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Middle East firms eye social media profit potential

25 October 11 09:46
Protesters in Tahrir Square in Cairo in February 2011
By Simon Atkinson
Business reporter, BBC News, Dubai

From the bursts of electric violin to the furtive bodyguards accompanying Russian oil oligarchs, you could not accuse the Middle East launch of of being low key.

But whether the site makes as much of an impact as the bright green laser show that seared onto the distinctive sail of the Burj Al Arab hotel, remains to be seen.

Billing itself as the world's first multilingual social network, Godudu hopes to take on the likes of Facebook by offering real-time translation that it says will allow people to communicate beyond language barriers.

Already it translates the likes of news and status updates between English and Russian - the language of its founders - but the event on Dubai's shoreline was to launch its Arabic service.

Surging internet penetration in the region had driven the move, says Alibek Issaev, chairman of its parent company Dudu Communications.

"And the number of users of social media here is also growing very fast," he adds. "This is why we believe it's the perfect time to launch our social network in Arabic countries."

Going social

The uprisings seen in places like Egypt, Tunisia and Libya this year played an integral part in the growth in popularity of networks such as Facebook and Twitter - as they were harnessed by the young people to organise and give momentum to the Arab Spring.

In the Middle East and North Africa, the number of Facebook subscribers has doubled in the past year, and there are 20 times as many active users of Twitter according to consultancy firm Value Partners.

And in Egypt alone, Facebook gained five million members in the month leading up to and immediately after the protests that led to the fall of leader Hosni Mubarak.

And while the likes of Godudu are seeing that as a reason to launch a social network here, other companies are keen to take advantage of the platforms.

Almost 60% of firms now say they now have some sort of social media presence, according to a report by Econsultancy, well up on a year ago.

Banner advertising has been the key business for the Middle East's advertising network - which is opening offices in places such as Morocco and Tunisia, which are among the countries seeing the region's greatest internet penetration growth.

But Ikoo also reports rising interest from firms wanting to incorporate social media into their advertising.

"Because of the Arab Spring what we've seen is brands starting to use social media because they've realised it's actually a personal interaction with the actual consumer," says sales and marketing director Hussam Khoury.

"In particular it's been Egypt where we've seen a massive growth in demand from the brands and the agencies we work with in the region."

'Great opportunity'

That trend was evident at the Gulf region's biggest technology exhibition, Gitex, held in Dubai earlier this month.

While the stands demonstrating the latest gizmos - from smartphones and display screens to the car which the makers claim "can park itself" - for the first time there was a section dedicated to digital marketing - including seminars on using social media to boost your business.

And for some companies trying to break into this region, social media is a crucial part of their marketing strategy,

Music streaming company UrFilez targets emerging markets, which do not have access to firms doing similar things such as Spotify.

Having already launched in Bahrain, it has now done a deal with a United Arab Emirates mobile phone network - and its boss says social media will be essential if it is to win enough subscribers to be viable.

"Because social media is booming here in the Gulf region, that's a great opportunity for us," says chief executive Hassan Miah.

"The social media audience is our audience. It's those people who love music, and who use it to find out about music, to recommend music.

"It's as big in Saudi as in Dubai, It's happening everywhere, and particularly now."

Early days

But despite this enthusiasm, only about 4% of all advertising Middle East advertising spending goes on digital campaigns - from mobile to online display adverts.

And only quarter of that is specifically for social media, according to Emmanuel Durou of Value Partners Dubai, who thinks it is still early days for the sector.

"It's a new concept and you need new local talent to make it happen, which is something that's currently lacking, whether you're talking about brands or about the agencies," he says.

"And I think in terms of return on investment, that is much more difficult to track than traditional advertising, so for advertisers it's a much more difficult proposition to validate in terms of budgets."

Back at the Godudu launch party, a singer in sequins waits in the wings for an event-closing performance which will, it later transpires, feature a version of Tina Turner's Simply The Best.

But before this finale, at a question-and-answer session with the firm's boss, a woman leaps to her feet.

"I'm a Facebook addict, I check it five times a day so how are you going to get me to give that up and start using you instead?" she asks.

For all the razzmatazz and the confidence about booming markets and growing potential users, it is an exchange which really brings home how tough success in this industry will be.

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