UAE- Advertising industry sees a big shift

It all started over 15 years ago when brand owners started gradually but decidedly shifting a portion of their advertising budgets from traditional media to digital media.

What triggered this shift is the advent of digital media and the large influence they gained in terms of delivering efficient and measurable reach to consumers. Another reason is the pace at which consumers have adopted and embraced digital media expediting their growth. For example, this year, brands are expected to spend circa $600 billion on advertising globally, of which one third of the amount or $200 billion is invested in digital media.

In the Mena region, the share of digital media from the total advertising spend in Mena is nearly 12 per cent. The share of digital spend in Mena is expected to double and reach 25 per cent within two years' time. In developed markets, the share of digital media has exceeded 55 per cent in the UK, and it ranges between 35 per cent and 50 per cent in markets like the US, Germany, and Japan.

Does this mean traditional media will disappear over time and their role will be replaced by digital media?

There is no simple, clear-cut answer to this question. The future of traditional media will be decided, and to a great extent, by the way they evolve and transform their product offering to meet a changing consumer's behaviour. Before I further elaborate on this point, I must point out one fundamental factor that influences this transformation. The core consumer requirement from media or 'access to content' has not changed. What has changed is the way that content is being delivered to consumers.

Consumers have always resorted to media being their main source of content. Their daily staple of general news, entertainment, sports and financial news, lifestyle, weather, etc. was always available through their preferred traditional media. Today's consumers can access that same content via their electronic devices at an unprecedented ease and speed, thus gaining a richer alternative to traditional media and, I hasten to add, a superior source of content.

Consequently, the relevance and influence of digital media has grown rapidly. Digital companies like Google, Facebook, Instagram, Yahoo, AOL, LinkedIn, Snapchat, etc. have become global household names and commercial powerhouses. The market capitalisation of Google and Facebook is $530 billion and $350 billion, respectively, putting them amongst the top five largest companies in the world. A high percentage of their revenue is generated from advertising money that used to be invested in traditional media.

This does not mean it's all over for traditional media brands. In fact, many of them have successfully transformed their business model providing consumers with online access to their content similarly to digital companies. As a result they started earning additional revenues for this content.

Many of them are regaining lost territory, thriving and growing again. The ones that are still taking a lackadaisical approach toward the shift will live to bear the cost.

The influence of the Internet and digital media companies is having on people's lives is far reaching; however, this can be a topic we can discuss in another article.

The writer is the vice-resident of Horizon Holdings and vice-president of operations BPN Merna. Views expressed are his own and do not reflect the newspaper's policies.