Advertising
The Entrepreneurship Opportunity in Egypt – 4: B2C Tech products: Selling Advertising
It is really easy to decide to base your product’s business model on Advertising. However, making it happen is anything but.
The first step is understanding how this business works.This is mainly comprised in 2 main questions:
1- How is advertising quantified? Is it sold by the kilo, pound, impression, hit, click? Basically it is the question of how much advertising costs how much money.
2- What does the sales process and value chain look like? who are the decision makers? what companies are involved? what leverage do they have? This is the question that handles the steps to actually sell your advertising inventory.
How is advertising quantified
Advertising is generally quantified by how much it costs the brand to achieve the marketing campaign objective. I’m keeping it general because the objective can vary from branding, awareness, engagement to sales. All advertising media follow this rule regardless whether their performance is reported by direct analytics or by disconnected market research. However, as a rule of thumb, the more advanced the market is, the more it relies on accurate data to evaluate its ad channels.
In the digital world, it becomes more specific than this. You basically sell one of 3 things:
1- Impressions — which are sold by buckets of thousands, aka Cost per Mille (CPM).
2- Clicks — priced per single click on a Cost per Click (CPC) basis, i.e. the advertiser pays you for every click on his had that takes your user to his web-page of choice.
3- Action — price per specific action (aka CPA) that relates to the campaign in question. The action can be sales, qualified lead generation, subscription to a newsletter or anything else for that matter.
4- Views — price per view or cost per view (CPV); basically applicable only to video due to its pervasive and engaging nature, where 1 single view can be roughly (heuristically) worth 5–10x more than static impressions. This is slightly irrelevant to this article, unless you are planning to start a video publishing platform monetized by video advertisements — in other words, youtube. This I highly recommend against, and wish you the best of luck on your suicide mission, should you choose to go down this path.
5- Native Advertising/Branded Content — where you create content that adds value to the user and is sponsored by a brand or has certain products placed within it. In publishing it is called advertorials; in video production it is called… well sponsored videos 🙂
Prices of Ad Products
Now that we’ve pinned down “What” is sold, let’s talk a bit about how much this “What” actually costs — in ranges of course.
First of all, all prices are subject to demand, supply and purchasing power, which varies a lot with geography. Therefore, I will restrict my numbers to Egypt with some hints about the costs elsewhere.
CPM
CPMs in Egypt typically range from 5 EGP/CPM to 80 EGP/CPM. As you’ve noticed, it is a very wide range, which corresponds to the wide range of offering. Here is a bit of an explanation:
- 5 EGP — 10 EGP is the price range of (more or less non-branded) Arabic comic pages and websites (e.g. asa7by, egypt sarcasm society, forums, etc.)
- 10 EGP — 20 EGP is the price range of general and sports news websites, also in Arabic (e.g. youm7 ~10 EGP, almasryalyoum/elwatannews ~15 EGP, Shorouknews ~20–25 EGP)
- 20 EGP — 35 EGP is the price range of relatively more niche websites, like Arabic women’s websites, vertical interest websites — cars, motorcycles, hard-core technology websites, specialized medical/health, investment banking, etc (e.g. supermama, Fustany, arabhardware, etc.)
- 25 EGP — 45 EGP is the price of range English websites targeting Egypt — English news, English content, etc. This also intersects with sites that address the A-A+ class (e.g. ragel.com)
- 45 EGP+ is the price range of sites addressing the A-A+ class in terms of content, fine dining, partying, (e.g. scoopempire, cairoscene, cairozoom etc.)
Judging by the above list alone would rather drive you to develop an English website targeting the A-A+ class. But, like everything in life, nothing is quite that simple. True, if you target this segment, you will have valuable merchandise to offer advertisers. However, there is another variable at play that can break this entire unidirectional equation, which is your traffic volume.
You need to cross a certain threshold of traffic in order to be taken seriously by advertisers. Before crossing this threshold you are basically still to small for them to advertise on your platform.
The threshold is around 1–5 million impressions a month created by 350,000 to 1,000,000 unique visitors. I realize that the range is a bit wide especially for a threshold. The reason it varies so much relates directly to the type of audience you have access to. It is the same reason the CPM prices vary; i.e. the more you can offer segmented, targeted and premium audience, the higher your CPM and the lower your sell-ability-threshold and vice versa.
The same concepts apply to mobile apps, but with a relatively different set of terms and values. Here are a few pointers:
- The sell-ability-threshold is a bit lower on traffic if you are an app that does something other than present content to the people.
- Unique visitors are replaced by Active Users. And their threshold is also rather lower — somewhere around 20%–40% of their web counterparts’ values. This is due to a couple of vague and heuristic reasons/assumptions. One of them is: when the user downloads the app and is actively using, it indicates certain level of commitment and loyalty which raises the quality of the audience. Another, is that the kind of data you can provide per user is more qualified, since almost all apps require some kind of login (FB, Google, email, etc.) that enables the app owner to generate richer analytics, user behavior reporting and user segmentation.
CPC
CPC’s prices typically range from 1 EGP to 15 EGP per click — following a similar spectrum as in the CPM. However, roughly only ~5% of the ad campaigns in Egypt are CPC based while the vast majority does CPM. This goes for buyers and sellers alike — for some obscure reason that for the life of me I cannot figure out — so far.
CPA
It becomes very hard to put a price on CPA because of a lot of things, but mainly because it is very case specific, and I don’t have direct experience with this. It isn’t a mature model in Egypt yet, although the food ordering and real estate sector actually have some guidelines, where they pay a fixed amount per qualified lead (Real Estate) or pay a percentage of the order generated by your platform (Food ordering). Food ordering percentage ranges from 8% to 15% off the top.
Native Advertising & Branded Content
It is typically priced by production, i.e. price per video, per advertorial/article, per comic, per episode, per story, etc.
Here there is no fixed rule, because it really depends on what you are planning to do within the content, how much it costs you and how much it is currently worth in the market. Also, the prices vary quite quickly because the diversity of open publishing platforms (Youtube, Facebook video, medium, etc.) made it relatively easy for production firms to focus on production and push the material onto platforms with existing traffic. Therefore, part of the entry barrier was torn down.
Another important concept: Click-Through-Rate (CTR)
CTR basically measures the effectiveness of the advertising material and the channel it is placed on, i.e. your website and/or app. It is usually measured as a percentage, and is calculated by dividing the number of clicks on an ad over the number of impressions said ad generated.
It is a very long and detailed topic, so I will refer you this article instead.
Conclusion
Should you consider to base your product on an advertising business model, you should make sure of the following while productizing your offering:
- Know your target segment — not just know them, but can prove using analytics that you are actually capturing their attention for decent spans of time, and that they are returning users of your product.
- Know your numbers — look at them every day. Know the industry’s numbers. Know your competitors numbers albeit roughly. It’s a cut-throat game and you need to be on top of the market to succeed.
- Build enough traffic — to be advertising worthy, you need to pop up on the radar of advertisers with your numbers.
- Do your pricing homework — the numbers I’ve shared might be outdated, as said numbers change frequently. Make sure you know the whole market and that you’ve priced your stuff correctly
- Stand out, but not too much — you need to differentiate yourself somehow (by target market, by engagement, by click-through-rate, by whatever), but not to the extent that you become an odd-ball and cannot be easily and stupidly bench-marked. The Egyptian market likes what it knows after all, and that is not something you tamper with.
- Optional: Find a unique and monetizable niche — it should be unique enough to enable you to clearly and distinctly define the segment you are targeting; yet, it should be big and “important” enough to be attractive to advertising money. Content that addresses certain “rich” verticals can be interesting and full of potential, especially if said verticals don’t have much digital access to their target segment, except through you.
Finally, if you are entering the advertising realm, you must know that you are going to be competing over digital marketing budgets. This means, that you will be fighting over money to be spent on content websites, Facebook, Google Ads, Instagram, Twitter and mobile apps.
This has to be always in the back of your mind when you define your target segment and pricing, because Facebook and Google ad products in general are way cheaper than local websites.
This shall be addressed in greater detail later when tackling your next step, once you have your product ready for sale: Maneuvering the advertising value chain.
See you in the next article.
Acknowledgements
Special thanks to Abdelrahman AboSreea for pointing my attention to including CPV and CTR in the article
Special thanks to Ahmed Galal for complimenting my lack of updated numbers, and for reminding me of the gap between Facebook/Google ad prices and local networks.
Thanks to Sherry Kilany for correcting my numbers on ScoopEmpire (one of my favorite guilty pleasures by the way).
As traditional advertising revenues plummet globally and broadcasting budgets are slashed, The Middle East and North Africa (MENA) and South East Asia (SEA) regions have reported tremendous growth in digital adoption and a rise in digital advertising revenue as a result.
This growth is driven by an increase in internet users, smartphone penetration, and the rise of social media platforms. AI Copywriter tools are now being widely adopted by brands, organisations, and companies in these regions to enhance their digital advertising campaigns.
Let’s delve deeper into the trends and statistics of advertising revenue and digital adoption in MENA and SEA.
Digital Advertising in MENA
MENA has emerged as one of the fastest-growing digital advertising markets, driven by a young population and increasing smartphone penetration. According to a report by McKinsey, the United Arab Emirates (UAE) has the highest degree of digitisation, while Egypt represents the largest untapped opportunity. The report also highlights a growth in the adoption of digital channels and spending in the coming years, coinciding with the increased use of artificial intelligence (AI) across all sectors.
The Market Size
The digital advertising market in the MENA region is estimated to be worth over 1.2 billion U.S dollars in 2021. The market is expected to continue growing, with a projected growth rate of 20% by 2024. The region’s e-commerce market is also expected to grow and reach 69 billion U.S dollars by 2020. The GCC and Egypt account for 80% of the regional e-commerce market.
Media Channels in the MENA
The advertising market in the MENA region is witnessing a major shift toward digital advertising. Traditional channels such as newspapers are declining, while the internet is taking over with 44.2% of the total ad expenditure in 2020, according to Statista. Social channels account for more than half of the total digital ad spend, surpassing global benchmarks. The region is also moving towards a “mobile-first” strategy, with a majority of internet traffic generated through mobile devices such as smartphones and tablets.
Performance Marketing in the MENA
Performance-based campaigns are gaining traction in the MENA region, with 59% of advertising agencies significantly shifting into performance-based campaigns, according to a survey conducted by the Interactive Agency Bureau (IAB). Brands are demanding payment by results (ROI & Return on ad spend ROAS) as well as enhanced consumer insights and analytics.
Digital Advertising Agencies in the MENA
The MENA region has over 500 advertising agencies that have a large number of employees, with Egypt, Saudi Arabia, and the UAE fuelling the region with small and medium-sized agencies. The UAE is home to big advertising firms, while Egypt, Lebanon, and Jordan represent the majority of digital marketing talents and creative resources. However, the highly qualified talents in digital advertising and performance are always moving outside the region to join companies in the European market.
Programmatic Advertising in the MENA
The slow transition from traditional to digital media is one of the key reasons programmatic advertising is struggling to dominate the region. Collectively, the MENA trails other regions in innovation and adoption of ad tech and marketing technologies. The top ad networks in the MENA region include Facebook, Google Ads, IronSource, Applovin, Adcolony, AdFalcon, InTarget, AdZouk, and Ambush. The United Arab Emirates is leading the growth in programmatic advertising due to technology partners and pressure from clients and brands to automate the process and use AI.
Digital Advertising by Sector
According to Ipsos research, the top ten sectors in the region are dominated by beauty care, food, telecommunications, and entertainment. Telecommunications companies, followed by real estate and banking, are the top categories.
Digital Advertising in SEA
SEA is a rapidly growing digital advertising market, driven by a young and tech-savvy population. According to a report by eMarketer, digital ad spending in SEA is expected to reach 15.3 billion U.S dollars in 2021, with Indonesia, Thailand, and Vietnam leading the growth.
The Market Size
The digital advertising market in SEA is expected to grow at a rate of 13.7% in 2021, with a projected market size of 22.45 billion U.S dollars by 2025. The region’s e-commerce market is also booming, with a projected market size of 153 billion U.S dollars by 2025.
Media Channels in SEA
SEA is also witnessing a major shift toward digital advertising, with traditional channels such as newspapers and TV declining. Social channels are the most popular, accounting for 63% of total digital ad spend, according to a report by Hootsuite. Mobile advertising is also on the rise, with a majority of internet traffic generated through mobile devices such as smartphones and tablets.
Performance Marketing in SEA
Performance-based campaigns are becoming popular in SEA, with advertisers demanding more accountability and transparency. Brands are looking for more measurement and optimisation to ensure their campaigns are reaching the right audience and delivering the desired results.
Digital Advertising Agencies in SEA
SEA has a large number of digital advertising agencies, with many emerging startups and creative agencies. The region is home to a highly skilled workforce, with many professionals trained in digital marketing and advertising.
Programmatic Advertising in SEA
Programmatic advertising is becoming more popular in SEA, with many brands and agencies adopting the technology to automate their advertising campaigns. The region is also seeing an increase in the use of AI-powered tools and platforms to help advertisers optimise their campaigns.
Digital Advertising by Sector
The digital advertising market in SEA is dominated by the retail and e-commerce sector, followed by the travel and hospitality sector. The region is also seeing growth in the financial services, healthcare, and automotive sectors.
AI Copywriter Tools in Advertising
AI copywriter tools are becoming increasingly popular in the MENA and SEA regions, with many brands and agencies adopting the technology to enhance their digital advertising campaigns. These tools use natural language processing (NLP) and machine learning algorithms to generate high-quality, engaging content that resonates with the target audience.
AI copywriter tools can help brands and agencies save time and money by automating the content creation process. They can generate a large volume of content quickly and efficiently, allowing advertisers to test multiple variations of their ads and optimise their campaigns for better performance. AI copywriter tools can also help advertisers improve the quality of their content by ensuring that it is grammatically correct, engaging, and relevant to the target audience. They can analyse data from social media and other sources to identify trends and insights that can inform the content creation process.
Conclusion
The MENA and SEA regions are witnessing tremendous growth in digital advertising and digital adoption, driven by a young and tech-savvy population, increasing smartphone penetration, and the rise of social media platforms. AI copywriter tools are becoming increasingly popular in these regions, providing brands and agencies with a cost-effective and efficient way to enhance their digital advertising campaigns. The future of digital advertising in these regions looks bright, with continued growth and innovation in the years to come whilst broadcast and traditional advertising feels the pinch. The time has come for the more conservative amongst us to take the plunge and fully embrace digital and all it entails.
Facebook will no longer allow Special Ad Category advertisers to use the Special Ad Audiences tool.
Meta will be sunsetting Special Ad Audiences, a tool that lets advertisers expand their audiences for ad campaigns related to housing, employment, and credit ads.
In 2019, in addition to eliminating specific targeting options for housing, employment, and credit ads, Facebook introduced Special Ad Audiences as an alternative to Lookalike Audiences.
Since the Cambridge Analytica scandal, Special Ad Category advertisers must declare their category before creating ads. If advertisers fail to declare it, the Facebook policy team shuts down their advertising accounts.
Now, it’s getting more limited with this new rule.
Deprecation Timeline
Following is the timeline from Meta regarding the deprecation of Special Ad Audiences:
- August 25, 2022: you will no longer be able to create new Special Ad Audiences.
- September 13, 2022: Special Ad Audiences will no longer be available in new ad creation via the API.
- October 12, 2022: Special ad audiences will no longer be available in new ad creation across Ads Manager and the API. After this date, the affected ad sets may be paused for delivery. To resume delivery of the paused ad sets, you will need to update them to remove Special Ad Audiences.
According to this timeline, you’ll no longer be able to use Special Ad Audiences in new ads via the API on September 13 and Ads Manager on October 12.
How can the Special Ad Category advertisers benefit from Facebook after this update?
It’s still unclear if Facebook is going to introduce a new way or release some restrictions for Special Ad Category advertisers or not.
That said, the only option is to go broad audience. However, some other options still benefit from the Facebook advertising platform. I will prepare some tips and tactics. Please keep an eye on Digital Boom for more.
Fresh Egypt, a Home Appliance company kicked off its Ramadan campaign with a 1:43-minute Ad promoting the company’s products. Starred by Ruby and Mahmoud El-esseily.
The Ad gained more than 600L views on YouTube and over than 1.2M views on Facebook. Fresh Egypt Ad caught the audience’s attention with its beautiful rhythmic song, saying, “because everything is much better when it’s fresh, make your life fresh and day delightful.”
Some people described it as one of the most beautiful ads this Ramadan, especially Ruby and Mahmoud El-esseily fans. Although it’s a bit different than last year’s ad that was performed by Ruby and Dina El-Sherbiny went viral in a split second.
Watch last Ramadan’s Fresh Ad featuring Ruby and Dina El-Sherbiny.
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