Mobile advertising mena bpg bates slides & deloitte tmt may 2013

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Mobile Advertising

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Mobile advertising mena bpg bates slides & deloitte tmt may 2013

  1. 1. MENA Mobile Advertising 2013Predictions & AnalysisRound Table with the PressDubai Media City16/05/2013
  2. 2. TMT Predictions 2013Focus on MobileAdvertising
  3. 3. © 2013 Deloitte LLP. All rights reserved.3• A fragmented smartphone user base• Two emerging categories of mobile advertising – tablet vs.smartphones• Mobile advertising has gained momentum but still remainsunder-monetized – particularly in the regionTechnology, Media & Telecommunications Predictions, 2013#tmtpredictionsKey themes
  4. 4. © Deloitte LLP and affiliated entities.4“In 2013, Deloitte predicts thatglobal shipments of smartphones,defined as any device perceived byconsumers as being a smartphone,will likely exceed one billion units forthe first time.As the base grows, usage is likelyto stratify further. The proportionand absolute number of those usingonly the basic functionality of asmartphone – voice, text andphotos – is also likely to rise.”Technology, Media & Telecommunications Predictions, 2013#tmtpredictionsSmartphones ship a billion but usage becomessimpler
  5. 5. © Deloitte LLP and affiliated entities.Even if smartphones were created equal, usersare notQ. Which one of the following best describes you?“Late adopter” profile UK: “Early adopter” profile UK:Average number of devices: 3.5 Average number of appsdownloaded / month 1.87Average number of devices: 7.9 Average number of appsdownloaded / month 3.65Number devices connected to theinternet: 32%Monthly expenditure on apps: £0.67Interested in NFC: 12%Number devices connected to theinternet: 49%Monthly expenditure on apps: £1.70Interested in NFC: 45%Phone ownership: 75% featurephone usersAge: 50% aged 55+ Phone ownership: 85% smartphoneusersAge: 25% aged 18-24Average number of smartphonesowned 1.25Sex: 60% female Average number of smartphonesowned 1.51Sex: 69% maleTablet ownership: 5% Next phone 4G capabilities: 2% Tablet ownership: 37% Next phone 4G capabilities: 33%Late adopterEarly adopter5Technology, Media & Telecommunications Predictions, 2013#tmtpredictionsIn Western Europe ~30%of smartphone users arenot internet connected
  6. 6. © Deloitte LLP and affiliated entities.“Mobile” advertising is dead. Long live tablet andsmartphone advertisingNot all “mobile advertising” is created equal6Total “mobileadvertising”Smartphones Tablets“Mobileadvertising”revenues$8.3B $4.9B $3.4BSearchrevenues/device$1.70 $5.60Displayrevenues/device (incl. in-app)$0.60 $7.00Total/device $2.30 $12.60Technology, Media & Telecommunications Predictions, 2013#tmtpredictions“Deloitte predicts that in2013, what is currentlydescribed as “mobile”advertising will get splitinto two categoriesrepresenting two similarbut distinct devices –tablets andsmartphones”
  7. 7. © Deloitte LLP and affiliated entities.Facebook might have “figured out” Mobile Ads…Join the #Deloittepredicts conversation7Facebook Quarterly Mobile Advertising revenues ($ m)~ 0Mobile App Install Ad• 0.8% for mobile sponsoredstories• 0.3% for desktopSource: Facebook
  8. 8. © Deloitte LLP and affiliated entities....but the big bucks are yet to roll inJoin the #Deloittepredicts conversation8138%34%80%80%96%4,08581%8,40713,581Breakdown of Mobile Ad spending* worldwide by Region, 2011-2016(USD Millions)Source: eMarketer, Dec 2012 , Deloitte analysis* Includes display (banners, video and rich media) and search; excludes SMS, MMS and P2P messaging-based advertising; includes ad spending on tablets82%Middle East accounted for6% of the global smartphoneshipments in 2012 but lessthan 0.1% of mobileadvertising
  9. 9. © Deloitte LLP and affiliated entities.In the Middle-East, stars are aligned for growth indigital/ mobile advertisingJoin the #Deloittepredicts conversation9Millenials constitute more than 50% of the population and will drive the engagement with digital platformsSource: Ipsos, Deloitte analysisGeneration ZAge 10-14Generation YAge 15-34Generation XAge 35-44Baby BoomersAge 45+• Born with prevalent digitaladoption• Use of tablets and smartphonesfrom early age - before PC/laptops• Never knew a world withoutinternet and mobile• Arab spring generation• Smartphones, Twitter,Youtube, Facebook• Technology use & work ethicsgeneration• Starting working during thefirst internet boom• PC, PVR, MP3, Google,Facebook• Work ethic & generalrespect generation• TV remains main mediaconsumption platform• While Gen Y are the most activesocial networkers – 62% usingthem more than once a day…• …while 48% of Generation X areon them once a day or more…• …and only 35% of the “BabyBoomers”Who they areand what theyuseDemographicimportanceSocial mediausageTV or Internet?34% 37% 11% 18%• More than half of Gen Z arealready on social networks morethan once a day…Contentconsumptionand UGC33 42Internet TV4320Internet TV31 28Internet TV2643Internet TV• Almost 50% are on Youtubedaily• 75% of them have uploaded aphoto on social networks• 1/3rd on Youtube daily• 60% have uploaded a photo• 13% daily on Youtube• 50% have uploaded a photoMore thanonce a dayWhich media activity would you miss the most?Less thanonce a day(*)(*) Includes 0-14 year old
  10. 10. © Deloitte LLP and affiliated entities.Indeed digital advertising is projected to grow to10% of total advertising spend by 2015…Join the #Deloittepredicts conversation10Source: Zenith Optimedia, Deloitte analysis%fromTotalAdSpendNewspapersTelevisionOut-of-HomeMagazinesDigitalRadio4,933 5,282 4,741 4,908 5,154 5,488 5,954100%= 2012, % of total advertising spendEvolution of advertising spend by platform – Arab Region Digital advertising share – Select marketsLow considering ourresearch shows peoplespend 2 hours online per dayand 3 hours watching TV
  11. 11. © Deloitte LLP and affiliated entities.…but there remains significant growth potentialfor mobile ad regionally and globallyJoin the #Deloittepredicts conversation11Number of users (m)68% of FB users access Facebookon Mobile but generating only 30%of revenues…Facebook US UAE – Middle Eastx10x1.1Number of users (m)x1.2x40Ad Revenues (m) Ad Revenues (m)…despite mobile ads earing 2.5more ad revenues per impressionthan desktopSource: Facebook, IAB, Deloitte analysis
  12. 12. 2013 Mobile Advertising trends in the Middle East
  13. 13. Pros ConsWHY MOBILE SHOULD WORK# Strong demographics – by large youngand wealthy population# Mobile is the main channel to theInternet in MENA – little bit lower in KSA+ UAE# In 2012, Smartphone end up holding24% of the total sales in MEA# UAE is very competitive market as theconsumers tend to adopt newtechnologies early# GCC great Telco infrastructures (3G)BUT …# Ownership structure of most of thebrands - licensee (volume) / distributors# Brand lifecycle in the MENA is still atthe infancy stage - TOMA# Digital era started late in MENA – mostof the brands did not have compatiblewebsite for Mobile format# From 1.0 (Push) towards 2.0 (Pull)+80% of MENA brands
  14. 14. Old New EcoNEW ECONOMY OLD ECONOMYCOMMERCIAL REALESTATE IS STILLBOOMING IN THE GCC#MALLCULTURE
  15. 15. Digital MobileFACTORS THAT WILL INFLUENCEMOBILE ADVERTISING# Most of the MENA brands are starting tocreate relevant content online – but notnecessary on Mobile format.# “Plateau effect” on the digital work formajority of MENA brands.# 350 millions of Arabic speakers / onlineArabic content only 3% at the world stage.# 2012 e-commerce: highest number of e-shoppers based in Saudi Arabia, with thehighest penetration in Qatar & UAE – still at itsinfancy stage for the largest advertisers
  16. 16. Push PullMOBILE ADVERTISING REMAINS MORE PUSH RATHER THAN PULL# Rare MENA advertisers have yet capitalized on the particularities of each 4 screen platformsand enhance the real opportunities offered by 2.0 (brand storyscaping) on mobile advertising# In the Middle East, only 57% of the tablet owners are finding their apps useful (lowest of the world)– vs. the 97% in Asia# Push strategy still the main tactic today for Mobile advertising #DATA #TOMA BATTLE
  17. 17. Time Adv.ANOMALY ON MEDIA ADVERTISING - SORRELL# Sorrell said that the main anomaly is internet and mobile wherein the US it counts for about a third of time spent by consumers,but that the ad spend level is about 20%.# Same diagnostic for the KSA, KUWAIT, QATAR, UAE markets
  18. 18. Brands Views
  19. 19. Brands Views
  20. 20. Brands Views
  21. 21. Brands Views
  22. 22. MENA BarriersWHAT ARE THE MAIN BARRIERS TO NOT ADOPT FASTER MOBILE ADVERTISING# Lack of expertise in the region# Lack of accurate consumer data to know consumerpreferences# Lack of best practice case studies to show that itactually works = Direct ROI# Early in the maturity cycle – still focusing ondeveloping structure – website, apps, e-commerceplatforms etc# Lack of content creation ability internally# The buzz about social media is still in the air – brandshave not yet looked into optimizing mobile platforms# Limited known effectiveness for B2B business# Not strongly linked to revenue generation – maygenerate “moderate” revenue in the future
  23. 23. Grégory Bolle
  24. 24. Grégory Bolle
  25. 25. Round Table &Press coverage
  26. 26. © Deloitte LLP and affiliated entities.Grégory Bolle
  27. 27. © Deloitte LLP and affiliated entities.Dubai: We are stepping into a world where smartphones and tablets outsell PCs. Whileregional advertisers are aware that the industry is going ‘mobile’, spend on digital advertisingis still low, according to a recent report by global consulting firm Deloitte.“Digital advertising spend in the Middle East represents approximately eight per centof the total advertising spend [this year],” said Emmanuel Durou, Deloitte’s director ofstrategy consulting.The report, entitled ‘Middle East Technology, Media and TelecommunicationsPredictions 2013’, shows that digital advertising in the region accounted for 6 per centof the total advertising spend last year. This creates a disparity between digital ad spendand the consumption of mobile devices, considering that the Middle East made up 6 per centof global smartphone shipments last year, but has less than 0.1 per cent of mobileadvertising.In addition, the gap between digital and television advertising spend in the region is stillglaringly large, with the latter accounting for 40 to 41 per cent of total advertising spend, saidDurou.The region has many opportunities for mobile advertising, a term that considers smartphonesand tablets. The UAE, for instance, has a strong telecoms infrastructure, with two majortelecom service providers, a high smartphone penetration, as well as a predominantly youngpopulation with a big appetite for smartphones and tablets.The tablet market in the Middle East and Africa was up 90 per cent year on year, closing with1.36 million units in the fourth quarter of last year, stated the report.Grégory Bolle
  28. 28. © Deloitte LLP and affiliated entities.The demand for tablets was fuelled by low-cost options and the Millenials’ (the populationbelow 25) engagement with social network sites and online videos on these devices, amongother factors.There are a number of factors that hamper the creation of digital content on mobile devices.One factor is the ownership structure of brands. Licensees that manage a number ofinternational brands are less likely to engage creatively with customers throughadvertising. Instead they “focus on sales and volumes,” said Gregory Bolle, BPG IBates’ Head of Strategic PlanningAnother challenge is the late arrival of some of the regional brands to digital platforms.Some brands “have only three or four years of online existence,” Bolle said.Meanwhile, advertisers in the region are still reliant on push strategies to communicate theirbrands to consumers. One way they can achieve that is through direct messaging or SMS,Bolle said.Companies in the UAE allocate their advertising budget on display ads, such as banners onwebsites, which make up 60 per cent. The rest of the budget is spent on direct messaging orSMS, which accounts for 30 per cent, and search 20 per cent.Digital advertising spend in the region is expected to grow at a compound annual growth rateof 35 per cent and make up 10 per cent of the total advertising spend by 2015, according tothe report.Grégory Bolle
  29. 29. © Deloitte LLP and affiliated entities.Grégory Bolle
  30. 30. © Deloitte LLP and affiliated entities.The Telecoms Media and Technology Predictions 2013 report states that mobile advertisingspend will reach $8.3 billion this year globally, with $4.9bn geared towards smartphones and$3.4bn on tablets.Digital advertising in the region accounted for about 6 per cent of total advertising spendacross the Middle East, a figure that is "extremely low, not just from a benchmark point ofview when compared to the UK at 32 per cent but from a logical point of view as well", saidEmmanuel Durou, the director of strategy consulting at Deloitte.The Middle East accounted for 6 per cent of global smartphone shipment last year, butless than 0.1 per cent of mobile advertising is coming to the Middle East, according tothe report.In the UAE there are 3 million users of digital apps and 3.6 million internet users, yet mobileadvertising revenues are just $7 million while internet advertising revenues are $280m. In theUnited States, where they have 220 million app users and 245 million internet users, mobileadvertising revenues are $3.4bn according to Deloitte."Mobile advertising spend was $8m last year and this year we see it growing to $15m," saidElie Khouri, the chief executive of Mena at Omnicom Media Group."This will grow in the foreseeable future, but it is still well below the level it should be at.Monetising mobile is not just a local or regional issue, it is a global issue with even the likes ofFacebook and Twitter facing problems.“In the Middle East, people spend on average two hours a day on the internet and three hourson TV, but the gap between digital and TV advertising spend is substantial with more than 40per cent of advertising budgets spent on television. Grégory Bolle
  31. 31. © Deloitte LLP and affiliated entities."The digital era started late in Mena," said Gregory Bolle, the strategic planning head at BPGGroup. "For some brands they have only just 3 or 4 years of online existence. In 2008we just started exploring internet and digital opportunities with most of the localbrands.“According to Bolle, there are three critical phases for digital advertising. The first is a robusttelecoms infrastructure and high laptop, Smartphone &tablet penetration rates. The second ishigh quality local content and the third is e-commerce."We are only just entering phase two in the region," said Gregory Bolle. "We are not late, it isjust that the traditional channels [TV and print] are still doing very well in the region, also themindset is different from the US and Europe.“Advertisers in the region are still relying on push strategies when it comes to digitaladvertising instead of pulling customers into their brands.Generally most companies in the UAE allocate 15 per cent of their advertising budgeton digital of which 12-13 per cent goes towards internet advertising and 2-3 per cent onmobile and tablet. About 60 per cent of this is spent on displays like banners on websites, 30per cent on direct messaging, like SMS and 20 per cent on search. Globally, however, searchaccounts for 62 per cent of digital advertising budgets, 10 per cent on direct messaging and28 per cent on display."Mobile advertising is a huge opportunity that is still untapped said Durou.Grégory Bolle
  32. 32. Emmanuel DurouDirector | ConsultingME TMTDeloitte & Touche (M.E.)Building 3, Level 6, Emaar Square, Downtown DubaiP.O. Box 4254, Dubai, United Arab EmiratesTel: +971(0) 4 376 8602 | Fax:+971(0) 4 376 8899 | Mobile +971 (50) 5913078edurou@DELOITTE.comGrégory BolleStrategic Planning HeadBPG GroupLevel 6 MAF Tower Deira City CenterPO Box 3294 Dubai UAET +971 4 295 3456 | F +971 4 295 8066 | M +971 50 435 4846@GregoryBolle | gregory@batespangulf.com | www.batespangulf.com

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