Saturday, November 19, 2011

Analysis of digital media in the Middle East and North Africa Region

    Fig 1: logos of various social media. Source:


The competitive dynamics of the media industry is being transformed throughout the world. All across the world, the popularity of traditional media channels such as print media, TV broadcast and Radio broadcast are depleting and is being replaced by the digital media. Not only is the digital medium encroaching upon the space of the traditional media; but also changing the dynamics of revenue model- so far enjoyed by the traditional media. Even in the digital media itself, lot of changes are happening. The traditional boundaries, between media companies, telecom operators, handset manufactures and internet service provider is getting blurred. Everyone is trying to encroach upon each other’s space.

The digital media in the Middle East and North Africa (MENA) is still in its nascent stage, as compared to other developed parts of the world such as Western Europe and North Africa; but given the fact that huge investments are made in ICT infrastructure, internet and mobile penetration are increasing at a rampant speed and a new wave of political change is happening all across the region, digital media seems to have a huge potential to grow in the region. The following research article will do an analysis of Digital media, its present state and its future prospect; in the MENA region. It will take help from reports from sources such as: Booz and Company, PWC, Arab Media Outlook, Spot On PR, Neilson etc.  

Advantages of digital media:

Digital media offer some unique advantages, which traditional media such as TV & Radio broadcast and print media cannot offer.  Some of the unique advantages are:-

·         Economical: digital media is very economical. Having a brick and mortar shop will cost a lot; in contrast to this having a web presence is much cheaper. It does not cost much to develop and market a website.

·         Curtails geographical barriers: a very remarkable feature of digital media is that, it could be accessed from any part of the globe. Geographical barriers often create challenge for traditional media sources such as newspaper and magazines in disseminating information, but digital media, which has a virtual presence, could be accessed from any part of the world.   
Convenience: Digital media is always convenient to use. With the help of a laptop,i-pad or other hand held device plethora of content could be consumed. 

·         Content can be consumed as well as produced at the same time: with the help of web 2.0 platforms, content can be viewed/consumed as well as produced at the same time. Web 2.0 provides two way communication platforms. Not only does it communicate directly to the end users, but also allow the consumers to share their opinion, feedbacks etc.

·         Consumer Insights: with the help of web based analytics, digital media can give a lot of detailed insights, pertaining to consumer behavior and demographics- consumption pattern, duration, geography etc. One remarkable feature is that, all such valuable data could be obtained at a negligible cost.

 ·         Target Marketing: digital media helps in capturing the target audience.

Disadvantages of Digital Media:

Along with advantages, digital media also has some disadvantages such as 

·         Revenue from advertisements is not easy in the digital media. It’s easy to have a web presence/ digital presence, but it is as difficult to generate revenue out of it.Monetization of digital media is a challenge, through out the globe.  

·         Generating revenue always takes a large amount of time. Revenue can follow only, after creating a sizeable customer base. For instance, even Facebook took five years to break even. The revenue from marketing could be generated only after securing huge customer base.  

·         Not everyone is very comfortable with digital media, especially when it comes to money transaction. A large number of individuals are wary of transferring money over the internet. More over the web medium has also been the source of lot of frauds.

·          Consumers expect a lot of free content on the web. When it comes to paying for the content, many individuals are not very willing to pay. They just want stuffs for free.    

DIGITAL MEDIA: global trends

Globally more than 50% of the internet consumption comprises of 5 nations: USA, China, India, Brazil and Russia. As described earlier a lot of creative rearrangements are happening in the media sector, all across the globe. Some of the major global trends in the digital media are as follows (Morgan Stanley, 2009)

·         E-commerce: major products which are purchased online globally are- computer products, electronic items, event tickets, hotel bookings, tour packages, books, music/video etc, toys etc.

·         Consumptions of internet on mobile are catching up fast with consumption on desktop. According to Morgan Stanley report, by 2013-14 more users will be consuming internet via mobile devices, rather than desktop computer.

·         Social Media: social media users are surpassing the regular email users. People refer spending more time on social media rather than on regular emails.

·         Adoption of newer and better telecom services such as 3G will further consolidate the stronghold of mobile medium.
Digital media in Middle East

In contrast to other parts developed world, digital media in MENA region is still not very matured but is surely one of the sectors, which is poised for a high growth in the coming time. As a region, MENA has its own advantages and its own challenges. Presently there are 65 million internet users in the MENA region, which is expected to increase to 80 million by 2012. (AMIR, 2011) Other than global heavyweights such as Google, Yahoo, Facebook and regional players such as Kooora, Maktoob etc; the region is also witnessing the arrival of online marketing firms such as Al click, Eastline Marketing etc.         

Advantages of Middle East

The Socio Economic structure of the entire Middle East has lot of inherent advantages, which can boost the growth of online media companies in the region. Some of them are (Booz & Company, 2009):

·         A uniform, homogeneous market: the Middle East might have many small nations, across the region but, all share the common Arab heritage and enjoy high degree of commonality across various socio-cultural dimensions. Hence the Middle East could be considered as a homogeneous mixture of around 300 million individuals. The idea of uniformity becomes more apt in case of digital media because; unlike regular media such as print and broadcast which are restricted to national boundaries due to regulatory barriers; online media can have a pan Arab presence.
·         High mobile penetration: these days a large amount of digital contents are being viewed with the help of mobile devices. MENA region enjoys a high degree of mobile penetration with states like UAE and Saudi Arabia enjoying a mobile penetration of 200 and 125 percentages.

·         High literacy rate: Many of the MENA states are taking education, high up on their agendas. Some of the MENA states enjoy a high degree of literacy. For instance: collectively the six gulf state enjoys a literacy rate of more than 75 percentages.

·         Several MENA nations are extremely rich: many of the oil rich MENA nations, especially Gulf States are extremely rich and enjoy high per capita GDP. For instance: Qatar, where per capita GDP is around US $ 78,000.  By 2015, Gulf States and Egypt are expected to have 13 million households in middle to high income brackets.

·         Investments in the ICT infra structure: rather than depending on oil MENA nations are realizing the urgency of economic diversification. One thing which is high up on their agenda is ICT infrastructure. All across the MENA huge investments are being made to develop state of the art ICT infra structure.

·         Demographics: the younger generation is more inclined towards the digital media. Somewhere around, 55 percentages of Arab population, is less than 25 years of age, which shows that there is a huge potential for the digital media to flourish in the Arab world.

  Challenges for digital media in Middle East & north africa

Along with advantages, MENA also has lot of challenges, providing hindrances to the growth of digital media in the sector.

·         Low broad band connectivity: it is expected that broadband connectivity will increase in the coming years; but the present penetration of 12 percentages is much lower than other developed parts of the globe. 

   Fig2: broad band penetration in different geographies. Source: Arab Media Outlook 2009-13

·         Dissimilarity in ICT infrastructure across the region: even though the region shares socio cultural heritages, there is a high degree of economic asymmetry across the whole region. There are cash rich small Gulf States; North African bigger states like Egypt and Morocco which are comparatively more integrated with the world economy; developing states like Jordan and Syria with almost no oil and reserve and states like Libya and Algeria with high oil deposits but high population as well. This asymmetry is also reflected in a wide range of economic parameters such as mobile penetration, internet penetration, broad band connectivity, kind of network technology being used etc. For instance, in emerging markets like Syria and Sudan broadband penetration is less than 1 percentage; in Morocco and Jordan it is 12 and 15 percentages respectively where as in rich Gulf States like UAE and Qatar it is 69 and 84 percentages respectively. This inherent heterogeneous nature of the ICT infrastructure across the region makes it difficult for organizations to adopt a single digital marketing strategy. (Arab media outlook 2009-13, 2009)

·         Gap between presence and revenue: any business model does not make any sense, until unless it cannot generate constant stream of revenue. In the MENA companies are finding it tough to en cash their digital presence. For instance: 85 percentages of Arab newspapers have digital presence as well, but digital media constitutes just 2 percentages of their advertising revenue.                       

Fig 3: shows the breakup of digital media revenue (in US $ million) in the MENA region, for 2009.  (Source: Booz & Company)  

Fig 4: percentage wise break up of online advertisements in MENA region. Source: Booz & Company, 2009.

 Fig 5: percentage wise break up of mobile advertisements in MENA region. Source: Booz & Company, 2009.

·         Online shopping activity is abysmally low: according to a research conducted by Neilson (comprising of 1,246 individuals from four countries- UAE, Egypt, Lebanon and Saudi Arabia) less than 1 percentage of individuals prefers engaging themselves in online shopping. (Arab Media Outlook 2009-13 , 2009)

·         Monetization of the online content, which is somehow a challenge all across the globe, is quiet challenging in the MENA region. The prevalence of a cash based culture and low penetration of credit & debit card penetration makes it more difficult. (Arab Media Outlook 2009-13 , 2009)  

       Internet consumption behavior of MENA users

In order to analyze the prospect of digital media in MENA region, it will be helpful to have a brief overview of internet consumption behavior of people from the region. In order to understand this better, the blog will be taking the help of a research conducted by, Effective Research in conjunction with Spot on PR, in July 2010. The research has been conducted over a base of 2587 individuals, out of which 69 percentages comprised of Egyptians and 20 percentages comprised of individuals from GCC. 

Fig6: shows the common activities on internet in the MENA region. Source: Neilson, the survey comprised of 1,810 individuals from 4 countries- Egypt, Saudi Arabia, UAE, and Lebanon. 

Education level of individuals surveyed:

 Fig7: shows the education level of respondents surveyed, in terms of percentages. Source: Effective Research and Spot on PR.

Place of internet access

Fig8: shows the place of access of internet, for the respondents, in terms of percentages. (Source: Effective Research and Spot on PR, 2010)   

Respondent’s, Usage of Social Media Platform:

Fig9: shows respondent's usage of various social media platforms.(Source: Effective Research and Spot on PR, 2010)  

Respondent’s daily consumption of other  media channels.

Fig10: shows percentage of correspondents consuming various media channels on a daily basis (in case of magazine, weekly figures have been taken). Source: Effective Research and Spot on PR.

Disposition towards Internet Marketers:

Fig11: respondent's disposition towards internet  marketers. Source: Effective Research and Spot on PR. 

Important Conclusions:

Important conclusions, drawn from the report are as follows:
·         Majority (more than two third) of internet users from the region seems to be, graduate or above.
·         Internet is primarily used from home.
·         Facebook seems to be very popular across the region. The tremendous popularity of Facebook is followed by other local brands such as Kooora, Maktoob etc.
·         Internet users from the MENA region simultaneously use a wide range of other media channels as well, such as newspaper, magazine, radio, TV, mobile applications etc 

   Challenges for Digital Media:

·         Less ad spending on digital media: so far digital media contribute a miniscule share of just 2 percentage of overall ad spending in the MENA region. In 2008, the digital advertisement investments per capita in the MENA region was just US $ 2 compared to the global average of US $ 27. (Booz & Company, 2009

Fig 12: shows per capita digital ad spend across various countries in 2008. Source: Booz & Company, 2009.   

·         Internet penetration is comparatively low: internet penetration is increasing in the Middle East region at a very fast pace and the present penetration of 28.8 percentages is higher than the global average of 26.6 percentages. Although when compared with other developed parts of the globe; it appears to be very low.

Fig 13: shows internet penetration in various geographical regions (Source: Internet World stats, 2010)

Social media angle
The understanding of digital media in the MENA region will be incomplete without understanding the “Social Media” angle. Social Media is one of the fastest growing segments of media in the MENA. Not only does it make sense for business in present as well as in future; but also plays a pivotal role in socio-political sphere of the region. The best exemplar could be the latest Arab revolution, which started from Egypt & Tunisia and spread across the entire region. Social Media sites such as Facebook and Twitter played a major role in the revolution, eventually forcing the incumbent governments to step down. In a wide range of activities such as; creation of popular pages such as “We are all Khalid Said”, meant for addressing the political concerns of the common people; communicating across the user network to stage a mass protest on 25th January to post revolution analysis and public opinion building on key issues; everywhere social media has been the key player.


Facebook or FB is the most popular, social media in the MENA region, very much in line with the general popularity, which it enjoys across the globe. The region has somewhere around 15 million FB users, with GCC countries accounting for some 5 million users (Spot On, 2010) Other than English, other popular versions of FB are French and Arabic.

Fig14: shows the percentage wise break up of FB users in the MENA region. Source: Spot On

The Arabic interface has been added in March, 2009. It helped FB capturing a whole new range of user segment. With a year of its inception, it added 3.5 million users to the existing base. The French version of FB has a total of 3.7 million users and is more popular in francophone countries such as- Algeria, Morocco and Tunisia etc. The top five user communities of FB in the region are- Egypt, Saudi Arabia, Morocco, Tunisia and UAE. These five countries, comprise of 70 percentages of FB’s market in MENA region.

Fig 15: percentage wise break up of FB using population of various MENA nations. Source: Spot On


As discussed earlier, the online media/digital media segment in Middle East is in its nascent stage but the future seems to be bright. The following factors will drive/influence growth of digital media in the future:

·         Young Demographics will influence growth: one of the biggest advantages that MENA is having is its young demographic. More than 55 percentage of population is aged less than 25. This young generation will be heavily influencing the growth of digital media in the region.

·         Broad band penetration: broad band penetration, especially in comparatively bigger states like Egypt and Saudi Arabia will drive growth of digital media in the region.

·         Europe could be a role model: though digital media has enough presence in both social as well as economical spheres of the region, the advertisement revenues are still not very high. In this regard Europe of 2000s could be perfect role model, when the advertisements revenue where low there as well. But with the growth of more and broadband and mobile penetration, it got emancipated. With increasing broadband penetration and adoption of better mobile technologies; MENA can undergo the same growth trajectories.

·          Arabic and local Content: in order to digital media (as well as other media sources to an extent) to succeed, one area that needs to be addressed is developing local content. According to survey conducted by Neilson, 62 percentages of respondents prefer browsing the web in Arabic rather than English; but the region has dearth of Arabic/local digital content. (Unlike newspaper, where 90 percentages of content are local in nature). In spite of the fact that international brands like Yahoo and Facebook enjoy a high degree of popularity in the region due to their brand value and 1st mover’s advantage; the fact cannot be discounted that there is a penchant for local content both on and off the web. Hence in order to succeed in the coming future, it is essential to emphasis on the development of more and more local content. This requires funding, govt. support as well as developing local talent. (Arab Media Outlook 2009-13, 2009)

·         Creating right cultural environment for web entrepreneurs to succeed: in order to develop the online media sector in Middle East, a possible step could be developing something similar to Silicon Valley. This will help nurturing young talents to develop web based start ups. In the MENA region one possible role model could be Jordan, which is taking similar initiatives. Jordan is transforming itself into a knowledge economy by- generating 6000 ICT graduates every year, attracting venture capital for web based start ups and taking a comparatively tolerant stand on media sector including the blogosphere. (Arab Media Outlook 2009-13, 2009)

·         Nurturing Talent: one of the most essential pillars for developing the digital media in the region could be having the right talent base. Though many of the Arab/ Gulf countries are taking initiatives, but there is further room for improvement. The students from the region need to be trained on a wide range of subjects such as- digital media, gaming, animation etc.           

1>    Morgan Stanley, 2009, Internet trends report
2>    Arab Media Outlook 2009-13, 2009, simulating local content in Arab Media Industry, p-169
3>    Arab Media Outlook 2009-13, 2009, simulating local content in Arab Media Industry, p-172
4>    AMIR, March 2011, P-3
5>    Booz & Company, 2009, Winning in MENA new media scene
6>    Booz and Company, 2009, Winning in MENA new media scene,  p-17
7>    Arab Media Outlook 2009-13, digital media, p-68
8>    Spot On, 2010, Middle East and North Africa Facebook demographics. 
9>  Arab Media Outlook 2009-13, digital media, p-169 

1>    Arab Media Outlook 2009-13, digital media, p-181 

Saturday, November 5, 2011

Comparative Analysis of the tourism sector of the Gulf countries and Nordic countries

                              Fig 1: Travel & Tourism competitiveness report (Source: The Armenian Observer Blog)
In the world of tourism, geographical clusters play a very important role. Attractiveness of individual states does not only depend on them, but a large part of it also depends on the attractiveness of the whole region as a tourist destination. This concept is more applicable in small states. Bigger state like India and China or heavily popular and strongly marketed states like Dubai or Singapore are quite independent of their regions but for other places regional clusters do play a very significant role. For exp: Jordan’s attractiveness as a tourist destination will be dependent on the attractiveness of Arab world / MENA region.
It has following impacts:

·         Marketing and Branding: helps in the marketing of the whole cluster/ region. If a region has quite a good number of tourist destinations, then it helps in promoting the whole region as a tourist destination, eventually helping in promoting, often overlooked locations.   
·         Complimentary packages: these days’ tourists prefer tour packages comprising two or more nations. Hence availability of a good number of tourist destinations in single region helps in developing better tour packages. For exp: lot of tourists visiting UK prefers combo packages comprising of England, Ireland, and Scotland. Tourists visiting South East Asia prefer combo packages comprising of Malaysia, Indonesia, Singapore and Thailand.      
·         Regional cooperation: Tourism is a highly capital intensive industry and it requires huge investment in infrastructure as well as marketing. Regional economic cooperation among the nations in a region enables in developing better infrastructure- in the form of hotels, resorts, roads, airports etc.

The following blog article will do a comparative analysis of two geographical cluster- Gulf countries and Nordic countries. Both the clusters consist of economically well off nations with small population and surface area. Hence they provide a good case to do comparison. The documents used for this are – The Global Competitiveness report and World Economic Forum travel and tourism competitiveness. (Some of the terms have been directly used from WEF report. Their meanings have been explained in the end. )    

COMPARISON OF Economic & social indicators FOR THE SIX GULF STATES

Table 1: Showing population of the six Gulf States. (Source: WEF, travel and tourism competency report 2011.)

Aggregate Population: 37.8 Million
Aggregate Surface Area: 2423.2 (000 SQ KM)

Fig 2: Pie chart showing GDP of individual Gulf States. (Source: WEF travel and tourism competency report 2011.)  

Aggregate GDP: US $ 863.6 Billion

Fig 3: Showing per capita GDP (PPP, US $) .Source: WEF, travel and tourism report, 2011. 

 Fig 4: Showing environment performance index of the six Gulf States. (Source: WEF, travel and tourism competency report, 2011.) 

The Gulf States are comparatively small states with Saudi Arabia being the biggest and most populous while Bahrain being the smallest and least populous. Saudi Arabia on account of being the biggest state is also the biggest economy, followed by UAE. Qatar, one of the fastest economies of the world enjoys the highest per capita GDP among the Gulf States. Other Gulf States shows a high degree of uniformity in terms of per capita GDP with per capita GDP lying between US $ 25,000- 35,000. The average environmental performance index is 127, with UAE showing the highest value of 152 and Saudi Arabia showing the lowest value of 99.

 Tourism statistics of gulf state

  Fig 5: Showing T&T industry and economy receipt (US $ Billion) of the six Gulf Nations. Source: (WEF, travel and tourism competency report, 2011.)

Fig 6: Showing, per capita T&T industry and economy receipt (US $) of the six Gulf Nations. Source: (WEF, travel and tourism competency report, 2011.)

Table 2: Showing the overall competencies of six Gulf Nations. Source: WEF travel and tourism industry report 2011.   

Analysis: Dubai is considered as gateway of, Middle East to the whole world and it gets reflected in the above figure. In both categories- Tourism receipt as well as tourism receipt as a percentage of GDP, UAE holds a numero uno position. UAE is followed by Saudi Arabia which receives a considerable amount of tourism receipt on account of conducting the very famous Hajj festival, where Muslim pilgrims from all around the globe come to Mecca. For most of the other Gulf nations, tourism still does not seem to be playing any significant role. 

Table 3: Showing population and surface area of the five Nordic nations. (Source: WEF travel and tourism competency report, 2011)

Fig 7: Showing the GDP (US $ Billion) of the five Nordic Nations. Source: (WEF travel and tourism competency report, 2011)

Fig 8: Showing the per capita GDP (PPP, US $) of the six Nordic Nations. (Source: WEF, travel and tourism competency report, 2011)

Fig 9: Showing environmental performance index of the six Nordic Nations, 2011. (Source: WEF, travel and tourism competency report, 2011) 

 Like Gulf countries, Nordic countries are also small nations with Iceland being the smallest and Sweden being the largest. Considered as one of the safest and happiest places in the globe, these states enjoy very low rate of crime, high per capita GDP and high standard of living. Most of the nations have per capita GDP in the range US $ 35,000-40,000, with Norway being an exception. The Nordic nation has a per capita GDP of US$ 51,980. One of the remarkable features of the Nordic nations is exceptionally good environmental performance index. The Numero Uno position in this ranking, which comprises of 139 nations, is with Iceland, smallest Nordic nation. Al most all the nations other than Denmark are ranked within 15 in this ranking.   

          Table 4: Showing Travel and Tourism competency, of the five Nordic Nations. (Source:     Travel and Tourism Competency 2011.)

Average attractiveness: 5.1

Fig 10: Showing T&T industry and economy receipt (US $ Billion) of the Five Nordic Nations. Source: (WEF, travel and tourism competency report, 2011.)

Fig 11: Showing, per capita T&T industry and economy receipt (US $ Billion) of the Five Nordic Nations. Source: (WEF, travel and tourism competency report, 2011.)


 Table 5: Comparison of Gulf and Nordic Nations across various parameters. (Source: WEF travel and tourism report, 2011)

Fig 12: Comparison of Gulf and Nordic Nations across T&T industry and economy receipt. (Source:  WEF travel and tourism report, 2011)

 Fig 13: Comparison of scores of Gulf and Nordic Nations across, various WEF competitive parameters. (Source: WEF travel and tourism report, 2011)

Analysis: On being compared, the Nordic nations surely score better than the Gulf countries in almost all the parameters, socio-economic as well as statistics pertaining to tourism. Nordic nations have bigger aggregate GDP and enjoy higher per capita than the Gulf countries. An area where the Nordic nations have done exceptionally good is environmental performance and there seems to be a wide gap between the two clusters, across this parameter. Coming to T&T industry receipt, Nordic nations have received US $ 37.3 billion against US $ 22.93 billion received by Gulf countries. An important trend which could be seen over here is that, when compared across T&T economy receipt, the difference has narrowed down. Nordic nations have received US $ 114.83 billion against US $ 103 billion received by Gulf countries. The reason for this small difference could be the multibillion dollar tourism development projects, being incubated all across the Gulf. Given the fact that oil will not last for long, Gulf countries are realizing the significance of economic diversification and tourism is high up on their agenda. In nations where tourism does not contribute much in the GDP, huge investments are being made in developing state of the art tourism facilities. Qatar- the tourism industry in the state estimated at US $ 961 million in 2010 constitutes just 0.9% of the GDP but on account of some of the extravagant tourism development assignments, the overall economic impact is estimated at US $ 9,348 millions, constituting 8.4% of the GDP. (WEF_TravelTourismCompetitiveness Report, 2011) When compared across various WEF competitive parameters, Nordic nations again have a considerable edge over their Gulf counter parts. Comparatively lean across parameters such as T&T business environment and infrastructure and high across others such as human cultural and natural resources and regulatory frame works. With an average score of 5.1 in the overall competitiveness, the Nordic nations are among the top performers in the overall WEF ranking, consisting of around 139 nations where as with an average score of 4.3, Gulf countries are among the “slightly better than the average band”.  
Since both the clusters share a lot of similarity, in terms of various socio economic parameters, Nordic nations, with a better performance with the Gulf countries, could be a good role model for the Gulf countries.           

Use of key terms

·         The T & T competitiveness index is a measurement of factors that make a country, an attractive tourist destination. It consists of T&T regulatory frame work, T&T business environment, T&T human cultural and natural resources.  Countries are ranked on a scale of 1 to 6, with one being the lowest and 6 being the lowest.
·         T&T regulatory frame work consists of Policy rules and regulation, environmental sustainability, safety and security, health and hygiene and prioritization of travel and tourism. Countries are ranked on a scale of 1 to 6, with one being the lowest and 6 being the lowest.
·         T&T business environment and infrastructure consists of air transport, ground transport, tourism, and ICT infrastructure along with price competitiveness. Countries are ranked on a scale of 1 to 6, with one being the lowest and 6 being the lowest.
·          T&T human cultural and natural resources consist of human resources, affinity to tourism, cultural and natural resources. Countries are ranked on a scale of 1 to 6, with one being the lowest and 6 being the lowest.
·         T&T industry as a narrow perspective of T&T activity that captures the production-side
              Industry contribution that is, direct impact only (WEF report, p-105)

·         The T&T economy is a broader perspective of Travel & Tourism that takes into consideration the direct as well as the indirect contributions by traditional travel service providers and industry suppliers within the resident economy. (WEF, p-105)

ü  WEF_TravelTourismCompetitiveness Report, 2011, Qatar-Country/Economy profile, p-316