RIYADH, 21 August 2007 -- Online advertisement spending in the Arab region is expected to grow in the next 5 years that would bring the total online ad value to about $142.08 million by end of 2011, a new study by Madar Research said.

Online advertisement spending among the GCC-Levant countries remains below 1 percent of the total globally, although Internet as a veritable marketing medium is building up in several sectors of the region.

The growth rate averaged of more than 50 percent took place over the past six years. However, by end of 2006, online ad spending in GCC-Levant raised 54.6 percent from the previous year that cost $18.71 million. Marketers saw this development as a promising sign that will push online ad spending to break the 1 percent share in the overall advertising market in the upcoming years.

Fahd Al-Sedairy, executive manager of interactive technical solution company MITSCO, pointed that in spite of spending on online, advertising in the 12 markets that constitute the GCC-Levant region remains very low. the online ad spending in the region has been incredibly increasing each year.

The market value of online ad spending in the Arab region was estimated at $1.5 million, but has grown to an average compounded rate of 52.29 percent over the past six years. "Spending of 50 percent in the next five years will push online ad to rise steadily," the general manager of MITSCO pointed to Arab news.

However, the expected growth in the next coming years as Madar Research survey highlighted is due to many factors; primarily to a comprehensively small base, in term of dollar investment and the volume of active online marketers. The other crucial factors that will facilitate such growth include the steady rise in the number of the internet users particularly broadband, the portal's abilities to achieve a high level of functionality and flexibility in term of pricing and internal efficiencies, as well as the acceptance of online entertainment and social work services by consumers.

But some marketer's believe that the expected growth value will remain minimal compared to international standard. However, overall online advertising market in the GCC-Levant region, which sustains 0.64 of the overall ad spend, is way below the international standard. For instance, US total online ad spending has reached $15 billion by end of 2006 as reported by IAB interactive advertising bureau. In contrast, in the GCC-Levant, online ad spending in the same year is estimated at $18 million.

Art director in an ad agency Yassir Ali to Arab News that ad agencies continue to downplay the online media. He said lack of trust dampened the interests in coming online. "One primary obstacle that prevents marketers coming online is their own media planning or buying agents who remain largely cynical about the online medium," he said. Marketers in the GCC-countries spent less than five percent of their overall ad budget on an online media in 2006, a surveyed by Madar Search showed.

The study said companies in GCC-Levant countries were still able to reach their target audience without shifting their campaign online. However, large bulk of advertising are done through traditional media (newspapers) which are mainly retailers (automotive, fashion retailers etc), James Griffith, brand marketing manager, told Arab News that the retailers in countries like Saudi Arabia, are looking for immediate advertising, so if a message needs to be delivered quickly, a newspaper is the tool to use as its circulation is much higher compared to Internet usage in this region.

"To move to online ad will be hard for companies in the Arab world as the region's total Internet users represents only 1.78 percent of the world's total users," he said.

But not all sectors are downplaying online. Some are competing to advertise online. For instance, the aviation travel and hospitality sector is the top online ad spender in the GCC-Levant countries in 2006, accounting for almost a quarter of the spending estimated at $4.68 million, followed by banking and finance sector with $3.28 million.

By Najah Alosaim

© Arab News 2007