FEATURE: Arabs struggle for share in web adverts boom

BEIRUT (Reuters) - Khaled al-Bohsali is the ideal man for Arab web portals desperately seeking a bigger slice of the growing global online advertising market. Unfortunately for them, he is also one of a rare breed.

Bohsali spends hours online every day, buying products like books, CDs and flowers from websites, at home and abroad.

"The internet is safe and more attractive than other media," the 35-year-old Lebanese bank employee told Reuters.

"I have been shopping online since 1996 and...I feel happier giving my card details online than I do when it comes to paying at a gas station for example," he said.

Despite the rapid growth in the global online advertising market, Arab websites still face problems attracting advertisers, mainly because of the low number of users and a lack of trust from big name companies.

Spending on Arab internet advertisements grew from less than US$250,000 in 1999 to between US$7 million and US$10 million in 2005, says Mustafa Mohamed, managing director of NetAdvantage, a web advertising agency.

That is still a fraction of the global online market which reached US$2.8 billion in the first three months of 2005, according to the US-based Interactive Advertising Bureau.

It is also nothing compared to the total advertisement spending in the Arab world -- including television and newspapers -- estimated to be around US$2.3 billion in 2005.

"The business is improving, but we are still years behind the West," said Mohamed, whose company sells adverts on several portals like news channel www.aljazeera.net and www.maktoob.com, the region's biggest email provider.

"Big multinational firms still do not properly recognise the internet as a medium for advertising in the Arab world," he said in a telephone interview from Dubai, United Arab Emirates.

Fewer users, less money

A key reason, analysts say, is that only around 17.2 million of the Arab world's 280 million people use the internet.

Websites offer low rates to attract more adverts -- between US$15 to US$25 per 1000 impressions or page views -- compared to between between US$55 to US$75 in the United States, Mohamed said. Such rates contribute to the low annual turnover, he added.

Some companies also blame advertising agencies for not promoting online campaigns.

"Agencies don't understand the effectiveness of the web in the Arab world," said Con O'Donnell, chief executive officer of Sarmady Communications (SARCOM), an Egyptian digital media company, which runs several web and mobile content services.

"It seems like too much effort for them to educate advertisers, to explain that for example they only pay for the number of people who view the ads, not like newspapers and television," he said.

Iad Abdel-Khalek, media director at media house Starcom in Dubai, said low user numbers made web adverts a hard sell.

"We still do not have something like Google in the Arab world, which makes it hard for advertisers to allocate more money for the Internet at the expense of conventional media," he said, referring to the world's top online search engine.

Alexa, an internet company that ranks global websites based on their traffic details, says that of the top 500 websites worldwide, only five are Arab, including the online edition of Egypt's Al-Ahram newspaper, maktoob.com and aljazeera.net.

Suggestions, anyone?

Some portals, such as www.araboo.com, an online directory owned by Lebanon's Emox, depend on Google for advertisements.

They use Google AdSense, a sort of advertising agency which automatically places sponsored links and adverts on websites and splits the revenues with them.

Other companies are going after different revenue sources.

Qatar-based Al Jazeera syndicates its online content to other websites and will soon allow users to pay and watch a live streaming of the channel online, said Samir Ibrahim, head of e-marketing at the Arab news channel.

Egypt's SARCOM, which runs www.filbalad.com -- one of the region's largest news and sports portals -- sells sports and entertainment content to television networks and mobile phone operators like Arab Radio and Television and Vodafone Egypt.

Internet service providers, meanwhile, use their portals to promote their dial-up and broadband connection services.

Yet despite the financial difficulties which have forced many Arab websites to shut down in recent years, NetAdvantage's Mohamed remains optimistic and expects Arab online advertisement spending to rise to between US$12 million and US$17 million in 2006.