28th December 2015 (Dubai, UAE)
As we write, the year is coming to a close and we are preparing for a needle-shifting year for Digital in Qatar in 2016. The drivers of the shifts are founded on commercial realities that are facing the market. The good days of spending aimlessly on marketing are over for Qatar and other countries in the Middle East, which means there will be some winners and there will be some losers.
In 2015, Qatar’s governmental budgets pegged the price of oil at $65 a barrel, and we all know how that played out. With the budget shortfall have come the loss of thousands of jobs, as companies and the government, itself, trim spending in an effort to meet the reduction in Qatar’s revenues with less spending.
The outlook for 2016 is far worse, with Qatar’s oil peg reducing to $45 a barrel. As you can see in the cart above, crude oil prices are roughly 20% below Qatar’s oil benchmark for budgeting purposes. So, where does that leave us? It means further budget shortfalls in 2016, unless there is a surprising turn in energy prices this year. The silver lining is that there is an expectation by major brokerages and research firms that oil prices will recover in the second-half of 2016, giving markets like Qatar a reprieve and hopeful decrease in the budget deficit.
Why does all this matter? Oil prices govern the overall business health of the entire region, especially markets like Qatar and Saudi Arabia, who are so reliant on petroleum and natural gas revenues. It has a major contagion effect to the entire region, and the international and regional firms in Qatar know it. Therefore, one thing that is coming down is marketing spending.
Contrary to popular belief, cutting marketing spend during times of weakness is not a good thing. Dubai-based SilverFox Digital Communications, Inc. reminds its clients that marketing spend reductions are not beneficial. Our team, alternatively, recommends companies focus on spending optimisation. In other words, force their marketing budgets to be accountable. That leads us to the first Marketing Trend in Qatar in 2016.
Trend 1: Print & TV to be big losers in Qatar during 2016, with Digital a prime beneficiary
There will be an acceleration in the share loss of both Print and Television as a percentage of total media spending. In our estimates, at least 25% of the reduced amounts will move to Digital, with the rest of the reduction being added back to corporate coffers. In our 22 years in business (with 18 in Digital), we have abserved the shift from print to digital accelerate repeatedly when times are tough.
This spells potential clouds on the horizon for Qatar’s big media outlets, who have not yet realised significant gains by selling digital media. Although big media is attempting to establish itself in the digital space, there are already strong incumbents, like qatarliving.com, iloveqatar.net, dohanews.co, qatarisbooming.com, and new risers like welcomeqatar.com. Add to this a multitude of vertical sites and Arabic-targeted content sites, and the digital opportunity for Qatar’s big media outlets is diminished.
We believe the big winners will be the aforementioned local sites in addition to the usual suspects, Google Search, Google Display Network, and Facebook. The dark horse candidate may be Twitter, which has recently enabled paid advertising in Qatar and has integrated a quickly rising social video platform called Periscope.
Trend 2: If it works well on mobile, Qatar companies should invest
Most of us have heard by now that the average Qatari has at least 2 smart phones in his or her hands. This number is slowly increasing, whilst the smart phone penetration of GCC nationals, Asian expats, and Non-Asian expats sails higher at a major clip. What does this mean for advertisers? They need to quit ignoring mobile marketing. You would not believe the percentage of Qatar-owned sites that are not mobile responsive (meaning, they adjust naturally to whatever screen size is displaying the site).
Companies in Qatar need to invest to make their sites mobile responsive. Back in April 2015, companies that did not have a mobile-responsive site already began taking a hit in Google Search Engine Results Pages (SERPS), leading to less direct traffic. We are recommending to our clients to take stock of their mobile readiness and magnify their mobile ambitions.
Web traffic in Qatar is already nearly 55% mobile. One client of our recently saw 85% mobile penetration, so the numbers are staggering! Where should companies invest this year? Why not SMS marketing, mobile app download advertising, social media advertising (as most social media use is via mobile and social lends itself to mobile-friendly ad formats).
Trend 3: Qatar companies will take a more objective look at Social Media investments in 2016
Have a very distinct reason for being involved in social media; and making the CEO happy doesn’t count. If you can list 3 business contributions social media can create for your brand, then it belongs in the mix at your company.
Repeat this questioning for all social media sites, including fashionable ones like Snapchat and Periscope. In our belief, you should not enter a social media platform without a success plan. We believe most of the companies in Qatar who have taken to Snap Chat don’t really have a plan around why they are there. It’s important to know who you are targeting and why. If a Qatar-based company has figured that out, and can put a commercially astute plan to reach their market using a social platform, then by all means, they should do it.
I’ve seen brands in Qatar get involved in social media for all the wrong reasons, so my biggest tip is not to spend resources unless you want to use social to solve a real business objective. Social Media really works when you’ve got a world of purpose for your investment.
SilverFox Digital Communications believes 2016 will be a difficult one for the Qatar market overall. However, we see great opportunities for the digital and mobile space as companies turn their attention (and budgets) towards more accountable mediums. Therefore, SilverFox Digital places a stable-to-positive outlook for sites such as qatarliving.com, iloveqatar.net, dohanews.co, qatarisbooming.com, and new risers like welcomeqatar.com.
Sometimes it takes a budget shockwave to shake old habits. We believe Qatar will be no different. Look out for the Digital Marketing wave to take Qatar on a ride towards marketing modernisation and accountability. Bring on 2016!
ABOUT SILVERFOX DIGITAL COMMUNICATIONS, INC.
SilverFox Digital Communications, is a Dubai-based Digital & Social Media Agency with an array of clients around the Middle East and Asia. Its executives bring digital experience from mega brands like: Southwest Airlines, Singapore Airlines, Qatar Airways, UBS, Orbitz.com, and more. Its origins date back to 1997 in Dallas, Texas.
ABOUT THE AUTHOR
Michael Stellwag is Founder & CEO of SilverFox Digital Communications, Inc., a Dubai-based Digital & Social Media Agency serving clients throughout the Middle East & Asia. His expertise in Digital Marketing spans almost two decades, with digital leadership roles at Southwest Airlines, Singapore Airlines, Qatar Airways, UBS, and Orbitz.com.
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