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Everyone’s talking about digital. Buying, advertising, marketing, spending; it’s all got the word prefacing it. At least it’s a welcome relief from the C-word, though (“crisis,” that is; stop sniggering at the back). But is the hype justified? Some even go as far as proclaiming 2009 the year of digital. Mind you, they said that about 2008. And 2007.

According to internetworldstatistics.com, Internet usage in the Middle East increased an impressive 1,176.8 percent between 2000 and 2008, solidifying digital as one of the most important emerging media channels for advertisers. The region has an average penetration rate of 21.3 percent – only a few millions shy of the worldwide average Internet usage of 21.9 percent.

Internet penetration rates vary from country to country in the region (they are as low as 1.4 percent in Yemen and as high as 49.8 percent in the United Arab Emirates), and it’s clear the Middle East is still lagging behind more developed digital markets such as North America and Europe. But with all kinds of changes happening in the online world, the Middle East is catching on, and catching up.

Google, Yahoo, YouTube and Facebook are all among the top 10 most visited sites in the UAE, Saudi Arabia and Lebanon, according to traffic-monitoring site Alexa.com, giving an indication of the popularity of search engines, social networking and viral videos in the region. With those sites visited at such high frequency, marketers and media planners are keen to capitalize on online.

While television, print, outdoor and radio haven’t evolved dramatically over the past few years, digital media has. Marketers and advertisers are using online in more innovative ways, and gone are the days when standard pop-ups and banner ads were the only sign of selling on the Web. Enter the new age of social networking, interactivity, and user engagement. “Social networking seems to be the big topic for 2009,” says Imad Sarrouf, general manager of Flow, MCN Media’s digital arm.  “I expect social networks to become a shopping destination.”

Search engine marketing is the other big buzzword within digital. Industry insiders attribute the medium’s popularity to its measurability (see X-pert files, page 40). Paid search grew more than 20 percent last year, says David Sheridan, CEO of NeoDigital. “We predict this will again be the best performing medium by growth in digital media this year.”

Over the past couple of years, digital campaigns coming out of the region have moved beyond standard banners to more interactive, cross-platform campaigns such as Leo Burnett’s Fred the Chicken for Nando’s in Kuwait (see TKTK Communicate, Feb. 2008), which mixed blogging with Facebook, MySpace and more; and JWT/Firefly’s “What Type Are You?” campaign for HSBC, which won the Digital Cristal in Lebanon in January by drawing consumers to a microsite to flog them credit cards.

With the most important media planning agencies in Dubai launching or reinvesting in their digital arms, there’s no doubt the advertising industry is taking digital seriously – even though marketers are still trying to find ways to use it innovatively.
The credit crisis is hitting advertising across the board, and marketers are looking to focus their spending, and the digital buyers we spoke to say they predict a shift of budgets from traditional media to digital media this year. All of them agree that digital offers accountability, accuracy, measurability, and affordability – all attributes that prove all-the-more attractive during a recession.

A recent study by global management consultancy firm Booz & Company reports that the region will witness a greater shift from print to online advertising as budgets are slashed, and that online advertising in the Middle East is expected to grow by 25 to 35 percent as a result of the downturn.

Figures from online ad monitoring service OOXmonitor.com show banking and finance is the advertising category most active online in the UAE , followed by real estate and properties, airlines, and automotive. “Historically, banking, finance, and travel are the biggest spenders in digital media, and they are being hit very hard,” said Dimitri Metaxas, executive group director of digital at Omnicom Media Group, in a December interview with Communicate. “Therefore, their dollars have to work a lot harder for them. … Those sorts of advertisers should definitely be focusing more on digital.”

However, digital is hardly a mainstream medium in the region. Marketers rely heavily on television, outdoor, print and radio advertising, and are only starting to wade into digital waters. Madar Research, a Dubai-based research company, pegs online advertising spending in the GCC and Levant countries at below 1 percent of the global total.

As the pace of digital evolution increases, the Middle East is beginning to keep up with global trends. Over the next few pages, Communicate speaks to key players in the region’s online planning and buying scene. As well as collecting the specialist agencies’ vital statistics, we ask what we should expect from online media in 2009, and what works best in  the fast-changing environment of an emerging market.

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