e-commerce in the Middle East growing fast – 2014 Mastercard report

According to a special Mastercard Shopping Behavior Study released recently, e-commerce is finally making its mark in the Middle East, and how. The UAE leads the table with just above 50% of consumers reporting that they had used an e-commerce platform. With around 70% of the UAE's population connected to the internet, and with almost 75% with smartphones, that is no surprise. Saudi Arabia and Qatar are followers on the leader board with nearly 48% saying they have transacted online. The study was based on a survey of 3000 people.

Areas where people use e-commerce include shopping for air tickets and other travel-oriented services, DVDs, CDs and books, clothing and accessories and food items. These have always been e-commerce favorites – anywhere in the world.

Shopping transactions via mobile phones are also expected to grow strongly in the region, increasing by almost 20% in the next few years. That, again is not surprising with the smartphone-in-wallet ratios climbing steeply every month. Telcos are now tempting consumers with bundled data+handset offers, and this only means that there will be sharp increases in what we call m-commerce (e-commerce via mobile).

image courtesy Mastercard

What emerges as good news for the local e-commerce platforms is that more than 50% of those surveyed say that they prefer to shop from local websites rather than international platforms. Hello souq.com, not so happy amazon... Having said that amazon and ebay are still 3 and 4 on the top 5 list of shopping destinations in the region according to Paypal.

Earlier, those of us in the advertising, marketing and media industries have always side-stepped e-commerce citing reasons such as lack of consumer confidence in security, lack of access to information on products sold and delivery issues.

That perception has changed. Paypal tells us that the e-commerce market is set to grow from US $11.2 billion today to US $15 billion by 2015 – with over 30 million people in the region now shopping online. Speaking of Paypal, it is rather interesting to note that Cash on Delivery corners 80% of e-commerce shopping, with Payment Cards second at 15% and Paypal at 5%. Regionally, Paypal predict a growth to cornering 15% of this share by 2015. But COD (Cash at the Door) being king so far, it still points to two things – fear of online monetary transacting, and the need for checking the product at delivery or that tactile feel.

In a report on the ArabianGazette website, Aaron Oliver, head of emerging payments – Middle East and Africa, MasterCard said: “Well-developed internet infrastructure and the availability of secure online payment options means companies can expand their online presence to grow their business and diversify their customer base. For consumers, online shopping is convenient, fast and safe. When you consider the benefits, it is not surprising that more people are going online to make purchases.”

“The steady growth of online shopping trends in the UAE sheds light on the priorities of the technology-savvy new age consumer, who now enjoys the convenience, speed, value for money and safety of their transactions while shopping online,” added Oliver.

What will be crucial for Middle East e-commerce platforms to succeed in the future is to make the user experience both exciting and value-adding at the same time. Many of the local sites pay very little attention to usability, and UX and UI are greek to them. If I were to develop a whole new platform, that's where I would start. Keeping the experience simple, visually enticing and rewarding, clean, clear and informative – and memorable. Making one come back and buy again, and again.
See useful comment by usability expert Amol Kadam below...

How does this change the Middle East shopping landscape? Are brands going to jump on and perhaps open up their own stores online offering Direct-to-Customer benefits of lower prices and assured quality? Are major aggregator online retailers going to increase their product spectrum? Is it going to be a local rather than global game? We're not quite sure yet. And we'll deliver that news to you as and when it happens. It will be Cash on Delivery, though.

10 types of advertising and marketing agencies in the Middle East

The advertising, marketing and media agency and service scenario in the Middle East has evolved over the years. From a large behemoth ad agency model to various specializations today, the industry is being fragmented in certain segments and integrated in others. What type of agency or service will you need depends on the spectrum of work or assignment you need a solution for. Here are agency models in the Middle East region that are taking shape based on demand or market dynamics.

The Advertising Agency

has been around forever. Large advertising and marketing agencies have always held sway in the region, but lately many of them have developed or grown into large networks, diversifying their services into segments and narrow niches. In the Middle East the ad agency is synonymous with tv advertising, and there are those who dominate this most used form. Even with media agencies splitting out into their own, it has been tv that is the main focus of the larger agencies. Today, of course advertising agencies offer a wide spectrum of services including what we call 'through-the-line' advertising services such as tv, print, radio, online, PR, digital and online – but many chose to offer these divergent services under separate banners – mostly clubbed together under a 'network' or holding company banner. Most of the well recognized names in this category are part of larger international agency brands or networks, although here in the Middle East there are a few regional independents that have made their mark as well. Advertising agencies typically offer complete advertising solutions – from strategic planning through to execution of ads across various media.

Media Planning and Buying Agencies

basically offer the where, why and when of ad or message placement. They offer services such as strategic media planning, research and consumer insights, planning for reaching target audiences and buying space (the where aspect) on behalf of clients. Their main strength today in the region is media buying, because here in the Middle East, they are typically more adept at buying the space (in print, on tv, radio, outdoor, in social, in online etc) and offer better rates to clients based on negotiations with media suppliers.

PR Agencies

today are a lot more than just press releases and media relations. Today, the PR agency is a valuable ally in the Middle East marketing scenario, with several large and small PR agencies evolving and offering far more than what we knew as traditional PR. PR agencies were known for news announcements, article writing and placement, and organizing press conferences or events. Today, PR agencies offer crisis management, thin-slice specializations by market segment, B2B communications, B2G (Business to Government relation managing) and as well G2C (an important aspect – Government to Consumer or even G2B – Government to Business communications). And, of course, many believe that social media and community managing, engaging the consumer on behalf of the brand is also a PR challenge. Middle East PR agencies offer solutions including product launches, event management, social media solutions and often are being called on to deliver SEO solutions as well.

Digital, Interactive and Online Marketing Agencies

are really the new evolving must-have partnerships in the region. These agencies were typically founded to offer website development solutions but have grown their offering spectrum to include website content, analytics, social media including content management and community management, online advertising specializations including on-social ads, some levels of online media planning, SEO and SEM services, app development, gaming and advergaming and more. With the rapid proliferation of technology driven changes, better bandwidth, smarter smartphones, this is a agency model that's here to stay and make its mark. Some agencies, like the globally renowned RG/A call themselves 'Agencies for the Digital Age' rather than Digital Agencies – meaning their offering is wide spectrum and dependent on what today's consumer is demanding from brands...

Promotional and Marketing Services Agencies

have an important role in the Middle East market place. These offer services in retail and packaged-goods environments with specialized activities including advertising, in-store, couponing, contests, loyalty driven incentives. While many large ad agencies offer these services as well, smaller specialized agencies often steal the show because their pricing models set them ahead of the game. Marketing Services agencies are actually wider in scope than 'Promotional' agencies – and a wide spectrum marketing agency is capable of offering through-the-line advertising, branding, photography, design, printing, collateral material services etc.

Branding and Identity Agencies

are specialized in developing a brand's identity and all collateral communication devices needed to establish the brand. The develop services including brand naming, logo development, packaging, stationery, retail and store design, signage, environmental design and more – and often do the preliminary work in establishing a brand's look and feel in advertising, online presence such as websites and social media, annual reports and publication design.

Design Agencies

are typically smaller boutiques that offer specialized services in designing collaterals and/or specialized design challenges such as annual reports, event signage, tickets, website look and feel and more. While they can and often end up creating advertising communications, these agencies are typically geared to offer design only services rather than end-to-end solutions.

Social Media Agencies

in the Middle East aren't new any more, and several have already made their mark. This is a fast growth track agency model as increasingly brands are shifting budgets to social media. Social media marketing in the region is growing fast, and services offered by these specialized agencies include managing a brand's presence on YouTube, Facebook, Twitter, LinkedIn, Instagram, Pinterest and other platforms. Social media agencies design and develop a brand's content strategy, their look and feel across various platforms, manage communities and engagement and often also offer services in social search, connected shopping, blogging, content management and more.

Specialized Agencies

are agency models that either offer solutions based on segment or offering specialization. Today specializations include Direct Marketing (used to be a standalone important segment earlier), Analytics and Insights, Merchandizing,  Real Time Bidding, Data Mining, Search, Video Marketing (there's an unique YouTube marketing agency, believe me) etc. Specializations also include very narrow dedicated agency specializations like Commonwealth that is an agency that only serves one brand – Chevrolet – globally, or like McCann Health that is dedicated to the healthcare sector. Unique specialized agencies are carving out their own niche in the Middle East market and many brands are finding their specialized services unavailable with their larger mainstream or media agency partners. One such agency in Dubai is rbbideas – which is geared to provide User Experience and Performance marketing solutions including UX and UI – again a demand driven offering that's here to stay.

Can Do Agencies

are small-to-medium sized agencies that are incredibly nimble and can provide any of the above depending on how, where, and why you ask them. In this region, one outstanding example is Xische & Co who according to their website "combine management consulting, design thinking and technology to solve modern-day business challenges. This could mean building a business strategy, board-level advisory or financial modeling". Often based on a 'need-to-staff' insourcing talent from a wide pool of freelances as needed, these agencies are able to quickly turnaround their services and offering model to be able to bespoke themselves to need. They are extremely adept, often far less expensive, and most often very attentive to a brand's ask. Thus, this model is actually hyper-specialized because it's need or demand based and can form a model quickly and efficiently as needed. Some of these call themselves 'hybrid consultants', some call themselves 'idea consultants' and some 'integrated' and 'end-to-end'.

Whichever way the wind blows in the Middle East, both the two emerging trends are fighting tooth and nail. One is for the large agency model offering total integration and end to end solutions – sometimes as one or sometimes as a network. The other is for thin-slice specialization. And, there's rather little room in the middle.

Social Gaming is Winning: 375 million play games on Facebook every month

The numbers are big on Social Gaming. Every one seems to be playing games – on social media. Facebook, with 1.3 billion active users has revealed that 375 million Facebook users play at least one Facebook-platformed game every month! That's a lot of Candy Crush and Farmville.

Imagine this: 735 million "play this or that game with me" requests are sent out every day on Facebook alone. This is big news for both game developers and brands that have 'social gaming' in their engagement strategy. In this game of eyeballs, social is becoming a lot about gaming – and, yes, its across devices and platforms – meaning that it is something that's happening universally across iOS, Android and desktop.

An article in Mashable tells us that the average user who plays the same game on two or more platforms spends 3.3 times as much money on in-game purchases as people who just play on desktop, Facebook said. Cross-platform players are also far more likely to click on ads, and show other signs of engagement with the game.

Candy Crush Saga has held the title of most-popular game on Facebook for the past year. Not only that, it's the most popular Facebook app overall, according to analytics firm AppData. Candy Crush is closely followed by Farm Heroes Saga and Pet Rescue Saga. All three are products of King, which is preparing for its IPO, and has overtaken Zynga as the top Facebook games developer.

Here in the Middle East, we haven't seen a rush towards utilizing this phenomenon in brand-consumer engagement. Most of the well-followed games have been global in scale and approach. Perhaps its time for the Middle East marketer to take a fresh new look at social gaming...

Lean Forward and Lean Back: Using mobile in two ways. And the new 'first screen'

There's been a lot of talk about engagement via mobile in the advertising and marketing circles, but the overwhelming agreement is that mobile is clearly emerging worldwide as the new 'first' screen – or the device of primary engagement.

That does not mean that TV is dying. TV is and will be still around – because it's still about lean-back entertainment and mute consumption. Mobile is about here and now, about participation and most often about lean-forward. Although there's a lot of lean-back consumption happening as well on smartphones that allow for enhanced viewing on large screens and better definitions. 

Mike Parker, Chief Digital Officer at McCann Worldgroup says "Our recent Truth about Shopping study, that we presented at Mobile World Congress in Barcelona identified that there are really two 'mobile worlds' emerging.  One is about browsing and discovery – Pinterest, instagram are becoming the new 'window shopping' and catalog browsing.   Were as the other is about mobile on the go, or about action and utility – which e is so much more about doing things, performing tasks, getting business done." 

From an agency point of view, Parker adds "One thing is clear, that our clients are very aware of this shift to mobile usage and are asking questions about where and how to engage consumers in mobile.   We need to ensure that we have the knowledge to be able to incorporate mobile thinking on our strategies and work.  I believe strongly that it wont be long before the small screen is the main screeen, and all of the work we develop for our clients will need to be thought about in terms of displaying on small screens first…"

Here in the Middle East, this should be no surprise at all, because we have really high rates of smartphone adoption, and there are nearly two handsets in each pocket in some countries like the UAE!
There's a study that's bee done for the US market by Millard Brown that shows mobile emerging as the clear new first screen (no pun intended). The study reveals that Americans now spend 151 minutes per day on smartphones, next to 147 in front of TVs. But the numbers are even greater elsewhere. In China, consumers spend a whopping 170 minutes a day buried in smartphones, nearly double their TV watching time.

Users in Indonesia, the Philippines, Brazil and Vietnam also spend more total screen minutes on average than the U.S., predominately on mobile.The firm surveyed more than 12,000 mobile users, between the ages of 16 and 44, in 30 different countries, polling consumption of ads over TVs, laptops, smartphones and tablets. 

AdAge, covering the report tells us "According to the findings, the smartphone has emerged as the primary screen worldwide, but the firm also found users are watching multiple screens simultaneously, a global trend that is most-pronounced in China.

"It's still a recent phenomenon that people are tethered to their phones while watching TV," said Joline McGoldrick, research director at Millward Brown. "Their default is to type something into their smartphone."

The agency classifies simultaneous screen time into two key buckets: "stacking," when the consumed content is unrelated (mindlessly surfacing Facebook during a favorite show); and "meshing," when the content synchs up (searching for an actress in the show).
Across the globe, particularly in Asia, consumers prove much more willing to "mesh" than they do in the US. Only 30% of American screen time is spent soaking in related content. The rates in China, Japan, Indonesia and South Korea are all higher. Sixty percent of Thai users spend their screen time "meshing."

Ad Age also tells us that, in the report we discover that outside the US, consumers are also much more amenable to ads on their devices. Asian smartphone owners responded far more favorably to ads than counterparts in the US; and they were more attentive to ads splashing across their phones. When it comes to mobile ads, global smartphone users are also noticeably open to watching short videos. "Mobile video is just completely poised to explode," Ms. McGoldrick said. The agency's data, she noted, is "showing that other markets are utilizing micro-video more effectively."

Despite the rise in mobile screen time in the U.S., ad spending has failed to catch up. Smartphones and tablets claim around 44% of daily screen time in the U.S. But media spending for the two devices reaches just $18.9 billion, well short of the roughly $70 billion spent on television, according to eMarketer. (Millward Brown does not track global media spending across each device.). 

Reposted on BestinMe.com

Facebook: Organic reach for Brands is Way Down

Ever since Facebook changed the rules of brands engaging on the platform "to improve the user experience" brands – big and small across the world – are facing substantial declines in organic reach. It's simple. Facebook wants brands to put their money where their social mouth is. The decline is around 50% of what it used to be. That's a lot.

A study from Ogilvy (done a few useful months after the October 2013 change) shows that for larger brands with over 500k Likes, the decline is down to around 2% of all reach for February 2014. These large on-Facebook brands were pulling in above 4% before the platform made changes. So, the newsfeed algorithm change sends a clear message to brands on Facebook – start to pay for engagement and reach.

The changes don't target large Like or fan based brands alone. The organic reach decline is across both large and small fan based brands. So, Facebook's message about "improving user experience overall" is size neutral. 

A company called Sim Partners who provide social marketing solutions saw this affect them hugely. The extent of the decline prompted them to protest. "“We used Facebook advertising to help promote our page and content, but when we turned the ad campaign off, we saw a significant decrease in organic traffic to our page,” says Hawkinson, a partner at the company. “A small drop in organic traffic was expected with the loss of the ad promotions, but we experienced drops between 69% and 83%, numbers which are astounding.” a spokesman said on mashable.

Ogilvy Social feel that organic reach still has its place on Facebook, but feel that it will be around and keep its place for a "few months to a year".  This is not going to drive brands away from Facebook, but simply up the ante on increasing their media spends on the platform. Most brands engaging on Facebook here in the region provide very little media (spend) support on Facebook. They're going to have to come to the table with fatter wallets now. Not sure they'll "Like" that.

How brands balance in-house and outsourcing

There's a new trend that's seeing brands and marketers in this region seriously considering building in-house marketing capabilities rather than outsource. This is a key decision faced by brands – and finding the right balance – or making the right "smart sourcing" decision is key.

The digital marketplace is shifting, and increasingly, at least here in the Middle East, top marketing talent is becoming hard to find. Advertising and marketing agencies find it difficult to source talent that can help their clients' marketing functions, because the days of the 'all-round' marketer is long gone. Specializations have led to complexity. And while, within agencies and agency groups, there is a possession struggle as to who should be doing what, client-side marketers are opting for certain functions to be brought in house.

Most of these functions are "owned media" related – meaning, when it comes to some areas of content and brand driven PR, many marketers are bringing functions in. These can be in the areas of social media – every day content management being a key area. Other functions are SEO, Data and Analytics. Large brands are finding this an easy way to balance their spends, and also finding it relevant to bring these every day, Always-On functions home.

In a research done by eConsultancy, figures indicate that around 45% of respondents feel that more functions would come in-house than be farmed out to agencies and specialist consultants. P&G is  is leading the social newsroom concept driven by P&G boss Marc Pritchard, who believes that brand/agency teams today need to be more reactive and have a "newsroom mentality", to capitalize on the opportunities in today's digitally-enabled world. This is mostly an in-house act. You really can't newsroom out of an agency located somewhere else when the action is happening within the house.

We're not sure how this dynamic will affect this region, or when it might just quickly change, but for now, brands are becoming self reliant on some specialized marketing functions – and the success of this strategy really depends on the functions. Unless you are a huge brand with huge advertising bills to pay, you wouldn't really jump out and hire a creative director. That's your agency remit. But surely, when it comes to stand-alone analytics or social, you could find a balance.