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Direct marketing in Mideast could grow 6.7%

Direct marketing business in the region has a chance to grow to global levels in the next five to seven years, making the best of advertising budget cuts to lure advertisers to more direct and effective ways, said direct marketing expert Yousuf Hamidaddin, CEO, Acxiom Mena.

Translated to figures, this means an expected growth to a 6.7 per cent market share in the next five years, said Hamidaddin.

Speaking to Emirates Business, he said while direct marketing currently generates 10 per cent of the total GDP in the US and $2 trillion (Dh7.3trn) in incremental sales across all industries, the spend on this sector remains equivalent to one per cent of the total ad spend in the Middle East and North Africa region.

Hamiddadin, who established Direct Marketing Services (DMS), a firm specialising in direct marketing and later acquired by international interactive marketing consultancy Acxiom, said: "I believe the market is ready. We need to educate marketing managers, chief information officers and chief executive officers about the benefits of having a mature and robust data strategy."

Direct marketing services include analyses of customer bases, customer relationship management programmes, data management and operation data centres.

Hamiddadin said the private sector, including FMCG, hospitality, airlines and telecommunications companies, are probably the most advanced in terms of data management, a major component of direct marketing. But governments still lack programmes that allow capturing data and information."

Meanwhile, the decline in ad spend has made companies stricter on their budgets and expenditure, paving the way towards a structured change in the media and shift in companies' positions towards a more personalised interaction with customers, said Hamidaddin.

According to him, "the crisis has essentially led to fine-tuning" the budgets, revealing a growing tendency towards direct marketing because of its appealing measurability and reliability in proving conversion and recall rates, in addition to the impact on market share and growth in sales volumes. It is more so in this region, where the advertising environment is not fully mature, due to lack of measurement in the form of print audits and TV viewership measurement."

He said: "I believe that we have a potential to grow quickly, though we won't be jumping media, for sure."

However, Hamidaddin pointed out a number of challenges that face the growth of direct marketing practice in the Mena region.

He said: "Historically, most businesses in the region have been lacking the knowledge and awareness of what direct marketing is. Often, companies do have the data but are unable to translate it into useful information. They also tend to simplify the information they already have."

"The prevailing market culture here is more towards traditional advertising, where businesses feel more comfortable dealing with media buying agents than with direct marketing consultants specialising in database management or managing call centres. The second challenge is the need to identify the right talent, who understand the role of direct marketing in structured, data-driven branding and communication," he said.

Hamidaddin also complained about the lack of a proper regulatory environment for direct marketing, especially in terms of data privacy. "The regulatory framework is still in development, so in the meantime, companies are compelled to self-regulate their operations in terms of direct marketing, to stabilise this market, protect individual right and drive growth.

Launching and heading initiatives such as The Arab Direct Marketing Association, Hamidaddin said the association has a strong mandate to support stakeholders to work in an environment that would help mature a robust direct marketing industry and manage return on investment. He said the government membership of the association is allowing the industry to urge for the enhancement of regulations starting with postal and telecommunications regulatory frameworks.

Hamidaddin said Acxiom had developed experimental models to improve customer acquisition, relationships and retention.

By Dima Hamadeh

© Emirates Business 24/7 2010