The ad revolution will be televised

When internet protocol television comes to the MENA region, advertisers will be able to focus their marketing as the technology will allow them to direct particular ads to specific households.

Sales Merchandiser Janet Silayan checks out the TVs in the electronics department in the Carrefour City Center store in Deira.

Much to the dismay of advertisers, television viewers often treat commercial breaks as the time to make a cup of tea, call a friend or even switch channels.

But such urges could diminish with the arrival of targeted TV advertising, which would deliver more appropriate marketing messages to individual television viewing households in the Middle East.

Billions of dollars are spent annually on TV advertising in the Arab world. But almost none of this is targeted effectively, because most of the region's 500 free-to-air channels are beamed out across the entire Arab world, with the same programming and advertisements reaching all viewers.

Because the ads on a particular channel cannot be changed, there is no effective way for TV advertisers to target consumers in markets such as Egypt or the UAE, which clearly differ in their demographic structures.

This means that an advertiser has to buy airtime across all Arab countries when advertising on certain TV channels, even if it is targeting only one market. A luxury goods manufacturer may be compelled to advertise across the entire region when it wants to target only a high-income country such as the UAE.

But the growth of internet protocol television (IPTV) - digital television services delivered via broadband - could change all this.

Regional telecommunications operators such as Etisalat, du, Qtel and STC have launched IPTV services in recent years, and the sector is expected to see significant growth.

According to the management consultancy Booz & Company, IPTV revenues from subscriptions in the MENA region stood at US$32 million (Dh117.5m) last year. But this figure is expected to almost double this year and reach $467m by 2014.

IPTV typically comes with features such as an electronic programme guide, video on demand and interactive features such as media storage and personalisation.

But another potential feature is targeted advertising, which delivers marketing messages tailored to the profile of an individual viewer.

Last year, the US company Cablevision started testing technology to send targeted ads to specific households. The ads were chosen according to demographic data on individual households, including variables such as income, ethnicity, gender and whether a homeowner had children.

While such marketing is technically possible, it has not yet been implemented in this region. But the telecommunications company du is working on introducing targeted IPTV advertising in the UAE, the company says.

"The day is not too far when commercials will be segmented by geography and demography - making adverts even more relevant to both viewers and advertisers. At du, in conjunction with our partners, we are working to bring these services to the UAE," says Farid Faraidooni, the chief commercial officer at du.

"With technology no longer being a barrier, networks, broadcasters and service providers the world over have already begun experimenting with the concept of targeted commercials as a viable business proposition."

There are barriers to overcome before targeted TV advertising arrives in the Middle East, says Hadi Raad, a principal in the communication, media and technology practice at Booz & Company.

Telecoms companies must build up the number of pay-TV subscribers in a region - a tough task given that many Middle East consumers are accustomed to receiving television free.

"It will only be viable or possible for [telecoms companies] to sell advertising once they've built the customer base," Mr Raad says.

"In the Middle East and North Africa, there are challenges for IPTV. First of all, free-to-air channels are in abundance in the region … So MENA users are not convinced to pay for television."

Despite this, Booz & Company forecasts healthy growth in the number of IPTV subscribers in the region. Currently, about 100,000 households in the MENA region are connected to IPTV, and more are in the UAE. But this "could grow to 1.5 million households by 2014", Mr Raad says.

"That represents an opportunity of around half a billion dollars by 2014," he says, referring primarily to subscription revenues.

Another barrier to targeted TV campaigns is that advertisers may not be ready for it, Mr Raad says.

"The market is not there yet. Advertisers in general are not used to this sort of advertisement.

"There needs to be a mind shift - and that will only come after the telcos have the scale of users."

If and when such a shift occurs, the arrival of targeted - and even interactive - TV advertising could yield great benefits for marketers, Mr Raad says. Telecoms companies have a great deal of information about their users, and much can be derived about a consumer simply from the person's address.

"Telcos are able to identify users. That would really be valuable," he says.

The number of IPTV subscribers globally is expected to grow to 100 million by 2014, drawing in subscription revenues of $18 billion, he says.

"IPTV will provide several benefits to consumers. It will provide the choice, the convenience and the ability to control your viewing experience."

For advertisers, the hope will be that this experience is enticing enough to keep viewers glued to the screen - and not wandering off making cups of tea - especially during commercial breaks.