The 2016 MENA Pro­duc­tion In­dus­try


Un­less you’ve been stranded on a re­mote de­serted is­land for the past decade, be­ing con­nected to the In­ter­net is cen­tral to al­most ev­ery facet of our lives, so much so, that per­form­ing any kind of task how­ever mun­dane re­quires ac­cess to the Web.

This multi-screen en­vi­ron­ment run­ning on the back­bone of the worlds most ad­vanced com­mu­ni­ca­tions net­work has been re­spon­si­ble for un­prece­dented lev­els of growth in all busi­ness sec­tors. And, when it comes to gen­er­at­ing rev­enue for any in­dus­try, ad­ver­tis­ing is one of the main sources pow­er­ing pro­duc­tion.

As such, the pic­ture, rather than the sound, has be­come one of the most dom­i­nant ve­hi­cles when de­liv­er­ing a mes­sage. Now pic­ture this; al­most ev­ery per­son you know owns a smart­phone ca­pa­ble of record­ing au­dio and video with the press of a but­ton. Cou­ple that with the ob­ses­sive de­sire to ‘be seen’ and more free cloud space to show­case that re­al­ity, and you’ll ar­rive at the here-now where 300 hours of con­tent is up­loaded ev­ery minute to Youtube.

To­day, ad com­pa­nies re­gard In­sta­gram as the new holy grail of ad­ver­tis­ing po­ten­tial.

So­cial Me­dia

Be­ing one of the most pow­er­ful de­liv­ery ve­hi­cles for con­tent on the planet, Youtube, which is owned by Google, is an ideal plat­form for brands to ad­ver­tise. Yet, with so much noise to break through, even great ideas could eas­ily go un­no­ticed. That is why it also takes a great eye to shoot and bring to life work that tow­ers above the rest in any con­text. Though pro­duc­tion costs have sig­nif­i­cantly fallen, the bar­rier to en­try has risen tremen­dously. The irony of it all is, while com­pa­nies look for ways to get no­ticed us­ing clever tac­tics, some­times do­ing the ex­act op­po­site is what works best as the or­der of the day, based on a num­ber of stud­ies proves that MEDI­OCRITY is KING.

Yet prior to the era of ‘ self-pro­mo­tion’, both TV and ra­dio were the two ve­hi­cles with the most reach, which de­spite dig­i­tal por­tals of­fer­ing vaster and cheaper reach, they con­tinue to push the bound­aries of what feels like an an­ti­quated and quite lim­ited lin­ear struc­ture. Iron­i­cally, TV ad­ver­tis­ing, ac­cord­ing to lat­est re­search, has been found to be more ef­fec­tive than ever be­fore. How­ever, dig­i­tal video is grow­ing and spend will over­take TV in the next cou­ple of years. Put sim­ple, this kind of por­tal now bun­dles TV with so­cial me­dia, and real-time feed­back on mul­ti­ple screens. The only catch is, that the in­tro­duc­tion of dig­i­tal video recorders such as Tivo, which al­lows view­ers to skip ads, as well as the pop­u­lar­ity of com­mer­cial­free ca­ble chan­nels, has been di­min­ish­ing the reach and ef­fec­tive­ness of TVCS, thereby threat­en­ing con­tin­ued op­er­a­tion of these tra­di­tional ve­hi­cles as well as the pro­duc­tion houses re­spon­si­ble for con­tent cre­ation.

Ad-free TV

User be­hav­iour that sup­ported the tra­di­tional all-in-one TV pack­ages, net­works and ca­ble/satel­lite dis­trib­u­tors has also changed. We al­most never watch tele­vi­sion shows when they broad­cast any­more. We rarely watch shows with ads. We watch a lot of TV and movies, but al­most al­ways on de­mand and al­most never with ads and we watch con­tent on four dif­fer­ent screens de­pend­ing on what’s most con­ve­nient. This leads us to ques­tion the strate­gies com­pa­nies and net­works are us­ing to fi­nance oper­a­tions.

Some ar­gue that the tra­di­tional ‘net­work’ model is likely to break down and be re­placed with far larger and more ef­fi­cient li­braries

of con­tent, con­sid­er­ing that the per­cent­age of world­wide au­di­ences who watch TV has dropped seven per­cent over the past year. Also, the per­cent­age of peo­ple who watch video on a com­puter is higher than those watch­ing TV.

There have been a num­ber of at­tempts, in the past, to pro­mote the con­cept of ‘TV Ev­ery­where’, with mixed re­sults that have been less than spec­tac­u­lar con­sid­er­ing the pre­vi­ously men­tioned lin­ear model of the orig­i­nal sys­tem. Af­ter all, there is a fi­nite num­ber of pro­gram­ming slots forc­ing the TV sta­tion own­ers to fo­cus on max­imis­ing eye­balls among a spe­cific tar­get de­mo­graphic. On the other hand, a dig­i­tal net­work faces none of these lim­i­ta­tions since there is no max­i­mum amount of pro­grammes re­quired.

For in­stance, in the last quar­ter of 2014, Net­flix de­liv­ered more min­utes of video in the United States than the av­er­age broad­cast net­work and twice the amount as the in­dus­try’s largest ca­ble net­work (The Dis­ney Chan­nel). This kind of ser­vice was also seen as a di­rect Pay TV com­peti­tor. Net­flix is also de­lib­er­ately in­vest­ing in niche con­tent that, over time, will cre­ate a mass mar­ket ser­vice. That is why the rush for orig­i­nal con­tent has be­come ubiq­ui­tous. Aside from a rush to ‘brand-name’ tal­ent, A-list Hol­ly­wood di­rec­tors are in­creas­ingly in­volved with small screen con­tent. For that rea­son, TV shows are now level­ing the qual­ity of cin­e­matic pro­duc­tions ri­val­ing Hol­ly­wood block­busters.

Over the last five years, to­tal TV ad spend re­mained around 40 per­cent, which hap­pens to be four times larger than dig­i­tal in 2015.

The Power of Video

Though pro­duc­tion costs have sig­nif­i­cantly fallen, re­al­ity paints a dif­fer­ent pic­ture as usu­ally is the case. The cost of pro­duc­ing TVCS is two-fold. There are the pro­duc­tion costs and then there is rent­ing a spot to air it. The global av­er­age of pro­duc­ing a 30-sec­ond na­tional TVC is $300,000 how­ever, com­mer­cials de­signed to air in lo­cal mar­kets can be pro­duced for far less.

On the one hand, it be­comes clear that ‘videos’ have be­come the ul­ti­mate form of com­mu­ni­ca­tion/ex­pres­sion. On the other, due to the pro­lif­er­a­tion of dig­i­tal por­tals, craft­ing such mes­sages can eas­ily be achieved with bud­gets that don’t nec­es­sar­ily ‘break the house’. Ac­cord­ing to Cisco, video will ac­count for 80 per­cent of all In­ter­net traf­fic by 2019, up from 64 per­cent in 2014. In sup­port of that pro­jec­tion, Face­book Founder says that 90 per­cent of so­cial net­work’s con­tent will be video-based by 2018. Also, net­work com­pany Eric­s­son be­lieves video traf­fic will rocket 55 per­cent a year till 2020.

But what does all this mean to ad­ver­tis­ers?

Well, some me­dia ex­perts be­lieve that it is time for brands to step up and take re­spon­si­bil­ity for the pro­duc­tion of me­dia rather than leave it in the hands of ad agen­cies and their myr­iad third party sup­pli­ers all of whom have per­sonal vested in­ter­ests in main­tain­ing the sta­tus quo re­lated to high pro­duc­tion costs.

The Per­sonal Ap­proach

Brands also have to wake up to the fact that they need to cre­ate more unique con­tent them­selves to en­sure an au­then­tic feel to their mes­sag­ing now that they are in­creas­ingly speak­ing di­rectly to the con­sumers who de­mand nat­u­ral con­tent, or­gan­i­cally shared and peer-se­lected, some­thing that speaks to them per­son­ally on an au­then­tic level. In other words, per­son­al­i­sa­tion is key to brand ex­pe­ri­ence, which is known as cross-chan­nel be­hav­iour.

Some savvy ad­ver­tis­ers, hav­ing dab­bled with var­i­ous dig­i­tal plat­forms to pro­mote their brands found great merit in un­likely so­cial net­works and both In­sta­gram and Youtube are prime con­tenders in that space. To­day, ad com­pa­nies re­gard In­sta­gram as the new holy grail of ad­ver­tis­ing po­ten­tial. The im­age heavy plat­form en­cour­ages brands to make their ad­ver­tise­ments look like user posts, blur­ring the lines be­tween ad­ver­tise­ments and or­ganic posts. Also, for ev­ery ad placed, In­sta­gram can show users mul­ti­ple prod­ucts with a sim­ple swipe, which in­creases user en­gage­ment and the value each ad place­ment with­out ex­u­ber­ant cost in­creases. These ads run for 15 sec­onds with the op­tion of go­ing the full 30 sec­onds and reach 400 mil­lion users, a re­al­ity TV can­not achieve.

By 2017 In­sta­gram’s global mo­bile ad rev­enues will grow to more than $2.5 bil­lion. This is done in three dif­fer­ent ways us­ing Photo Ads, Video Ads, and Carousel Ads (users swipe to see ad­di­tional images and a call to ac­tion op­tion to a web­site to learn more). Most im­por­tantly, user-gen­er­ated con­tent is ex­actly how to cre­ate trust lead­ing to pur­chases. Af­ter all, and till this day, two of the most trusted forms of ad­ver­tis­ing are rec­om­men­da­tions from peo­ple and on­line con­sumer opin­ions.

Another undis­puted so­cial net­work mak­ing waves and gen­er­at­ing profit while amass­ing mo­men­tum is Youtube. The com­pany, in a bid to lure ad­ver­tis­ers has its own built-in tools that en­able par­tic­i­pat­ing firms to post their ads and learn how long view­ers were en­gaged, at what point they stopped watch­ing, whether they watched it more than once, and if they shared it or not.

Money is made based on peo­ple’s en­gage­ment with the ad rather than num­ber of views. The term is de­fined as click­ing or watch­ing an ad for more than 30 sec­onds. Ad­ver­tis­ers chose ads on a Cost Per Click (CPC) or Cost Per View (CPV) model. There also are other types of meth­ods such as Pre­Roll ads, which act as a pre­view be­fore the video starts and view­ers can skip af­ter five sec­onds. In-search ads show up in search re­sults and are sur­rounded by a yel­low box. In-dis­play ads show up on the right side of Youtube in the sug­gested video area.

Ac­tion­able Re­sults

The power of video is so wide-spread that the Web Video Mar­ket­ing Coun­cil says al­most all B2B com­pa­nies they sur­veyed are us­ing this medium when it comes to their mar­ket­ing strate­gies. Three com­pa­nies of­fer­ing video ser­vices are: Episend who help firms cre­ate personalised mul­ti­me­dia videos they can send to sales prospects by email. Videopath in­cor­po­rates in­ter­ac­tive el­e­ments in videos. Rapt Me­dia makes videos even more in­ter­ac­tive by al­low­ing view­ers to choose which me­dia con­tent they want to see. Once a mar­ket­ing video is ready to go, ser­vices such as Vid­yard and Bright­cove help com­pa­nies dis­trib­ute the videos via ev­ery de­vice and plat­form and mea­sure per­for­mance.

The Mid­dle East

Though the re­gion is no ex­cep­tion, adop­tion al­ways takes time and VOD is no ex­cep­tion. It con­sti­tutes a mar­ginal one per­cent of the global mar­ket though is grow­ing fast. The tech­nol­ogy is still lim­ited due to the size and qual­ity of the li­braries made avail­able by lo­cal providers con­sid­er­ing that free-to-air TV chan­nels across the re­gion is at 95 per­cent. Around 25 per­cent of Mid­dle East­ern house­holds have broad­band sub­scrip­tions, 10 per­cent have Pay TV sub­scrip­tions and all met­rics have ex­hib­ited dou­ble digit growth over the past 10 years.

How­ever, high smart­phone pen­e­tra­tion rates and me­dia en­gage­ment are driv­ing fur­ther in­no­va­tion in the field. This ex­plains why, based on on­line video stream­ing at a pen­e­tra­tion rate of 50 per­cent through­out the GCC, con­sumers are ea­ger to pay pre­mium prices for high qual­ity and dif­fer­en­ti­ated con­tent ser­vice free of ads.

Over the last five years, to­tal TV ad spend re­mained around 40 per­cent, which hap­pens to be four times larger than dig­i­tal in 2015. Mid­dle East to­tal TV ad­ver­tis­ing rev­enues are ex­pected to sur­pass $2.6 bil­lion by 2019. In this re­gion Pay TV has a small share and the ad­ver­tis­ing busi­ness model can­not yet sup­port the hun­dreds of chan­nels on Free-to-air, which is why dig­i­tal could be an op­por­tu­nity.

In the ab­sence of stan­dard au­di­ence mea­sure­ment tools across re­gional mar­kets, Dig­i­tal can pro­vide pre­cious data for both broad­cast­ers and ad­ver­tis­ers. Dig­i­tal can also cre­ate new rev­enue streams for con­tent own­ers. How­ever, re­gional broad­cast­ers seem to be in a rush to de­ploy ‘TV Ev­ery­where’ plat­forms with­out any mon­eti­sa­tion and hence risk again in­creas­ing their cost base with no sus­tain­able busi­ness model in sight.

All these fac­tors di­rectly af­fect sup­ply and de­mand when it comes to re­gional pro­duc­tion houses who, in the fol­low­ing an­nual roundup, in­sist that cost and qual­ity go hand-in-hand. Though it re­mains clear that large com­pa­nies, es­pe­cially multi­na­tional ones, pre­fer to deal with re­puted pro­duc­tion houses when cre­at­ing con­tent, the dom­i­nant trend seems to be point­ing in a dif­fer­ent di­rec­tion. And, as the fre­quency for highly-crafted con­tent be­comes more of a niche rather than a stan­dard, the tra­di­tional busi­ness model will have to be se­ri­ously re­vised.

Fol­low­ing, are the thoughts and strate­gies MENA pro­duc­tion houses have been pur­su­ing to ac­com­mo­date this change, once again prov­ing how re­silient and cre­ative we as a peo­ple can be in the face of ad­ver­sity and di­ver­sity.

Brands also have to wake up to the fact that they need to cre­ate more unique con­tent them­selves to en­sure an au­then­tic feel to their mes­sag­ing...

Za­atar W Zeit us­ing Twit­ter video to pro­mote the brand

Master Chips video ad on In­sta­gram

Bank Audi video ad on In­sta­gram

Cof­fee­mate Ara­bia spon­sored video on In­sta­gram

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