Mobile Advertising

1. MENA Mobile Advertising 2013
Predictions & Analysis
Round Table with the Press
Dubai Media City
16/05/2013

2. TMT Predictions 2013
Focus on Mobile
Advertising

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 remains
under-monetized – particularly in the region
Technology, Media & Telecommunications Predictions, 2013
#tmtpredictions
Key themes

4. © Deloitte LLP and affiliated entities.4
“In 2013, Deloitte predicts that
global shipments of smartphones,
defined as any device perceived by
consumers as being a smartphone,
will likely exceed one billion units for
the first time.
As the base grows, usage is likely
to stratify further. The proportion
and absolute number of those using
only the basic functionality of a
smartphone – voice, text and
photos – is also likely to rise.”
Technology, Media & Telecommunications Predictions, 2013
#tmtpredictions
Smartphones ship a billion but usage becomes
simpler

5. © Deloitte LLP and affiliated entities.
Even if smartphones were created equal, users
are not
Q. 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 apps
downloaded / month 1.87
Average number of devices: 7.9 Average number of apps
downloaded / month 3.65
Number devices connected to the
internet: 32%
Monthly expenditure on apps: £0.67
Interested in NFC: 12%
Number devices connected to the
internet: 49%
Monthly expenditure on apps: £1.70
Interested in NFC: 45%
Phone ownership: 75% feature
phone users
Age: 50% aged 55+ Phone ownership: 85% smartphone
users
Age: 25% aged 18-24
Average number of smartphones
owned 1.25
Sex: 60% female Average number of smartphones
owned 1.51
Sex: 69% male
Tablet ownership: 5% Next phone 4G capabilities: 2% Tablet ownership: 37% Next phone 4G capabilities: 33%
Late adopter
Early adopter
5
Technology, Media & Telecommunications Predictions, 2013
#tmtpredictions
In Western Europe ~30%
of smartphone users are
not internet connected

6. © Deloitte LLP and affiliated entities.
“Mobile” advertising is dead. Long live tablet and
smartphone advertising
Not all “mobile advertising” is created equal
6
Total “mobile
advertising”
Smartphones Tablets
“Mobile
advertising”
revenues
$8.3B $4.9B $3.4B
Search
revenues/device
$1.70 $5.60
Display
revenues/
device (incl. in-
app)
$0.60 $7.00
Total/device $2.30 $12.60
Technology, Media & Telecommunications Predictions, 2013
#tmtpredictions
“Deloitte predicts that in
2013, what is currently
described as “mobile”
advertising will get split
into two categories
representing two similar
but distinct devices –
tablets and
smartphones”

7. © Deloitte LLP and affiliated entities.
Facebook might have “figured out” Mobile Ads…
Join the #Deloittepredicts conversation7
Facebook Quarterly Mobile Advertising revenues ($ m)
~ 0
Mobile App Install Ad
• 0.8% for mobile sponsored
stories
• 0.3% for desktop
Source: Facebook

8. © Deloitte LLP and affiliated entities.
...but the big bucks are yet to roll in
Join the #Deloittepredicts conversation8
138%
34%
80%
80%
96%
4,085
81%
8,407
13,581
Breakdown 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 tablets
82%
Middle East accounted for
6% of the global smartphone
shipments in 2012 but less
than 0.1% of mobile
advertising

9. © Deloitte LLP and affiliated entities.
In the Middle-East, stars are aligned for growth in
digital/ mobile advertising
Join the #Deloittepredicts conversation9
Millenials constitute more than 50% of the population and will drive the engagement with digital platforms
Source: Ipsos, Deloitte analysis
Generation Z
Age 10-14
Generation Y
Age 15-34
Generation X
Age 35-44
Baby Boomers
Age 45+
• Born with prevalent digital
adoption
• Use of tablets and smartphones
from early age - before PC/
laptops
• Never knew a world without
internet and mobile
• Arab spring generation
• Smartphones, Twitter,
Youtube, Facebook
• Technology use & work ethics
generation
• Starting working during the
first internet boom
• PC, PVR, MP3, Google,
Facebook
• Work ethic & general
respect generation
• TV remains main media
consumption platform
• While Gen Y are the most active
social networkers – 62% using
them more than once a day…
• …while 48% of Generation X are
on them once a day or more…
• …and only 35% of the “Baby
Boomers”
Who they are
and what they
use
Demographic
importance
Social media
usage
TV or Internet?
34% 37% 11% 18%
• More than half of Gen Z are
already on social networks more
than once a day…
Content
consumption
and UGC
33 42
Internet TV
43
20
Internet TV
31 28
Internet TV
26
43
Internet TV
• Almost 50% are on Youtube
daily
• 75% of them have uploaded a
photo on social networks
• 1/3rd on Youtube daily
• 60% have uploaded a photo
• 13% daily on Youtube
• 50% have uploaded a photo
More than
once a day
Which media activity would you miss the most?
Less than
once a day
(*)
(*) Includes 0-14 year old

10. © Deloitte LLP and affiliated entities.
Indeed digital advertising is projected to grow to
10% of total advertising spend by 2015…
Join the #Deloittepredicts conversation10
Source: Zenith Optimedia, Deloitte analysis
%fromTotalAdSpend
NewspapersTelevisionOut-of-HomeMagazinesDigitalRadio
4,933 5,282 4,741 4,908 5,154 5,488 5,954100%= 2012, % of total advertising spend
Evolution of advertising spend by platform – Arab Region Digital advertising share – Select markets
Low considering our
research shows people
spend 2 hours online per day
and 3 hours watching TV

11. © Deloitte LLP and affiliated entities.
…but there remains significant growth potential
for mobile ad regionally and globally
Join the #Deloittepredicts conversation11
Number of users (m)
68% of FB users access Facebook
on Mobile but generating only 30%
of revenues…
Facebook US UAE – Middle East
x10
x1.1
Number of users (m)
x1.2
x40
Ad Revenues (m) Ad Revenues (m)
…despite mobile ads earing 2.5
more ad revenues per impression
than desktop
Source: Facebook, IAB, Deloitte analysis

12. 2013 Mobile Advertising trends in the Middle East

13. Pros Cons
WHY MOBILE SHOULD WORK
# Strong demographics – by large young
and wealthy population
# Mobile is the main channel to the
Internet in MENA – little bit lower in KSA
+ UAE
# In 2012, Smartphone end up holding
24% of the total sales in MEA
# UAE is very competitive market as the
consumers tend to adopt new
technologies early
# GCC great Telco infrastructures (3G)
BUT …
# Ownership structure of most of the
brands - licensee (volume) / distributors
# Brand lifecycle in the MENA is still at
the infancy stage - TOMA
# Digital era started late in MENA – most
of the brands did not have compatible
website for Mobile format
# From 1.0 (Push) towards 2.0 (Pull)
+80% of MENA brands

14. Old New Eco
NEW ECONOMY OLD ECONOMY
COMMERCIAL REAL
ESTATE IS STILL
BOOMING IN THE GCC
#MALLCULTURE

15. Digital Mobile
FACTORS THAT WILL INFLUENCE
MOBILE ADVERTISING
# Most of the MENA brands are starting to
create relevant content online – but not
necessary on Mobile format.
# “Plateau effect” on the digital work for
majority of MENA brands.
# 350 millions of Arabic speakers / online
Arabic content only 3% at the world stage.
# 2012 e-commerce: highest number of e-
shoppers based in Saudi Arabia, with the
highest penetration in Qatar & UAE – still at its
infancy stage for the largest advertisers

16. Push Pull
MOBILE ADVERTISING REMAINS MORE PUSH RATHER THAN PULL
# Rare MENA advertisers have yet capitalized on the particularities of each 4 screen platforms
and 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. Time Adv.
ANOMALY ON MEDIA ADVERTISING - SORRELL
# Sorrell said that the main anomaly is internet and mobile where
in 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. Brands Views

19. Brands Views

20. Brands Views

21. Brands Views

22. MENA Barriers
WHAT ARE THE MAIN BARRIERS TO NOT ADOPT FASTER MOBILE ADVERTISING
# Lack of expertise in the region
# Lack of accurate consumer data to know consumer
preferences
# Lack of best practice case studies to show that it
actually works = Direct ROI
# Early in the maturity cycle – still focusing on
developing structure – website, apps, e-commerce
platforms etc
# Lack of content creation ability internally
# The buzz about social media is still in the air – brands
have not yet looked into optimizing mobile platforms
# Limited known effectiveness for B2B business
# Not strongly linked to revenue generation – may
generate “moderate” revenue in the future

26. Grégory Bolle

27. Grégory Bolle

28. Round Table &
Press coverage

30. © Deloitte LLP and affiliated entities.
Grégory Bolle

31. © Deloitte LLP and affiliated entities.
Dubai: We are stepping into a world where smartphones and tablets outsell PCs. While
regional advertisers are aware that the industry is going ‘mobile’, spend on digital advertising
is still low, according to a recent report by global consulting firm Deloitte.
“Digital advertising spend in the Middle East represents approximately eight per cent
of the total advertising spend [this year],” said Emmanuel Durou, Deloitte’s director of
strategy consulting.
The report, entitled ‘Middle East Technology, Media and Telecommunications
Predictions 2013’, shows that digital advertising in the region accounted for 6 per cent
of the total advertising spend last year. This creates a disparity between digital ad spend
and the consumption of mobile devices, considering that the Middle East made up 6 per cent
of global smartphone shipments last year, but has less than 0.1 per cent of mobile
advertising.
In addition, the gap between digital and television advertising spend in the region is still
glaringly large, with the latter accounting for 40 to 41 per cent of total advertising spend, said
Durou.
The region has many opportunities for mobile advertising, a term that considers smartphones
and tablets. The UAE, for instance, has a strong telecoms infrastructure, with two major
telecom service providers, a high smartphone penetration, as well as a predominantly young
population 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 with
1.36 million units in the fourth quarter of last year, stated the report.
Grégory Bolle

32. © Deloitte LLP and affiliated entities.
The demand for tablets was fuelled by low-cost options and the Millenials’ (the population
below 25) engagement with social network sites and online videos on these devices, among
other 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 of
international brands are less likely to engage creatively with customers through
advertising. Instead they “focus on sales and volumes,” said Gregory Bolle, BPG I
Bates’ Head of Strategic Planning
Another 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 their
brands 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 on
websites, which make up 60 per cent. The rest of the budget is spent on direct messaging or
SMS, 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 rate
of 35 per cent and make up 10 per cent of the total advertising spend by 2015, according to
the report.
Grégory Bolle

33. © Deloitte LLP and affiliated entities.
Grégory Bolle

34. © Deloitte LLP and affiliated entities.
The Telecoms Media and Technology Predictions 2013 report states that mobile advertising
spend 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 spend
across the Middle East, a figure that is "extremely low, not just from a benchmark point of
view when compared to the UK at 32 per cent but from a logical point of view as well", said
Emmanuel Durou, the director of strategy consulting at Deloitte.
The Middle East accounted for 6 per cent of global smartphone shipment last year, but
less than 0.1 per cent of mobile advertising is coming to the Middle East, according to
the report.
In the UAE there are 3 million users of digital apps and 3.6 million internet users, yet mobile
advertising revenues are just $7 million while internet advertising revenues are $280m. In the
United States, where they have 220 million app users and 245 million internet users, mobile
advertising revenues are $3.4bn according to Deloitte.
"Mobile advertising spend was $8m last year and this year we see it growing to $15m," said
Elie 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 of
Facebook and Twitter facing problems.“
In the Middle East, people spend on average two hours a day on the internet and three hours
on TV, but the gap between digital and TV advertising spend is substantial with more than 40
per cent of advertising budgets spent on television. Grégory Bolle

35. © Deloitte LLP and affiliated entities.
"The digital era started late in Mena," said Gregory Bolle, the strategic planning head at BPG
Group. "For some brands they have only just 3 or 4 years of online existence. In 2008
we just started exploring internet and digital opportunities with most of the local
brands.“
According to Bolle, there are three critical phases for digital advertising. The first is a robust
telecoms infrastructure and high laptop, Smartphone &tablet penetration rates. The second is
high 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 is
just that the traditional channels [TV and print] are still doing very well in the region, also the
mindset is different from the US and Europe.“
Advertisers in the region are still relying on push strategies when it comes to digital
advertising instead of pulling customers into their brands.
Generally most companies in the UAE allocate 15 per cent of their advertising budget
on digital of which 12-13 per cent goes towards internet advertising and 2-3 per cent on
mobile and tablet. About 60 per cent of this is spent on displays like banners on websites, 30
per cent on direct messaging, like SMS and 20 per cent on search. Globally, however, search
accounts for 62 per cent of digital advertising budgets, 10 per cent on direct messaging and
28 per cent on display.
"Mobile advertising is a huge opportunity that is still untapped said Durou.
Grégory Bolle

36. Emmanuel Durou
Director | Consulting
ME TMT
Deloitte & Touche (M.E.)
Building 3, Level 6, Emaar Square, Downtown Dubai
P.O. Box 4254, Dubai, United Arab Emirates
Tel: +971(0) 4 376 8602 | Fax:+971(0) 4 376 8899 | Mobile +971 (50) 5913078
edurou@DELOITTE.com
Grégory Bolle
Strategic Planning Head
BPG Group
Level 6 MAF Tower Deira City Center
PO Box 3294 Dubai UAE
T +971 4 295 3456 | F +971 4 295 8066 | M +971 50 435 4846
@GregoryBolle | gregory@batespangulf.com | www.batespangulf.com