Social Media in Dubai

Social Media in Dubai

The future for social media in the Middle East

To say that the future of the Middle East media market is about to change is akin to saying that the Dubai, UAE is going to develop a bit over the next few years.  Future and current technological trends such as web 2.0 and web 3.0 will make the new media revolution a reality. You may have heard media consultants call this Social Media. 

Leading the trend in Dubai

A good example of a company applying this new technology is Dubai Lime.com which provides an entertainment and community portal based that acts as the catchments website for Lime Green Entertainments LLC.   With this website the company has been able to integrate their business into the Dubai community, promote its CSR (Corporate Social Responsibility) commitments and act on the supply chain with instant targeted communications.  They are setting the trend for future businesses in Dubai.

Anyone will tell you that Entertainments companies survive through sponsorships, with the deployment of the web 2.0 portal does that mean that Lime Green Entertainments just have one kick ass website to promote its business and its CSR agenda or does it turn it into a media company by default?  Well the answer is almost certainly both.  Let’s look at the figures compared to some traditional media companies in the Middle East.

The Middle East has one or two relatively new TV channels that have been subject to investment of over 5 M USD, as a rule they attract between 20,000 and 100,000 viewers every month and took over a year to set up.   Compare that to Dubai Lime with a small investment of 100,000 USD to set the entire company their website now receives 300,000 “Viewers” each month, receives 22,000 individual video clip views every month, 6000 audio downloads and has achieved it all in four months.

Companies that take the opportunity to use media consulting to create their own media channel around their brand are going to set the trend and be the future market leaders in the UAE.

As the more tech savvy business leaders evaluate their competitive landscape they will see gaps in traditional companies’ business models that can be ripped apart with disruptive technologies.  These technologies are also within budget, especially considering that many of the tools required are licensed under free Open Source license agreements.   The company had the assistance of Onlime a new media marketing consultancy, but let’s face it who doesn’t hire consultants in the Middle East market.

Good Marketing managers will no longer be in brand marketing, they will be in brand media.  Traditional communications will no longer require heavy investment.  Now the tech savvy brand manager in the Middle East, with the help of consultants, can achieve the same effect without the huge investment. 

Onlime and Flip media have these technologies and expertise in place.  With new accounts being won on almost a weekly basis, it’s a shame the UAE doesn’t have more companies with this expertise.

Traditional media companies future depends on becoming quickly educated in this area.  Media is converging and with changes already happening, it won’t take long for the market to realise.

Media groups are grappling with a drift of revenue to the web

By Aline van Duyn

Published: January 1 2007 18:44 | Last updated: January 1 2007 18:44

Whenever a large company goes on the block, industry consultants can expect the phone to ring. Private-equity investors and other potential buyers need someone to analyse the business and its prospects, or at least produce figures to back up opinions they already have.

Yet the ongoing auction of Tribune, the second-largest US newspaper company and owner of titles such as the Los Angeles Times, has generated very little such business. Plenty of in-depth assessments of the future of US newspapers were conducted about a year ago when Knight Ridder, another newspaper group, was for sale.

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Knight Ridder went in a trade purchase. It drew no significant bid from private-equity investors, who concluded there was no hidden pot of gold in the newspaper industry and little certainty about future earnings amid internet-fuelled declines in circulation and advertising revenue.

“We all had a lot of work on Knight Ridder,” says the head of the media division of a New York based consulting firm. “Not for Tribune, however. Potential buyers already know the story – and it is not a good one.”

Gloom surrounding the prospects for the newspaper industry is one reason the boards of both Tribune and Knight Ridder sought buyers, submitting to pressure from some of their shareholders to find a way to boost returns.

Yet deals are not always the answer. McClatchy, the press group that bought Knight Ridder for $4.5bn (£2.3bn, €3.4bn) in cash and shares, turned out to be the worst-performing stock last year among US listed companies that completed large acquisitions. But how many more readers and advertisers will online rivals lure away and what can print publishers do to keep them?

Newspaper circulation has been in decline since the 1970s following the widespread introduction of news coverage on television. But the falls have accelerated in recent years as more people turn to the internet for instant news, often provided for free.

In addition, the shift in classified advertising to the internet as sites such as Craigslist make this service available, also often free, has gathered pace, hitting newspaper revenues. Advertising shifts appear to have hastened last year, leading many forecasters to cut their 2007 expectations.

Merrill Lynch, for example, expects a 2.6 per cent gain in overall US advertising spending this year but anticipates that newspaper advertising revenues will be down 1.5 per cent. Analysts at Lehman Brothers are even more pessimistic: newspaper revenues are forecast to fall 4 per cent this year, due in part to a migration of property advertising to the web.

“The movement out of print media continues and has lately been sharper than expected,” says Peter Winkler, managing director of the entertainment and media practice at PwC.

With newspapers at the centre of the digital storm, that industry’s efforts to adapt are being closely watched by executives in other media sectors, among them magazine publishers, television networks, film studios and cable and satellite television distributors. So far, at least in the US, the shifts have been less severe in television, the biggest advertising medium, with advertising growth keeping pace with economic expansion.

In Britain, where commercial television is a smaller market, a much larger proportion of advertising has already shifted to the internet. Google, the search engine, is forecast to take the biggest share of UK advertising revenues and overtake the top broadcasters as early as this year.

Laura Desmond, chief executive officer of MediaVest, a media buying agency, says that in the past year digital strategies have been “95 per cent of the talk and 5 per cent of the spend”. She predicts that this ratio will shift rapidly, with digital advertising potentially reaching 15 per cent of total advertising spending by 2009.

In particular, she says, television will start to feel the impact this year as the wider use of high-speed internet connections allows online video to proliferate. On the internet “you can now get sight, sound and motion”, she says. “Television [channels] will have to innovate to take that into account. The barrier around their fortress is crumbling; they will take a larger share of the shifts from now on.”

Other factors have so far limited the ability of advertisers to switch spending from old to newer media, Ms Desmond says. These include a lack of people with digital experience, as well as insufficient technical systems and infrastructure. “Digital is not the wild west but there is nothing standard in digital,” she says. “Everything is highly customised and this means it is not easily scalable. The industry needs to invest to develop these areas.”

Two weeks ago Publicis, the French advertising group, made a $1.3bn bid for Digitas, a US specialist in online advertising and other forms of digital and interactive marketing. Maurice Levy, Publicis chairman, said then that the bid reflected the speed with which advertising was moving to the web.

“What we can see is a huge migration of investment from traditional media to online media,” he said, adding that Publicis – which owns the Leo Burnett, Publicis and Saatchi & Saatchi global advertising networks – had expertise online but needed to buy Digitas to accelerate its efforts.

The effectiveness of interactive internet advertising – such as the search marketing developed by Google – is much easier to gauge than than television or print advertising. The increased attention being given to measurability has already led to shifts in strategy at many media groups, which are concentrating more on big brands that can more easily be extended to the internet and have a bigger resonance with consumers.

Time Warner, the world’s biggest media company – owner of AOL, Time magazine, Warner Brothers film studios and cable channels such as CNN and Cartoon Network – recently revamped its magazine group and is selling titles that are not among its strongest brands. This strategy is being adopted across the company.

“We are extremely optimistic about the internet platform providing advertising growth,” says Jeff Bewkes, president and chief operating officer at Time Warner. “Advertisers have long said that they know half of their advertising budget is being wasted; they just don’t know which half. As they figure this out with the improved measurability of the internet, it is a good thing to own the leading media brands as well as AOL, as all of these will be effective online, just as they are offline.”

Mr Winkler says that television advertisers are adapting their selling techniques, offering many more ways for companies to promote their brands. “Cross-platform ad sales are happening more and more,” he says. “For many, it is less about a move out of television than an evolution towards a broader approach, which includes product placement, online advertising and sponsorship. Big media companies are responding aggressively.”

For its part, the newspaper industry has seen no shortage of innovative efforts, with many newspapers adapting their content to make it available in a more suitable form online. Video and picture content have flourished on newspaper websites, with readers often being able to submit stories and pictures, strengthening the bond.

Yet there are troubling trends, which account for the nervousness about judging future profitability. The newspaper industry has higher fixed costs than some other sectors of the media, so switching distribution does not automatically lead to significant savings.

An analysis by Bain & Company, a consultancy, illustrates the problem. For an average US newspaper, a subscriber generates about $1,000 a year from advertising. For those newspapers that base their internet strategy around being a content destination, each viewer generates an average of $5.50 of advertising revenue. Losing one print subscriber can therefore be hard to recoup in terms of advertising, even as advertising dollars shift online.

“Newspapers can’t make up the difference for what they are losing,” says Peter Aman, a partner at Bain & Company. “Newspapers therefore need to monetise the internet through different business models.” These might include taking a cut from transactions that take place on the site (such as airline ticket sales) or charging a fee for consumer referrals (to a qualified plumber, say).

Some of the extremely popular social networking sites are also experimenting to see what will work best. Sites such as MySpace – owned by Rupert Murdoch’s News Corp and at the centre of his online strategy – are not content to rely solely on advertising as a revenue source. They are seeking to develop e-commerce deals with mobile phone companies, for instance, and offer users a search facility in a revenue-sharing tie-up with Google.

This need to find new income streams is one of the harder issues for the “old” media, which may resist investing in new areas in order to preserve their declining margins. Many are trying, though, revamping both print and online editions in an effort to attract more advertisers and also keep their readers interested. The Wall Street Journal, for example, is today due to change its print design. “We are in the early days of the digital age even now,” says Gordon Crovitz, executive vice-president of Dow Jones and publisher of the Wall Street Journal.

There are still some buyers interested in newspapers. The LA Times has attracted the attention of a number of California billionaires, who see value in owning a newspaper that has a strong local presence and is at the centre of the entertainment industry. David Geffen, the Hollywood media mogul, has made an offer but it is believed to be a lot less than Tribune wants. Jack Welch, former head of GE, has looked into buying one of Boston’s main newspapers together with a number of other local businessmen.

As efforts to sell Tribune gather pace again in the coming weeks, the level of interest will be watched by the newspaper industry as well as other media sectors. It will help place a future value on these businesses in transition.