
“Mobile” advertising is dead. Long live tablet and smartphone advertising Not all “mobile advertising” is created equal
6
Total “mobile advertising”
Smartphones Tablets
“Mobile advertising” revenues
$8.3B $4.9B $3.4B
Search revenues/device
$1.70 $5.60
Display revenues/ device (incl. in-app)
$0.60 $7.00
Total/device $2.30 $12.60
Technology, Media & Telecommunications Predictions, 2013#tmtpredictions
“Deloitte predicts that in 2013, what is currently described as “mobile”
advertising will get split into two categories
representing two similar but distinct devices –
tablets and smartphones”
© Deloitte LLP and affiliated entities.
Facebook might have “figured out” Mobile Ads…
Join the #Deloittepredicts conversation7
Facebook Quarterly Mobile Advertising revenues ($ m)
~ 0
Mobile App Install Ad• 0.8% for mobile sponsored
stories
• 0.3% for desktop
Source: Facebook
© Deloitte LLP and affiliated entities.
...but the big bucks are yet to roll in
Join the #Deloittepredicts conversation8
138%
34%
80%
80%
96%
4,085
81%
8,407
13,581
Breakdown of Mobile Ad spending* worldwide by Region, 2011-2016 (USD Millions)
Source: eMarketer, Dec 2012 , Deloitte analysis
* Includes display (banners, video and rich media) and search; excludes SMS, MMS and P2P messaging-based advertising; includes ad spending on tablets
82%
Middle East accounted for 6% of the global smartphone shipments in 2012 but less than 0.1% of mobile advertising
© Deloitte LLP and affiliated entities.
In the Middle-East, stars are aligned for growth in digital/ mobile advertising
Join the #Deloittepredicts conversation9
Millenials constitute more than 50% of the population and will drive the engagement with digital platforms
Source: Ipsos, Deloitte analysis
Generation ZAge 10-14
Generation YAge 15-34
Generation XAge 35-44
Baby BoomersAge 45+
• Born with prevalent digital adoption
• Use of tablets and smartphones from early age - before PC/ laptops
• Never knew a world without internet and mobile
• Arab spring generation• Smartphones, Twitter,
Youtube, Facebook
• Technology use & work ethics generation
• Starting working during the first internet boom
• PC, PVR, MP3, Google, Facebook
• Work ethic & general respect generation
• TV remains main media consumption platform
• While Gen Y are the most active social networkers – 62% using them more than once a day…
• …while 48% of Generation X are on them once a day or more…
• …and only 35% of the “Baby Boomers”
Who they areand what they
use
Demographic importance
Social media usage
TV or Internet?
34% 37% 11% 18%
• More than half of Gen Z are already on social networks more than once a day…
Content consumption
and UGC
33 42
Internet TV
4320
Internet TV
31 28
Internet TV
2643
Internet TV
• Almost 50% are on Youtubedaily
• 75% of them have uploaded a photo on social networks
• 1/3rd on Youtube daily• 60% have uploaded a photo
• 13% daily on Youtube• 50% have uploaded a photo
More than once a day
Which media activity would you miss the most?
Less than once a day
(*)
(*) Includes 0-14 year old
© Deloitte LLP and affiliated entities.
Indeed digital advertising is projected to grow to 10% of total advertising spend by 2015…
Join the #Deloittepredicts conversation10
Source: Zenith Optimedia, Deloitte analysis
% f
rom
To
tal A
d S
pen
d
New
spap
ers
Te
levision
Out-o
f-Ho
me
Ma
ga
zines
Digita
lR
adio
4,933 5,282 4,741 4,908 5,154 5,488 5,954100%= 2012, % of total advertising spend
Evolution of advertising spend by platform – Arab Region Digital advertising share – Select markets
Low considering our research shows people spend 2 hours online per day and 3 hours watching TV
© Deloitte LLP and affiliated entities.
…but there remains significant growth potential for mobile ad regionally and globally
Join the #Deloittepredicts conversation11
Number of users (m)
68% of FB users access Facebook on Mobile but generating only 30% of revenues…
Facebook US UAE – Middle East
x10
x1.1Number of users (m)
x1.2
x40
Ad Revenues (m) Ad Revenues (m)
…despite mobile ads earing 2.5 more ad revenues per impression than desktop
Source: Facebook, IAB, Deloitte analysis
2013 Mobile Advertising trends in the Middle East
Pros Cons
WHY MOBILE SHOULD WORK
# Strong demographics – by large young and wealthy population
# Mobile is the main channel to the Internet in MENA – little bit lower in KSA + UAE
# In 2012, Smartphone end up holding 24% of the total sales in MEA
# UAE is very competitive market as the consumers tend to adopt new technologies early
# GCC great Telco infrastructures (3G)
BUT …
# Ownership structure of most of the brands - licensee (volume) / distributors
# Brand lifecycle in the MENA is still at the infancy stage - TOMA
# Digital era started late in MENA – most of the brands did not have compatible website for Mobile format
# From 1.0 (Push) towards 2.0 (Pull)
+80% of MENA brands
Old New Eco
NEW ECONOMY OLD ECONOMY
COMMERCIAL REAL ESTATE IS STILL BOOMING IN THE GCC#MALLCULTURE
Digital Mobile
FACTORS THAT WILL INFLUENCE MOBILE ADVERTISING
# Most of the MENA brands are starting to create relevant content online – but not necessary on Mobile format.
# “Plateau effect” on the digital work for majority of MENA brands.
# 350 millions of Arabic speakers / online Arabic content only 3% at the world stage.
# 2012 e-commerce: highest number of e-shoppers based in Saudi Arabia, with the highest penetration in Qatar & UAE – still at its infancy stage for the largest advertisers
Push Pull
MOBILE ADVERTISING REMAINS MORE PUSH RATHER THAN PULL
# Rare MENA advertisers have yet capitalized on the particularities of each 4 screen platforms and enhance the real opportunities offered by 2.0 (brand storyscaping) on mobile advertising
# In the Middle East, only 57% of the tablet owners are finding their apps useful (lowest of the world) – vs. the 97% in Asia
# Push strategy still the main tactic today for Mobile advertising #DATA #TOMA BATTLE
Time Adv.
ANOMALY ON MEDIA ADVERTISING - SORRELL
# Sorrell said that the main anomaly is internet and mobile where in the US it counts for about a third of time spent by consumers, but that the ad spend level is about 20%.
# Same diagnostic for the KSA, KUWAIT, QATAR, UAE markets
Brands Views
Brands Views
Brands Views
Brands Views
MENA Barriers
WHAT ARE THE MAIN BARRIERS TO NOT ADOPT FASTER MOBILE ADVERTISING
# Lack of expertise in the region
# Lack of accurate consumer data to know consumer preferences
# Lack of best practice case studies to show that it actually works = Direct ROI
# Early in the maturity cycle – still focusing on developing structure – website, apps, e-commerce platforms etc
# Lack of content creation ability internally
# The buzz about social media is still in the air – brands have not yet looked into optimizing mobile platforms
# Limited known effectiveness for B2B business
# Not strongly linked to revenue generation – may generate “moderate” revenue in the future
Grégory Bolle
Grégory Bolle
Round Table & Press coverage
© Deloitte LLP and affiliated entities. Grégory Bolle
© Deloitte LLP and affiliated entities.
Dubai: We are stepping into a world where smartphones and tablets outsell PCs. While regional advertisers are aware that the industry is going ‘mobile’, spend on digital advertising is still low, according to a recent report by global consulting firm Deloitte.“Digital advertising spend in the Middle East represents approximately eight per cent of the total advertising spend [this year],” said Emmanuel Durou, Deloitte’s director of strategy consulting.
The report, entitled ‘Middle East Technology, Media and Telecommunications Predictions 2013’, shows that digital advertising in the region accounted for 6 per cent of the total advertising spend last year. This creates a disparity between digital ad spend and the consumption of mobile devices, considering that the Middle East made up 6 per cent of global smartphone shipments last year, but has less than 0.1 per cent of mobile advertising.In addition, the gap between digital and television advertising spend in the region is still glaringly large, with the latter accounting for 40 to 41 per cent of total advertising spend, said Durou.
The region has many opportunities for mobile advertising, a term that considers smartphones and tablets. The UAE, for instance, has a strong telecoms infrastructure, with two major telecom service providers, a high smartphone penetration, as well as a predominantly young population with a big appetite for smartphones and tablets.
The tablet market in the Middle East and Africa was up 90 per cent year on year, closing with 1.36 million units in the fourth quarter of last year, stated the report.
Grégory Bolle
© Deloitte LLP and affiliated entities.
The demand for tablets was fuelled by low-cost options and the Millenials’ (the population below 25) engagement with social network sites and online videos on these devices, among other factors.
There are a number of factors that hamper the creation of digital content on mobile devices.
One factor is the ownership structure of brands. Licensees that manage a number of international brands are less likely to engage creatively with customers through advertising. Instead they “focus on sales and volumes,” said Gregory Bolle, BPG I Bates’ Head of Strategic Planning
Another challenge is the late arrival of some of the regional brands to digital platforms.Some brands “have only three or four years of online existence,” Bolle said.Meanwhile, advertisers in the region are still reliant on push strategies to communicate their brands to consumers. One way they can achieve that is through direct messaging or SMS, Bolle said.
Companies in the UAE allocate their advertising budget on display ads, such as banners on websites, which make up 60 per cent. The rest of the budget is spent on direct messaging or SMS, which accounts for 30 per cent, and search 20 per cent.
Digital advertising spend in the region is expected to grow at a compound annual growth rate of 35 per cent and make up 10 per cent of the total advertising spend by 2015, according to the report. Grégory Bolle
© Deloitte LLP and affiliated entities. Grégory Bolle
© Deloitte LLP and affiliated entities.
The Telecoms Media and Technology Predictions 2013 report states that mobile advertising spend will reach $8.3 billion this year globally, with $4.9bn geared towards smartphones and $3.4bn on tablets.
Digital advertising in the region accounted for about 6 per cent of total advertising spend across the Middle East, a figure that is "extremely low, not just from a benchmark point of view when compared to the UK at 32 per cent but from a logical point of view as well", said Emmanuel Durou, the director of strategy consulting at Deloitte.
The Middle East accounted for 6 per cent of global smartphone shipment last year, but less than 0.1 per cent of mobile advertising is coming to the Middle East, according to the report.In the UAE there are 3 million users of digital apps and 3.6 million internet users, yet mobile advertising revenues are just $7 million while internet advertising revenues are $280m. In the United States, where they have 220 million app users and 245 million internet users, mobile advertising revenues are $3.4bn according to Deloitte.
"Mobile advertising spend was $8m last year and this year we see it growing to $15m," said Elie Khouri, the chief executive of Mena at Omnicom Media Group."This will grow in the foreseeable future, but it is still well below the level it should be at. Monetising mobile is not just a local or regional issue, it is a global issue with even the likes of Facebook and Twitter facing problems.“
In the Middle East, people spend on average two hours a day on the internet and three hours on TV, but the gap between digital and TV advertising spend is substantial with more than 40 per cent of advertising budgets spent on television. Grégory Bolle
© Deloitte LLP and affiliated entities.
"The digital era started late in Mena," said Gregory Bolle, the strategic planning head at BPG Group. "For some brands they have only just 3 or 4 years of online existence. In 2008 we just started exploring internet and digital opportunities with most of the local brands.“
According to Bolle, there are three critical phases for digital advertising. The first is a robust telecoms infrastructure and high laptop, Smartphone &tablet penetration rates. The second is high quality local content and the third is e-commerce.
"We are only just entering phase two in the region," said Gregory Bolle. "We are not late, it is just that the traditional channels [TV and print] are still doing very well in the region, also the mindset is different from the US and Europe.“
Advertisers in the region are still relying on push strategies when it comes to digital advertising instead of pulling customers into their brands.
Generally most companies in the UAE allocate 15 per cent of their advertising budget on digital of which 12-13 per cent goes towards internet advertising and 2-3 per cent on mobile and tablet. About 60 per cent of this is spent on displays like banners on websites, 30 per cent on direct messaging, like SMS and 20 per cent on search. Globally, however, search accounts for 62 per cent of digital advertising budgets, 10 per cent on direct messaging and 28 per cent on display.
"Mobile advertising is a huge opportunity that is still untapped said Durou.
Grégory Bolle
Emmanuel DurouDirector | ConsultingME TMTDeloitte & Touche (M.E.)Building 3, Level 6, Emaar Square, Downtown DubaiP.O. Box 4254, Dubai, United Arab EmiratesTel: +971(0) 4 376 8602 | Fax:+971(0) 4 376 8899 | Mobile +971 (50) [email protected]
Grégory BolleStrategic Planning Head BPG GroupLevel 6 MAF Tower Deira City CenterPO Box 3294 Dubai UAET +971 4 295 3456 | F +971 4 295 8066 | M +971 50 435 4846@GregoryBolle | [email protected] | www.batespangulf.com
