Amid pandemic, Middle East adtech startups play essential role in business growth

The pandemic’s impact on the business world encouraged adtech startups and digital marketing agencies to collaborate more, helping brands survive the pandemic by bringing businesses closer to consumers.

Although overall spending on advertising slowed in 2020, it is expected to recover in 2021 and reach $630 billion in 2024. According to Statista, North America spends the most on advertising, with second place going to Asia and Western Europe. The rest of Europe, Africa and the Middle East lag behind.

However, the Middle East embodies great potential. According to Statista, it boasts the highest growth, with a 600% increase in digital advertising in the MENA region between 2010 and 2015. Although consumers in the region used to prefer traditional advertising channels, the internet took over in 2020, with 44.2% of the total ad expenditures, while TV dropped to 30%.

Here are several essential characteristics of digital advertising in the Middle East region:

1. According to a PwC report, 39% of shoppers in the Middle East use social media to find inspiration for purchases, compared to the global average of 29%.
2. Due to the existence of a shadow economy, political regulations and unofficial business, the amount of digital ad spending in the MENA region ranged from $1 billion to $1.2 billion in 2020.
3. Paid social is the leading category in digital advertising expenditures in the MENA region. Saudi Arabia and Egypt are the largest in terms of active YouTube users.
4. There are more than 500 digital agencies listed in the region. UAE is leading in terms of big advertising agencies, while Egypt and Saudi Arabia are famous for small- and medium-size agencies. Most digital marketing talent and creative resources reside in Egypt, Lebanon and Jordan, while most adtech startups are born in Israel, UAE and Qatar, according to digital marketing consultant Yasser Ahmad.
5. E-commerce is driving growth, hitting $17 billion in the Middle East in 2020, according to Statista, with many online shoppers increasing the frequency of purchases during the pandemic.

MENA digital marketing agencies implement local adtech technologies

First, international businesses must rethink their branding strategy and consider local specifics. Each channel has its own cultural features and should align with users’ behavior. Ahmad noted that because 96% of consumers in Saudi Arabia and 82% of consumers in Egypt prefer Arabic, there is still a need for local startups to adjust the campaign’s language and provide a coherent translation.

Secondly, the Middle East region is moving toward performance-based campaigns, with nearly 60% of advertisement agencies preferring this type of campaign, according to a report from the Interactive Agency Bureau. Agencies collaborate with adtech startups to apply pricing models that measure the effectiveness of advertisements using cost per mile, cost per lead, cost per acquisition and other metrics.

Finally, despite the slow transition from traditional advertising channels to digital ones, the demand for programmatic advertising is rising, with the UAE leading this segment. Clients and brands intend to automate marketing campaigns and apply AI for more effective content performance. At the same time, brands demand results-based payment using metrics such as ROI or ROAS. Because there is a shortage of digital skills, adtech startups are primed to step in to help with advanced consumer analytics and generating insights.

 Adtech startups work with digital agencies and international brands

The top ad networks in the MENA region include Facebook, Google Ads, ironSource, AppLovin, AdColony, AdFalcon, InTarget, AdZouk and Ampush. At the same time, the region is rich in adtech startups and competitive atmosphere.

Here are, in my opinion, the most in-demand technologies:

1. ArabyAds, a Dubai-based advertising marketing intelligence agency founded in 2013, aims to adapt performance-driven models beyond mobile. The company has delivered its marketing solutions to more than 450 clients so far, including Noon, Alshaya, Al Tayer, Landmark Group, Namshi, Carrefour, Golden Scent and others. The effectiveness of ArabyAds’ campaigns was showcased in 2019’s Black Friday results. The team behind ArabyAds sold more than 2 million items resulting in sales of $54 million.
2. OMMA, a neodigital signage software platform founded in 2015 in Istanbul, provides a cloud-based, secure, flexible and OS-agnostic digital signage software. In partnership with Turkcell, the largest mobile operator in Turkey, OMMA launched a digital signage project with 1,200 locations and 12,000 displays.
3. Sayollo, an immersive platform founded in 2018 in Israel, enables targeted and immersive video ads within mobile games. Sayollo presents video ads inside the virtual scenery of mobile games, allowing audiences to enjoy an undistracted experience. The startup is fully compliant with GDPR and CCPA and partnered with Nielsen and Protected Media to verify all traffic, users and audience.
4. Crowd Analyzer, an Arabic-language social monitoring platform founded in 2013 in Dubai, is the first fully automated social web monitoring platform that supports English as well as different Arabic dialects. They use a proprietary algorithm, machine learning, AI and natural language processing to select trending topics in people’s conversations by analyzing hashtags, phrases and words. The startup received $1.1 million in funding from a group of venture capital firms based in the UAE, Saudi Arabia and Kuwait. Its clientele list includes Souq.com, Uber, Expo 2020 and Abu Dhabi Airport, among others.
5. Shelfy.io, a Tel Aviv-based mobile commerce platform founded in 2015, offers a retail media suite; data, analytics and management tools; and omnichannel support with loyalty features, enabling retailers and fast-moving consumer goods companies to improve performance and business growth. They offer a real-time dashboard and sales report with deeper analytics of customer behavior and user journey. Their clients include Kruidvat, A.S. Watson Group, and Rami Levy Hashikma Marketing, among others.
6. Because competition is intense in the region, the list could be continued with other startups such as Anagog, Anzu, KrASIA, Searchfuse, CHEQ, Yazle, Singular, Adjesty and others.

What to look for when choosing adtech startups

The wide variety of companies in the digital advertising industry makes it easy for brands to select an appropriate adtech startup for their business.

Here’s what to stick to:

1. Conduct market research and develop the localized advertising strategy.
   The Gulf Cooperation Council (GCC) marketplace should be divided into countries and cities to target consumers wisely. Dubai, with its many expats, prefers English in advertisements, while Saudi Arabia’s citizens rely mostly on Arabic. Demographics, market needs and purchasing power can differ among the regions and affect the results of the marketing approach one chooses.
2. Choose the right expert for the industry and region suitable for your brand.
   While Dubai is best known for the rise of digital marketing agencies with expertise in programmatic advertising, there are also good adtech startups in Egypt, Turkey, Israel and Saudi Arabia that could cost-effectively tackle your needs. The UAE accounts for almost half of advertising spending in the region, with advertising firms partnering with multinational businesses, while Turkey is the largest in terms of search advertising. Iranians are rather fast adopters of new technologies of local ad networks. There are some markets where it would be difficult to establish digital advertising, such as Syria, Sudan and Iran, because advertising via Facebook or Google is prohibited.
3. Customize your local Arabic branding campaigns.
   The brand image should address the culture of the region and respect the local values. Companies should use caution when hiring an influencer for a marketing campaign to preserve the brand image while interacting with the local culture.
4. Optimize your marketing channels and evaluate the performance with the right metrics.
   Although social media usage is on the rise in the region, there are other marketing channels apart from influencer marketing, such as video marketing, display networks and Arabic SEO. Thus, it is essential to choose a correct mix and remember the specifics. The process of tracking the performance of an advertising campaign is complex and requires various metrics, such as conversion rate, ROI, the cost for impressions and clicks. There is a special segment of startups that provide dashboards with deep performance analytics and help choose the suitable pricing model based on cost per mile, cost per lead, cost per view, cost per click or cost per acquisition.

Middle East as a prospective adtech region

The Middle East is a promising region with growing digital advertising solutions despite locals’ attachment to traditional means of advertising. In recent years, there has been a shift to the active use of social media and online shopping. However, customers became hybrid: They would continue to shop online without dropping the in-person shopping activity ingrained in their culture.

People are more likely to use YouTube and Instagram, although videos are viewed as entertainment, meaning the efficiency of video marketing is still limited to industries like travel, fashion and gaming. The searching skills of the audience are fairly elementary, but technological literacy is improving, with Iranians being the fastest adopters of digital instruments in the region.

As for the technological trends, there has been a rise in local influencer marketing services, usage of artificial intelligence to explore the patterns of behavior, cost-effective programmatic advertising, improved search advertisement methods, voice interaction and conversation-optimization tools.

It’s a complex market, but the smart selection and implementation of advertising technologies will help you start a successful dialogue with your customers.