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Sun 29 May 2011 11:32 AM

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US internet giants ramp up Middle East investment

Google and Yahoo! see surge in traffic, online ad spend; Google pledges 'aggressive' investment

US internet giants ramp up Middle East investment
Yahoo logo, Yahoo generic
US internet giants ramp up Middle East investment

US internet giants Google and Yahoo! are seeing significant
growth in traffic and revenues from search engine advertising in the Middle
East although overall revenues remain low.

Yahoo!’s Middle East revenues are growing in double digitals
while competitor Google is ramping up its investment in the region, regional
executives have said.

“[The Middle East] is one of the fastest growing in the
company in terms of revenue growth so we’re looking at very strong double
digital growth every year. Year-on-year the average growth for digital spending
is around 25-30 percent as a market,” said Ahmed Nassef, vice
president and managing director of Yahoo! Middle East.

Rapidly rising internet penetration rates coupled with the
region’s vast young population are some of the biggest drivers of this
growth. 

The UAE has the highest internet penetration in the region
at 60.9 percent, followed by the rest of the Gulf countries. Two thirds of the
Arab world is under the age of 25, the majority of which spend as much time on
the internet as they do watching television.

There are no official statistics for regional digital
advertising but experts estimate it to be less than five percent of the total
spent. The speed at which it is being adopted, however, is rapid.

“The industry ad spend today as a percentage of total on
online is less than two percent,” said Mohamad Mourad, Google’s
regional managing for the Gulf region.

“There is no reason why this number cannot become 30 percent
which means a fifteen-fold increase,” he said, adding that regional pickup in
demand will be quicker than western markets.

Google, the world’s largest search engine, is ‘aggressively’
hiring staff and boosting investment in both its English and Arabic-language
products in the region.

“We are really serious about MENA and we are investing
according to this thought. Not only saying we are very serious but we are also
investing in many ways to match this commitment. We’re definitely hiring
aggressively,” said Mourad.

In 2009, Yahoo!, owner of the second most popular US search
engine, paid $164m for Arabic language venture Maktoob.com. In less than two
years it has grown its users from 30 to 80 million while its Middle East
homepage is the company’s fifth most visited homepage.

“Our growth is very high and I think as we get to the 5-6
percent of [total advertising] spends then you’ll see the Middle East becoming
a more important part of the revenue contribution to the company globally,”
said Nassef.

Google chairman Eric
Schmidt said last week that Arab leaders were wrong to block internet access in
an effort to quell popular revolts, and had only hurt their own economies.

"It is a terrible mistake for them to do so," he said
on the sidelines of the G8 summit.

"Among other things it completely screws up the
economy, communications, the exchange of goods, the electronic commerce, the
flow of information into these countries... It's not a good idea to shut down
the internet in your country.”

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