The search engine giant promises technology expansion, skill transfers and reinvestments to boost the nation's internet commerce
In an unprecedented move, the Ministry of Communications and Information Technology (MCIT) signed a $10 million agreement with internet giant Google.
Dr. Hoda Baraka, first deputy to Egypt's Minister of Communications and Information Technology, and Vint Cerf, Google's vice president and chief internet evangelist, signed the three-year agreement at a special luncheon at the end of June, hosted by the US Chamber of Commerce, the Business Council for International Understanding, and the American Chamber of Commerce in Egypt.
The MCIT initiated the agreement, offering a proposal to Google for the provision of an advertising platform to promote Egyptian products and services in a number of internet sectors: technology, investment, trade, travel and tourism. The MCIT, Ministry of State for Administrative Development, Ministry of Trade and Industry and Ministry of Tourism are the main beneficiaries of the agreement, which the MCIT drew up during brainstorming meetings early this year.
"The progressiveness and forward thinking of the Egyptian government in turning to the private sector greatly impressed us at Google," says Mohamed Gawdat, Google's regional manager for Emerging Markets in Europe and Africa (EMEA), "and so the whole thing was wrapped up in a couple of months [] In terms of benefits to both Egypt and Google, I believe that this is the best agreement ever made."
In addition to promoting Egypt online, the agreement also obliges Google to reinvest 25% of the $10 million back into the Egyptian economy, supporting domestic business and workforce development, and developing Egypt's IT sector.
Ad World
As the world's largest internet advertising company, Google is taking advantage of the economic slowdown to push online advertising as a significantly less expensive alternative to traditional media. Although still very much in its infancy in the Middle East -- estimates say it accounts for less than 1% of total advertising spending -- online advertising accounts for 20% of total advertisement spending in developed economies. Globally, ad spending is predicted to grow by approximately 5% in 2010.
According to Dr. Tarek El-Saadany, advisor to the MCIT; "the wide, global reach of the internet as an advertising medium and knowledge base can ensure that we rightfully introduce our services and products to the whole world."
Google will work with the Egyptian government to create advertising campaigns of a global nature, targeting audiences in the United States and Europe as well as in other Arab countries. MCIT Minister Dr. Tarek Kamel will coordinate the agreement's implementation with the ministers concerned.
"We will work with the government to set immediate targets they want to approach," says Gawdat. "We work on preset targets but [change] day to day based on the exact objective of the government and what they want to achieve. We're identifying the exact targets of the five Egyptian sectors and the optimum way to achieve those targets.
Gawdat explains, "If they want 10,000 people to see a certain website about Luxor from certain countries at certain times of the year, Google has the tools to target such specific individuals." The nation's key tourist sites, a multitude of package travel offers and EgyptAir flights will be promoted on the web via a combination of text and display ads.
Google will showcase Egypt on the web to everyone who is searching for something the country wants to promote, says Gawdat, For example, with its low costs and qualified workforce, Egypt has recently become a major destination for global outsourcing, ranking sixth in AT Kearney's 2009 Global Services Location Index, and first in the region.
"Google has the largest content providers in the world," continues Gawdat. "So in articles that are relevant to outsourcing, in whichever countries Egypt chooses, we could show relevant ads. For example, if a German businessman is reading an article about outsourcing, there will be a link somewhere that pushes him to an Egyptian organization."
The campaigns, which aim to strongly establish Egypt on the international online marketing map, will, according to an MCIT press release, "promote the country's software development industry, business process outsourcing (BPO), call center industry, valued added services (VAS) and e-government." The deal will also promote foreign investment, exports, trade fairs and high-level trade missions, according to the release.
Giving Back
The agreement seems to mutually satisfy both sides, but other than gaining a major client, what benefits does Google get that justify reinvesting $2.5 million (LE 14 million) in the Egyptian economy?
"The agreement fits into our mission, which is to organize world information and make it universally available," says Gawdat. "[Our] investments in Egypt will lead to business [benefits for] Google but also the growth of internet in the [Arab] world by promoting entrepreneurship and new ideas." This, he explains, will in turn bring even greater benefits to Google.
"In the last three years, we've invested very heavily in the Arab world with the aim of improving internet infrastructure in the region -- fixing the plumbing, if you will." During this period, adds Gawdat, Google did not set a revenue target for any country in the region other than the UAE.
"Instead, what we wanted [] was to grow the internet economy in the Arab world, which is unfortunately lagging," he says. "When we help local businesses get online, they benefit from the digital economy and create sustainable economic growth."
In September 2007, Google opened an office in Egypt, paving the way for more investment in the region. Google also recently launched its Arabic services including Google's search engine, Google News, Gmail, and Google Earth. Believing that the region has great potential to generate revenue on a regional and global scale, Egypt was chosen as Google's regional hub, says Gawdat, since "not only does it have the biggest consumer base, but Egypt is also a big influence and trend-setter, the predecessor when it comes to internet content, usage and innovation."
In recent years, the Egyptian government has focused heavily on the information technology (IT) sector, improving technological infrastructure and supporting educational and telecommunications projects. Growing and developing a digital advertising industry in Egypt, and consequently an internet economy, is in its best interests.
"We in the MCIT have the mandate to build the IT industry in Egypt," says El-Saadany. "We believe that up until now we didn't tap [into] the online ad industry. This is a huge industry that, if we start creating the right infrastructure and companies around it, can definitely have huge returns and yields to the economy of the country."
Through the agreement, Google has pledged to transfer technology and skills to the Egyptian market, with the aim of improving the IT industry in the region.
"We will focus on the training and development of Egyptian professionals," says Gawdat, "and look for innovative small and medium-sized enterprises (SMEs) and young entrepreneurs who can deliver new ideas to the internet, so as to invest in those start ups."
Google has already been offering training in Egypt since 2007, when it partnered with the Ministry of Education to provide 11 million Egyptian students with free access to Google services.But the new training will go beyond that, offering technical support to local companies working on digital advertising and training them to carry out promotional and marketing campaigns online. Google will collaborate with the Information Technology Industry Development Agency (ITIDA), an MCIT affiliate, in its technology incubation and professional development programs for university students with regards to digital advertising.
Google hopes that this agreement will herald a new age of web presence and online usage for Egyptians. The main challenge it sees is internet readiness, but the hope is that once ad spending increases, hopefully so will e-commerce.
"I predict that we will start to see the beginning of [e-commerce] in Egypt within the coming two to three years," says Gawdat. "e-commerce never made it in the Arab world, but using the internet to promote your interests and export your products, [with] many SMEs now going online, will hopefully [change that]."
During the signing of the agreement, Minister Kamel predicted that Egypt's information technology-enabled service exports to the US would increase to $1.1 billion (LE 6.16 billion) by 2010. According to a recent Business Monitor International report, total IT spending in Egypt is expected to increase from $1.2 billion (LE 6.72 billion) in 2008 to $1.9 billion (LE 10.64 billion) by 2013.
"I think the symbolic meaning of this agreement is very valuable," says Gawdat. "It is much more than an advertising agreement between the Egyptian government and Google. In the grander scheme of things, the bigger accomplishment is the ability of Google and the Egyptian government to work together on the same target of accomplishing [the development of] an internet economy. I have no doubt that it will completely change the scope of the internet in Egypt, and it is the single biggest agreement in the Middle East with such massive potential."
By Ethar El-Katatney
© Business Today Egypt 2009
