Digital marketing is thriving in the Middle East, according to new research published today by Econsultancy and supported by ArabianBusiness.com. The survey-based research has found that companies are spending 22% of their marketing budget on digital.

Companies are using a wide range of digital channels for marketing, and investment in online is expected to increase across the board. Encouragingly, over half of companies (58%) are increasing their digital budgets in 2011. 

However, the market is still very much in its infancy, and still faces major barriers to investment. Company culture, a reliance on traditional marketing, and a lack of knowledge are preventing companies from investing further money into digital.

This post looks at the current state of digital marketing in the Middle East, and some of the trends covered in our latest report. 

The State of Digital Marketing in the Middle East and North Africa is Econsultancy’s first survey about online marketing in MENA, and compares spending trends across different online and offline channels.

Notably, the survey results show that digital growth in 2011 is slightly higher than for marketing overall. Companies who are increasing their digital budgets are doing so by 28% this year, compared to a 22% increase for marketing overall. However, it’s important to emphasise that this figure relates to proportional growth, rather than in terms of absolute budget invested.

Nevertheless, the figures reflect a buoyant digital industry, highlighted by the extent to which different online channels are used by companies for marketing.

Which online channels do you use for marketing?

The chart above indicates that the vast majority of companies are using email for marketing. It makes sense for marketers to employ email marketing, as previous research from Spot On PR and Effective Measure has indicated email to be the most popular online activity for consumers in the Middle East.

Email consistently performs well in these types of surveys, because it is inherently measurable. There are numerous metrics available (for example, open rates, clickthrough rates, unsubscribes) that allow marketers to measure success. But despite many companies employing email, there’s clearly a need for marketers to adopt best practice email marketing techniques to optimise their campaigns.

As Dan Healy, founder and CEO of Real Opinions, highlights, consumers are often unhappy with the emails they receive from companies:

“For many organisations in the Middle East, email marketing is one of the first steps into the digital marketing world and one which allows them to accurately assess return on investment (ROI), if it is planned properly and there is transparency from the organisation doing the emailing. These research results reflect the popularity of this with 80% of responding companies claiming to use it for marketing. However, although ROI can be compared against direct costs, there is often a further cost which is often overlooked by organisations in terms of alienating them from their target audience if it is done poorly. 

“Our own research in the UAE has shown that email marketing is considered unappealing and annoying for almost a third of recipients (32%). Even when there is an existing relationship with an organisation, 25% of recipients claim that email marketing is unappealing. This certainly presents a challenge for organisations in the Middle East to improve upon.”

The good news is that more companies are investing in CRM technology, which will enable them to better understand customer needs and garner valuable consumer insights.

Our report also shows that offsite social media channels (such as Facebook and Twitter) are hugely popular among marketers in the Middle East. And their popularity can only grow further, as consumers become increasingly familiar with these types of websites. As we’ve seen in recent months, social media channels have played a significant role in influencing political change in the region and this has helped to drive widespread consumer adoption.

According to statistics released by Techno Wireless, there has been a significant increase in the number of internet users in Egypt after the January uprising, and particularly in the number of people actively using social networking websites.

The chart below from Social Bakers shows the change in the number of Facebook users in the United Arab Emirates in the last month:

Although 56% of marketers are using offsite social media, significantly fewer (23%) are using social media tactics on their own websites, such as blogs, forums, and ratings and reviews. Suzanne Locke, Digital Development Director for Emap Middle East said:

“It is interesting to see that offsite social media is a hugely popular (and fast-growing) marketing channel (56%), yet onsite formats such as blogs and forums are only half as popular. Forums and blogs are a relatively easy way of generating pages of SEO-rich – and Arabic-language – content, but I suspect few companies are willing to invest the internal resource needed for pre-moderation, which is imperative in this region because of media laws and political and religious sensitivities.”

It’s also worth mentioning that, despite the favourable signs of growth for digital, there are still major barriers to further investment. A lack of understanding about online marketing is holding back a significant proportion of companies, as is the general shortage of case studies that are specific to the Middle East.

Companies need to invest in greater training, education and consultancy to readdress the skills shortage within their organisations. There’s clearly a gap for industry expertise and specialist knowledge that could be used to inform clients about the potential of online marketing.

Both company and agency marketers also report a reliance on traditional marketing methods, but as online marketing industry evolves, this will help to readdress the balance. There are also more fundamental issues such as the lack of broadband access, and lack of infrastructure for e-commerce, which will need to be addressed in the long term.

The good news is that these barriers are not holding back digital, as the industry continues to flourish. Further investment will break down the barriers to online marketing as the market develops and matures. We’re very much at the start of the digital revolution in the Middle East, and it’s certainly an exciting time to be in this space.

There’s plenty more statistics, trends and charts in The State of Digital in MENA report 2011.

Image credits: adapted from unanoslucror on Flickr

UAE Facebook statistics from SocialBakers.com