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.
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.
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.
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