Two decades ago, the internet was a new form of communication that advocates claimed would revolutionize every aspect of life by merging the real with the vast potential of the virtual. Skeptics, on the other hand, argued it would only have a slight impact, portraying proponents as delusional individuals living in a Sci-Fi movie. Fast forward 20 years and it seems that the advocates got it right. Not only has the internet changed communication, business and the consumption of information, it gave rise to the digital world, in which we now live.
It's no surprise then that digital advertising is growing and fast. Companies are no longer arguing about dividing their combined $1.5 billion (LE 8.7 billion) advertising budget solely among television, print and radio now that digital media marketing -- online and mobile -- is muscling its way onto corporate radars.
Though the amount of money being allocated to digital media in Egypt is rather humble, the rate at which it's growing, from zero only five years ago to around 3.5% now, is exciting industry players, as is the projected growth of domestic internet users. And if the trend falls in line with the Western world, then it will not be too long before it gives traditional media a real run for its money.
The paradigm shift
Although Egypt was about a decade behind the West when it came to rolling out of internet services, several initiatives implemented by the government in the early 2000s helped increase the penetration of internet services. Initiatives, such as the free internet model, lower ADSL prices, the introduction of WiFi and allowing the country's three mobile operators to sell mobile modems, played a pivotal role in increasing the number of Egyptians online.
Within a span of 10 years, the number of users jumped from just a few thousand in 2000 to 19.6 million as of 2Q2010, according to the most recent report issued by the Ministry of Communications and Information Technology. This number makes Egypt one of largest growing internet markets in the region.
With almost a quarter of the Egyptian population online, companies are finding ways to tap into the business opportunities that the virtual world offers by increasing their digital presence. And companies are not just creating websites showcasing products and services. Industry insiders say companies are actively working to engage their target audiences using this new frontier to expand their horizons in terms of new customers, export opportunities and potential international partners as well as to boost customer loyalty.
Hassan Kabbani, CEO of Mobinil, says the merging of the physical and the virtual worlds via the internet and mobile communications is creating an entirely different reality that businesses must take advantage of to stay competitive.
"Whether we like it or not, the virtual world is increasingly becoming integrated into the real one, and we, as a company, have to be ready to capitalize on this change," he says. "The internet is changing how everything is done at a very high speed. Those who capitalize on this new reality fastest are bound to be the biggest winners."
It's no longer enough to have a website, Kabbani notes. Instead, businesses need to use the medium to engage their customers through advertising, communication and online sales. "Companies have to realize that their customers are increasingly online using their computers or their mobiles, and they need to be there to capture the attention of their clients. That's why we have recently allocated a larger portion of our advertising budget to ensure a [strong] digital presence."
"Digital media offers companies a lot of advantages that traditional media simply can't. It offers affordability and flexibility at the same time. Whatever creative ideas you wish to try out, you can implement first online and receive the feedback from your customers immediately -- and you, as a company, can respond accordingly," says Kabbani. "You can also engage your clients like never before. So we do contests [on] Facebook and Twitter for example, which make Mobinil popular with customers who know they can win something for communicating with us. It used to be that including digital media work was a point of resistance. Now it is a main component of all of our communication work."
International content and service providers are on top of this new trend. Over the past three years, several of the world's biggest online players have increased their presence in Egypt, including Google, MSN and Yahoo, all in the hopes of tapping into the growing potential in the Arab world. Although the three have had some kind of presence in the country for some years now, all have made the strategic decision to raise their profiles in Egypt.
"The fact is Egypt along with Saudi Arabia and Morocco are among the highest growing markets in [the] region," says Ahmed Gamal-eldien, director of sales at Yahoo Egypt. "This is where the business is growing in terms of users and advertising and from a business perspective, we have to be here."
He says the changes in the market are being driven by the ever-growing number of internet users. "A huge percentage of the Egyptian population [is] under the age of 30 -- a prime target group for the digital world. At the same time, the penetration rate is still at around 20 million people out of 80 million. This is the up-curve of the trend and we need to be here. It is essential for all of us to increase the size of the pie. There's plenty of space for growth in every respect."
All about the ecosystem
Although the government played an essential role in increasing internet penetration, this was only one of the challenges. According to Wael Fakharany, Google regional manager of North Africa, increasing the number of Egyptians online was contingent on three factors: accessibility, availability and affordability. He says the number of companies now using digital advertising, the majority now being larger firms, has everything to do with the strides made towards addressing these three hurdles.
"The government began as early as 2000 with the introduction of programs to increase the availability of the internet in Egypt and to familiarize the public with it. But this was just the first step," Fakharany says. "There were other factors that needed to be present in order for the internet to be part of the daily lives of people as opposed to a luxury item reserved for the [well-off]. It was essential for the internet to be available for the masses through the introduction of computers in schools, social clubs and internet cafés. It was also important for this service to be available at prices that the masses can afford."
Less than a decade ago, the price of computers was a prohibitive factor preventing people from accessing the internet, he says. This slowly began to change through the reduction of prices by tech manufacturers coupled with government initiatives that allowed Egyptians to buy computers with payments of as little as LE 20 per month. At the same time, the actual cos
