Economic impact of social media Economic impact of social media

Social networking sites have increased in popularity in part as a result of the Arab Spring, finds the fourth edition of the Arab Media Outlook (AMO), developed in collaboration with Deloitte. One platform in particular witnessed a significant increase in users across the Arab region, Facebook, growing by 80% in the Arab world alone in 2011. Furthermore, Facebook’s impact on the global economy was also apparent in the Deloitte study entitled Measuring Facebook’s Economic Impact in Europe.

The first of these two reports, the Deloitte/Arab Media Outlook, explores the impact of the political uprisings on the extraordinary growth of social media in the region, while analyzing the extent to which such sites can be considered to have driven political change. Market research carried out in four major Arab countries indicates that 87% of the public believe that social media sites, such as Facebook, played an important role in inciting events during the political issues.


As per Facebook’s recently published figures, the MENA region has 45 million monthly active users and 20 million mobile monthly active users on the social network.

In addition, platforms such as Facebook have been found to create economic value through enabling ecosystems, according to Deloitte’s study Measuring Facebook’s Economic Impact in Europe. According to the study, Facebook embodies a new generation of social media organisations that have a significant global impact.

“Companies and advertisers are aware of the widespread use and importance of Facebook throughout the region, and have tailored their digital strategies to target Middle Eastern users through the platform,” said Santino Saguto, partner in charge for the Telecommunications, Media and Technology (TMT) industry, Deloitte Middle East. “However, it is a tool that needs to be used properly. It is not just a matter of investing in advertising on Facebook. Rather, companies need to manage a social community,” he commented.

Facebook penetration across most Arab countries reached double digit figures and there is still room for growth, given that female participation is relatively low in some countries such as Egypt, the AMO report finds. Markets such as Egypt added close to two million new Facebook users in the first quarter of 2011 alone. The AMO further indicates that over 90% of all internet users in the UAE are on social networking sites like Facebook. In addition, frequency of use has significantly increased in the past couple of years with over 65% of these users visiting social networks more than once a day in UAE and Saudi Arabia. Unsurprisingly the Arabic version of Facebook has captured the lion share of audience with nearly 90% of respondents in Saudi Arabia using Facebook’s Arabic version.

According to the AMO report, digital is in fact the fastest growing platform in the region and accounted for 4 percent of the total advertising spend in 2011. However, it is expected to grow at a Compound Annual Growth Rate (CAGR) of 35% from 2011 to 2015, generating approximately USD 580 million by 2015 across the region. It will account for an estimated 10 percent of the total advertising spend by 2015.

“There is a lack of audience measurement systems in the Middle East that, as in other markets, allow advertisers to assess the reach and impact of their advertisements through traditional mediums. Digital platforms on the other hand, offer a more quantifiable return on investment,” said Emmanuel Durou, Telecommunications, Media and Technology (TMT) director at Deloitte in the Middle East. “The digital advertising market in the region is expected to grow dramatically in the coming years as advertising budgets follow the migration of eyeballs from traditional to digital platforms, representing a significant opportunity for regional media outlets and overall industry development” he added.

Moreover, Deloitte’s ‘Measuring Facebook’s Economic Impact in Europe’ study finds that while the traditional narrow measures of economic impact are limited, it is critical to consider the broader impact of Facebook in allowing other parties to create value across the economy.  Facebook commissioned Deloitte to estimate its economic impact across 27 member states of the European Union and Switzerland in 2011. The report indicates that Facebook embodies a new generation of social media organizations that have a significant global impact.

The key finding of the study shows that the central estimate of gross revenue enabled by activities of Facebook is 32 billion Euros. This revenue converts into an economic impact of 15.3 billion Euros, and supports 232,000 jobs.

“We find common trends in this study, that are impacting the Middle East,” said Saguto. “Facebook still has the potential to attract additional advertising revenue. But brands need to be smarter in how they interact with users on the site,” he added.

Furthermore, according to the AMO report, digital platforms have a particularly strong growth potential in the region given the favorable regional demographics (ie more than 50% of the population is below the age of 25) and the strong uptake of smartphones and high-growth in tablets. Multi-tablet usage is also on the rise globally, according to a Deloitte report on 2012 top global Technology trends. The report finds that roughly five million tablets will be sold to people that already owned one in 2012 generating up to USD two billion in revenue.

As advertisers and media outlets in the region catch up with the increased usage of Facebook and other social media sites, Deloitte TMT experts predict heightened digital advertising spend in the coming years. The rise of tablets and SmartPhones in the Middle East will serve as a driver for this growth.

Rushika Bhatia Editor

Rushika Bhatia is one of the region’s leading commentators on business and current affairs issues. She is the Editor of SME Advisor magazine - the flagship title of CPI Business. She is passionate about infographics – with special emphasis on data, research and statistics. Rushika has a Bachelor’s Degree from Indiana University, USA and is also CIMA qualified.

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