Day 3 of ArabNet 2014: Diverse Paths to Success

With the ArabNet Digital Summit in Dubai taking place at Atlantis the Palm next week, now is perfect time to catch up on events from the last ArabNet session, which took place in Beirut.

ArabNet is the #1 event in the MENA region for digital creatives to geek out over Web and mobile development, Web and mobile design, online marketing, e-commerce, and much more.

This article is the last in my summary series on ArabNet Beirut 2014. Here is the full list, if you want to read them in order:

If you are interested in reading about the major events of the last day of ArabNet Beirut, keep reading.

Talk: State and Growth of Digital Advertising by OOX

The first talk of the day came at 10:45 a.m., covering digital advertising trends in the United Arab Emirates, Saudi Arabia, and Kuwait. The talk was given by a representative from OOX, an online advertising, monitoring, and intelligence company serving the Middle East.

OOX has come up with estimates for advertising activity in the UAE, Saudi Arabia, and Kuwait by calculating the total number of advertising campaigns in each country, multiplying that number by the total number of websites involved, then multiplying that figure by the total number of active weeks.

I will summarize their findings below.

United Arab Emirates

According to OOX, the 3 most active advertising categories in the UAE in 2013 were:

  • Automotive
  • Banking and finance
  • Telecom services

The UAE was also distinguished by the following popular advertising categories:

  • Leisure and entertainment
  • Hotels and resorts
  • Real estate and property
  • Retail
  • Food
  • Snacks

One noteworthy factor at play in the UAE was that the total share of the market held by top brands was relatively low compared to the number of brands in the market. In the UAE, only 19% of the market was controlled by top brands, compared to 30% in Saudi Arabia and 27% in Kuwait.

“I’d say this indicates that the market is more competitive,” said OOX’s representative. “There are more players in the UAE that are active online, and therefore they’ve diluted the share of the top ten in the market.”

Saudi Arabia

OOX found that there were 4 top advertising categories in Saudi Arabia in 2013:

  • Automotive
  • Telecom services
  • Banking/finance
  • Health/beauty

The additional popular advertising categories that stood out for Saudi Arabia were:

  • Mobile phones
  • Media

Saudi Arabia’s top rising brand seemed to be Mobily, STC’s competitor in the mobile telecom services market. Traditionally, STC has been the most active brand in Saudi Arabia, safely holding its position as one of the leading investors in online advertisement. However, these roles were reversed in 2013, with Mobily having not only taken over the top spot, but boasting a share of activity more than 30% that of STC.

“Definitely Mobily is the brand to watch in 2014,” said the representative. “There seems to have been a shift in strategy.”

Kuwait

Finally, OOX found that these were the top 3 advertising categories in Kuwait:

  • Telecom
  • Automotive
  • Banking/finance

Kuwait’s additional popular advertising categories were:

  • Retail
  • Food
  • Snacks

In Kuwait, the rising brand was J&J, which climbed from the 10th position in terms of top advertisers to the 2nd position. According to OOX’s representative, this made J&J a brand to watch in 2014.

Finally, the representative discussed the differences in seasonality and advertising language among the 3 markets.

Interestingly, the high and low months were not in sync among any of the markets. For example, the high point for advertising in Saudi Arabia was in July, while the high point for the UAE was in March. In terms of language used in advertising, OOX found that, while advertising campaigns in the UAE were more likely to use English for creative text on ads than campaigns in Saudi Arabia, there were more English campaigns and more English communication in campaigns in Saudi Arabia than in the UAE.

The representative then wrapped up by emphasizing that the 3 markets studied were all very different.

“Every market has its own mindset,” said the representative. “Every market has its own logic.”

Panel: Music & Digital Distribution

This panel was moderated by Eddy Maroun, the co-founder and CEO of Anghami, a Lebanon-based music streaming service. Focusing on the opportunities and challenges facing the music industry in the age of digital distribution, the session took the form of an interview given by Eddy to Claudius Boller, the Director of Digital Business, Business Development and Brand Relations at Universal Music MENA.

I will summarize the main points presented by Claudius for each major topic that arose.

Universal’s Acquisition of EMI

According to Claudius, while EMI was not very profitable, they had a huge catalog, including The Beatles and Coldplay. Some of EMI’s content had to be resold to Warner Music because of the U.S. Senate and the European Union’s regulations regarding monopolies.

However, Universal was able to obtain exclusive license for Warner Music content in the Middle East, representing them and taking care of monetizing Warner Music in the region.

The Importance of Digital Revenue

“From our perspective as a music label, digital is essential,” said Claudius. “It is very important. I can say that we increased our digital revenues in the three years that I’ve been with Universal Music massively, by three times.”

Claudius added that, while physical sales are still important, they are not a major money-generator. Likewise, while bands make most of their money from live concerts and music videos, this is not as important a source of revenue for Universal when compared to digital sales.

However, Claudius encouraged artists to think of digital distribution as an important promotional tool to gain traction for future releases.

Cooperating with YouTube

Claudius said that Google is an important platform for Universal, yet the Universal team has long felt that the money they earned from each music video shown on YouTube was not enough. This was one reason that Universal, Google, and several other major companies created the joint venture known as Vevo.

“We work with Google together on Vevo, but still there’s not enough money,” explained Claudius. “But you have to see that there is no big release without music videos. So we have to live with the fact that YouTube consumption and Vevo consumption is huge across the world. So, when artists come to us at the moment, show a great lead and their music’s great, they’re good singers, we have to talk about the video immediately.”

Claudius added that this is why YouTube videos from Universal Music artists like Rihanna, the Rolling Stones, and The Beatles include links to platforms like iTunes, Amazon, or Anghami—the goal to raise the viewer’s awareness of music services.

The Threat of Piracy

According to Claudius, the music industry is to blame for its own decline because the industry has not been able to monitor activity in other spaces, such as the digital realm.

“I see in Sudan there is illegal stores with CDs,” said Claudius. “No one actually bought a CD in their entire life, an official CD. And we can never win the race against piracy… if you want to have pirated music, you will always get it.”

However, in 2012, Claudius noted that industry revenues began growing once more. He said that the key to success is serving broadcasters and audiences by making access to music convenient. The peace of mind that comes from always having access to their favorite songs is something Universal can provide to music fans, but piraters can’t.

Getting Artists Involved in the Value Chain

Claudius encouraged artists to think of themselves as taking on some of the roles traditionally associated with a record label.

“They need to do their own social media,” said Claudius. “They need to do their own Facebook, being very creative.”

Essentially, the artist has to find their audience in order to eventually make money from brand ambassadors and sponsorships.

Finally, Claudius wrapped up by emphasizing that the key to digital distribution is introducing convenient options for accessing music to mobile users. By offering a free music service that offers some paid features (freemium), users can be gradually encouraged to become paid subscribers over the course of one year to several years. Thus, by combining advertising income and sponsorship, a free music service can maintain a balance between free users and paying users.

Claudius has envisioned a future where each music fan will have a music rights list that they can seamlessly access from any PC or other device, just by logging in.

“Convenience will win over clients,” he concluded.

Interview: Digital Luxury Brand Management

This session took the form of an interview between a moderator and Fatma Ghaly, the daughter of Azza Fahmy, best known for Azza Fahmy Jewelry. She is the current leader of the luxury brand, established in 1969, which launched a full e-commerce site in early 2013. In the next four years, Fatma believes online sales will make up six to eight percent of AFJ’s revenues.

Promoting the Website

Fatma started by discussing her focus on building AFJ’s Internet presence and driving traffic to fuel her site. Collaborations and partnerships with entities that already shared a market with AFJ have been key in driving relevant traffic, as opposed to traditional mass market advertisement. The Web platform has also provided a wealth of information on her customer base in ways that traditional advertising can’t match.

She said that running campaigns that can be easily adapted to both the online and offline worlds is essential. One of Azza Fahmy Jewelry’s biggest campaigns currently focuses on tagging and uploading photos on a social media outlet, but also writing notes to loved ones in their stores to be uploaded online. This has helped create “crisscross action” between the two worlds.

In terms of online promotions, Fatma said that they were an important tool for promoting online engagement, but that since AFJ is a luxury brand, she always had to be careful not to devalue the brand. Thus, the buy-one-get-one-free promotional ideas associated with pizza restaurants would not be appropriate.

“We sell art,” said Fatma. “You don’t give away art for free.”

Instead, AFJ has has run promotions that give away jewelry pouches or a free gift with a purchase, or the company’s book—always something far from the actual product.

Online Challenges

Fatma pointed out that a dichotomy exists between the accessibility of a website and the traditional inaccessibility of a luxury brand. She said that her focus has been on making AFJ a world-class company, not just an e-commerce site.

One challenge has been making shopping on the website similar to the experience of being in one of AFJ’s retail stores. For example, customers want to try on products before buying them, so she was initially concerned that customers would be turned off by shopping for high-end items online. She said that getting the products into stores, whether through “pop-up”/temporary stores or department stores, is a priority. Once people see and experience the product in person, they will go to the online store for more. Fatma is also hopeful that, with the advent of 3D printing, a better solution may be achieved.

The single greatest difficulty in taking AFJ online, however, was shipping. Fatma said that, since luxury jewelry is expensive, shipping problems could have spoiled the launch. However, once customers became more comfortable buying online, and saw how well the process worked, the results were worth it.

Panel: Emerging Commerce Platforms

This afternoon panel discussion focused on the experiences of 4 participants who had helped shape the e-commerce landscape in the region.

The participants were:

I will now briefly summarize the main topics of discussion that came up during this session:

Challenges in Regional Online Retail

Rania said that setting up shop in the Middle East as a region had its challenges, especially in terms of dealing with different countries’ rules and regulations. She mentioned being a big supporter of PayPal and said she hopes it will become more developed within the region. The other panelists mentioned customs exchanges and the reluctance within Arabic retail culture to make the transition to online business.

Online Advertising Platforms

When asked about using Facebook as an advertising platform, Muhammad mentioned that Citra Style generated a lot of buzz by collaborating with a woman who had gained a huge following by posting about fashion. Fadi said that flash sales are all about connecting the consumer with the opportunity to buy the next new thing, so social platforms are crucial.

Rabih said he had used a wide array of advertising platforms, including Twitter and Google. Not only do all of these platforms cost different amounts of money to use, but each one also produces different results in different countries and areas. His advice is to entrepreneurs was to stay close to the market and be ready to make adjustments.

Rania said that Ananasa had reached its current level of success partially through crowdfunding. The main problem that crowdfunding solves is bridging the gap between incubating the start-up and generating steady cash flow. She said that investors in the Middle East are not very eager to get involved with start-ups at that “gap” stage, but that crowdfunding provides an effective way to overcome that hurdle.

Fulfilling the Need to Haggle

Rania spoke about the experience of adding a bazaar feature to her e-commerce site. She found that her sellers were sometimes inexperienced, and allowing her customers to haggle over the price of goods was not only a great way to bring the offline experience online, but also allowed them to gain invaluable data on sales prices on specific items to further assist sellers.

Talk: Building Creative Communities by EyeEm

Finally, the last event of ArabNet Beirut 2014 before the closing Creative Combat and Awards Ceremony events featured Ramzi Rizk, co-founder and CEO of EyeEm. EyeEm is one of the world’s largest photo communities, as well as a social networking site for serious photographers that allows them to network and sell their photos.

How to Build an Online Community

Ramzi said that EyeEm is valuable because it is a real community, and that the first thing to know about building a community is that no one can actually do it.

He said that the following factors did help EyeEm progress from its first photo exhibit to the millions-strong community it is today:

  • Transparency: EyeEm does a few things to set them apart as far as communicating with their users. They have terms of service in plain readable language, their users know everything that is going on, and their users have complete control over their profiles and photos. EyeEm never changes anything without talking to their users first.
  • Approachability: EyeEm literally has an open-door policy. They regularly have members from all over the globe visiting Berlin to drop by their office. This shows users that they are valued and appreciated. It also allows users to communicate with management directly.
  • Love: Ramzi and his team are running EyeEm because they are photographers. Their focus is on the people in the community, not “huge numbers.” The team has built something that they love, and it permeates through the product.

Ramzi said that everyone thinks that that point of startups is to build a company, grow it, and then sell it, but that is missing the mark. When the consumer sees that a team loves and cares about the community they are building, that community will flourish.

“How do you build and create a community?” asked Ramzi. “You really don’t. You actually find one and you join it. You find something that you love, you find something that you’re passionate about—in our case it was photography—and you just go in there, nurture it, support it, and try to grow.”

This final day of ArabNet stood out to me because of the diversity of stories and experiences presented by interviewees, panelists, and presenters. It was truly a reminder that there are many different paths to success.

I hope you have enjoyed my series on ArabNet Beirut. If you have not already done so, please take this opportunity to sign up for the ArabNet Digital Summit in Dubai through their official website. “Late Bird” registration is only open for two more days, and on-site admission is considerably more expensive, so don’t miss your chance.

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