Online advertising; why Pakistan’s ignoring a billion dollar industry

The global statistics show that by 2020 online advertising will surpass $5 billion thus, overtaking traditional advertising channels like Newspaper and TV ads. This forecast has been made on the basis of increased use of smartphone and social media among the global population as means of getting their information. The dynamic of media advertising is changing as the traditional channels doesn’t offer the same advantages as they once did. With the increased smartphone usage and rise in internet penetration, the people are moving into the new age of digital media.

Are we catching up in Pakistan?

In the post 3G/4G era, Pakistan has registered a significant improvement in the number of broadband subscribers. With merely 26,000 broadband users in 2005-06, it could hardly reach to 3.7 million in next nine years and abruptly swelled to 36 million by September 2016. Apart from attaining an early success regarding numbers of subscribers, telecom companies are hunting more data customers by offering cheap packages, and in doing so, they have cut down their margins, which has started to reflect on their balance sheets in the form of squeezing profits.

Industry experts are emphasising on new data-driven avenues for improving the earnings. Digital advertising and particularly the mobile advertising could be one of the much-needed revenue streams for the industry. However, the existing statistics do not favour the industry as well as advertisers. Pakistan is still to catch up with the trend. In a $ 600 to $ 700 million advertising budget that is spent on TV, Newspapers, Radio and Outdoor combined annually, spending on digital advertising is around 3%. Interestingly, with nearly 72% teledensity in the country that translates into 134 million mobile subscribers, the spending on mobile ads is ridiculously pitiful, almost 1 million dollars as of today.

On average, 3% of the total advertising budget is spent on digital advertising in Pakistan

All over the world, the digital advertising is challenging all other mediums while having successful in grabbing the third largest medium with respect to ad spending. In the neighbouring country India, Mobile Marketing Association and GroupM released some compelling statistics in a cellular market of over 1 billion customers. The reports forecast 2016 to end with INR 42 billion spending on mobile advertising and further predicts INR 100 billion spending by 2018.

What is holding us back?

Unilever recently arranged a gathering of brand people and advertisers to learn the reasons for falling behind in the world of digital advertising. Among others, a finding common to most of the audience for lagging behind was the lack of willingness to adopt the change on the part of marketing managers and their bosses. At the same time, keep relying on conventional media including TV and Newspapers, a more traditional thinking within the advertising agencies is holding them back.

However, not all are willing to miss the wave. We also approached some more robust minds at few digital agencies and asked them to comment on the psyche of client and sum up the challenges this segment of the industry is facing.

They believe that advertisers are increasingly growing their spends. In some cases, i.e. Nestle and Unilever have made a 100% increase in their digital ad budgets during 2015 – 2016. Most of the budget goes towards Facebook as it has the highest density and time spent. It has been noted that ad spending on the search is on rising with the surge of E-commerce. With YouTube back in the business once again in Pakistan, a major shift in the ad spending will be observed towards the video sharing website.

Challenges in the eyes of digital agencies

One of the greatest challenges is to keep a consist engagement on digital world. As the audience is being segregated by adopting to new channels such as Snapchat and Instagram, there is more content development in demand.

  • Programmatic is the new way of advertising, and in Pakistan, very few are operating on that. The understanding and having a trading desk to do so is limited. The benefit of programmatic is that it will offer right message to the right person at the right time.
  • Having no regional offices of the big three (Facebook, Twitter and Google) it often slows down on the initiatives and capability building of the larger advertising market.
  • The quality resource remains a significant challenge for the digital industry, hence affecting the advertiser quality output.
  • There is a dearth of publishers in the market. The arena for evolving on publisher is immense.

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