Advertising
The Entrepreneurship Opportunity in Egypt (5): The Advertising Value Chain
Hell is just a sauna
Here is how I described it in my 1st article in the series:
“The value chain in the real [Content Publishing] world consists of: the Publisher — who creates the content, the publishers’ agency — who buys the ad rights to said publisher’s content, the media buyer — who buys ads on behalf of brands because he has ongoing deals with publishers’ agencies and buys from them in bulk, the media planner — who puts together a media plan for the brand, i.e. which ad slots to buy where, in order to achieve their sales targets. This value chain is extremely weak in Egypt and it is very, very hard for new publishers to enter the scene. Smaller digital publishers who made it had to navigate through this messy value chain, and sometimes compensating for its gaps — e.g. selling to brands and media buyers directly.”
The advertising value chain, or the market hierarchy if you will
What makes the advertising value chain weak and unreliable?
Here are 9 somewhat related reasons in my opinion, not in a particular order:
1. Publishers Agencies are too few, while Content Publishers are relatively many
In a decent world, the Publishers’ agency buys the ad inventory from the Publisher — either in bulk on in tranches coupled with certain traffic targets. This enables the Publisher to focus on Content Creation and user traction. However, the imbalance of this layer in the market enables the agencies to impose better cash flow terms for themselves onto the publishers; e.g. only pay for traffic they get paid by the brands, 90+ days invoice collection periods, etc. While this serves the agencies short term, it keeps content publishers from growing neither their business nor their traffic and user base.
2. A slow economy means budget slashes
Among the first budgets to get slashed are marketing budgets. Cuts happen at the top of the pyramid to the brands’ budgets, and trickle all the way down to the publishers. Therefore, publishers agencies have been facing severe challenges trying to sell their existing inventory. Consequentially, it becomes difficult for them to be interested in representing new Publishers and buying more inventory, which would basically choke their business operation to death.
3. Network sale vs a value sale
In the grand scheme of things, digital advertising isn’t much differentiated. Yes you can segment and target. Yes you can choose publishers based on their audience’s personas. But at the end of the day, it is a comparison between impressions and clicks. And at some point, publishers of the same genre are hard to distinguish by value. So, this transforms the sales process into a network sale, where you rely on your network to sell, rather than the your product’s differentiation. So, you have to be IN with the advertising community to tap into the network and sell regardless how much value your product adds.
4. Advertising efficiency vs Brand exposure
Digital advertising offers budget efficiency and targeting as its core value proposition — you know exactly how many people see your ads and how many take actions based on each campaign your run. However, it is still not officially considered an Above-The-Line channel, which are still the go-to channels for big budget advertisers, as it is still perceived as the main driver of brand exposure. Think TV and high-way billboard ads vs. FB ad campaigns.
5. Tough targets reduce risk appetite
Achieving tough sales target in a slow economy is very hard, which makes advertisers stick with what they know. Therefore, Brands & Media Planners have become too risk averse to allocate budgets for experimenting with new channels, unless an earth shaking disruption had happened and this new channel is a sure thing.
6. Impressions over actions
For some reason foreign to me agencies mostly sell and brands mostly buy impressions (page-views) more than actions (Clicks, acquisitions, purchases, sign-ups, etc.) — generally 90% vs 10%, if not more. In light of the previous point, an explanation would be that impressions are a “guarantee-able” deliverable by the publisher while actions are not. It becomes more plausible when you know that CTR (Click-Through-Rate) are generally low in Egypt. But nothing in Egypt is logically explainable anyway, so whatever.
7. Agency consolidation
Sometimes the three middle layers in the figure above are either fully or partially fused together; e.g. the media planner additionally does the media buying; or the creative agency also does the media planning; or the media buyer cuts an exclusive deal with the publisher, etc. This creates a challenge for anyone who wants to penetrate this fort of an agency to reach its brand, and the sale becomes more challenging — especially for new comers.
8. Every brand has its marketing operations set up differently
With respect to the agencies above: Some brands cover the whole value chain themselves and deal with publishers directly. Others have people who take care of that for them. This is not public knowledge, and you have to gather this information through market intelligence activities — the ethical and the dirty ones.
9. Publishers’ agencies are infamous
For under-performing their sales targets and not paying their dues and invoices in Egypt. This is not a generalization and this is just me repeating a general reputation in the market which may or may not be true. Be that as it may, I’m trying to say: CAUTION!
Google Ads
Theoretically, the easiest path to avoid this ordeal would be to rely on ad networks like Google Ads. Not surprisingly, such networks require massive traffic, i.e. millions of impressions and unique/active users per month. Not just that, it also forces you to run a very small content operation relative to the traffic. This is because the money you get from those networks isn’t really much for a company. On average, Google takes away 70%-90% of what the advertiser pays to display ads on your site, and you get the rest. The tiny, tiny rest.
As a rule of thumb, you need about 1–3 million impressions per month for every member on a team based in Egypt, and even then it doesn’t guarantee decent money.
Otherwise, you need to master your way around the aforementioned value chain — one way or another. Only then will you be able to sell ads locally at better margins.
Conclusion
Most conclusions relating to this article are already mentioned in the previous article about selling advertising. However, here are a few bonus advice:
- Bottom line, to build a tech product (website or app) that relies on ads, you need to have the right connections along the advertising value chain, find yourself a sizable unique niche, build the traffic, sell it. Way easier said than done.
- Know the brands you plan to sell to and figure out one way or another how they are spending their budgets. You will have to have (or build) strong relationships and allies in the market to gather this intelligence.
- Know the people behind the budget allocation decisions and play to what makes them tick.
Next stop: B2C Tech Products.
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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