Arab web advertising market set to hit $1bn by 2017

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Internet advertising in the Middle East and North Africa (MENA) region is forecast to be worth $1.04 billion by 2017, trebling its 2012 market value, according to a study published this week by PricewaterhouseCoopers (PwC).

Spending in the region’s online advertising industry is predicted to grow at a compound annual growth rate (CAGR) of 28 percent, according to the latest edition of PwC’s ‘Global Entertainment and Media Outlook’.

PwC said that the rapid growth would be “due to fast-increasing internet penetration, growing average disposable incomes in the GCC countries and online retailing trending quickly in the UAE, Egypt and the Levant.”

The pace of growth in the MENA region is forecast to outpace the global trend, with worldwide internet advertising revenues forecast by PwC to grow by just 13 percent.

Whilst internet advertising will grow rapidly in the next five years, newspaper advertising revenue is forecast to decline by 2.2 percent.

PwC cited “the increased internet penetration and heavy investment in the online and mobile services to serve the young ‘Arab Digital Generation’,” as factors behind this forecast decline.

PwC analyzed 50 countries in the 14th edition of its Entertainment and Media (E&M) overview. The E&M industry as a whole was valued at $1.6 trillion in 2012, but PwC forecasts revenues will reach $2.2tn by 2017, with a CAGR of 5.6 percent.

The MENA region is one of several markets which is said to be a key player driving this growth in the E&M industry.

“A core group of eight markets; China, Brazil, India, Russia, MENA, Mexico, Indonesia and Argentina will see the fastest and highest growth,” according to the report.

“These territories will account for 22 percent of total global E&M revenues in 2017, up from 12 percent in 2008 and their average CAGR will be more than double that of the global E&M sector as a whole,” it added.

Globally, the digital segment of the E&M industry is said to be the primary driver of growth in the next five years, as consumers switch from physical products, such as newspapers, to online equivalents.

Digital sales accounted for just 35 percent of total revenue in 2012, but is predicted to reach 47 percent by 2017, at a CAGR of 5.6 percent.

“Led by the burgeoning middle class in emerging markets, consumers will continue to increase their spending on E&M, migrating towards digital,” explained the study.