The latest research from the Middle East by Econsultancy indicates that the digital industry is experiencing rapid growth.
The State of Digital Marketing in the Middle East and North Africa report (supported by ArabianBusiness.com) shows that on average, 27% of of overall marketing budget is spent on digital, up from 22% since the last report was published 10 months ago in April 2011.
Overall, 58% of companies are planning to increase their digital marketing in 2012, and of these, 52% plan increases of at least 20%.
Despite the impressive growth rate, there's still a long way to go, as beyond restricted budgets, company culture, reliance on traditional marketing and the lack of skills are holding back marketers from making the most of the digital opportunities in the region.
In addition, the inability to measure return on investment is thought to be a barrier by 28% of marketers this year, up from 19% in the 2011 survey.
Broadly speaking, the appetite, interest and growth within digital is very buoyant and the percentage of digital spend within a marketing budget has gone up from 22% last year to 27% this year. These are encouraging signs.
That said, I think clearly the market feels like the UK was five or six years ago in terms of the maturity of businesses and agencies. Not many companies have big teams dedicated to digital and a lot of what they're doing is experimental. So it's just a little bit less mature, though in some areas, like social media, [the Middle East] is actually not far off where the UK is, I would say.
The State of Digital Marketing in MENA report shows that company culture is preventing 29% of companies from investing further in digital, indicating that some companies may be slow to adapt to the changing digital environment.
The tools and technologies are clearly there, but there also needs to be a change in the broader organisational structure, including focusing teams around digital, which may take longer to be addressed. There also needs to be a shift in mindset, as company culture may prevent organisations from acquiring senior management buy-in, holding back further investment in digital.
One sign of the industry's developing maturity is that marketers are increasingly focused on return-on-investment and what this means in the context of their own business.
In this year's survey, 54% of companies indicated that their understanding of ROI was excellent or good, while 17% said it was poor or very poor. In comparison, in 2011, 64% of companies said understanding of ROI was excellent or good, while only 8% reported understanding to be poor of very poor.
Though on the surface it may seem that understanding of ROI is worsening, the reality is that as their knowledge develops, marketers are much more aware of what they could measure and metrics that are important for assessing marketing value.
Consequently their perception of their own understanding of ROI becomes much more realistic. A similar pattern can be seen in UK research, which shows that marketers become increasingly less confident in their understanding of ROI as the industry matures, and measurement of multichannel campaigns and attribution becomes more complicated.
The results of the State of Digital Marketing in MENA report were presented by Ashley Friedlein earlier this week at Econsultancy's second annual Digital Cream Dubai.
Monitoring Twitter during the event allowed us to look at real-time feedback about the research as the results were presented. As digital is inherently measurable and provides a wealth of built-in metrics, some expressed surprise that so many marketers are still grappling with the question of how to measure return on investment.
However, understanding ROI in this region is still very focused on generating traffic, increasing clickthrough rates and driving brand awareness.
As companies use increasingly sophisticated digital marketing techniques, and employ a joined-up approach, measuring ROI typically becomes more challenging, as Ashley notes in his interview for AMEinfo:
In the UK or indeed the US, the focus is much more on analytics, data-driven decision making and conversion rate optimization. So there's much less focus on getting traffic for traffic's sake, it's about optimizing the business and the commercial results.
At the moment I think the ways it needs to catch up are around moving away from the focus of driving traffic and looking at what actually is the key metric we want and often that's sales, leads, cost savings and things. It's quite an analytical, data driven business in the UK, whereas here it's a bit spend, get some traffic, and job done. Though this is not true of all.
The rise of social has made it more difficult for marketers to tackle return-on-investment and measure true commercial value. Social media is contributing significantly to the rate of growth in this market as 81% of respondents say they are planning to increase investment.
However, it's still in its infancy in this region, as over a third of respondents (36%) are dipping their toes into the water by experimenting with social media.
It's natural that as digital develops in the Middle East, companies will invest in the analytics tools to make the most of the wealth of data available to them.
However, as well as investing in the tools and technologies, companies also need to invest in skills, training and education to nurture local talent. The survey found that a lack of Arabic speakers with significant online experience is holding back the industry. And as digital develops, there will be increasing demand for Arabic copywriters with a background in digital. So companies must skill up now in order to avoid getting left behind in this fast-paced digital environment.
There's plenty more statistics, trends and charts in The State of Digital Marketing in the Middle East and North Africa report 2012, which is available to download for $400. Silver+ members of Econsultancy get access to all of our reports (more than 400) for the one-off annual price of just $495.
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