Middle Eastern travel marketers see Amazon as biggest disruption threat

Amazon has been making a lot of noise in the Middle East in the past two years - and it's catching the attention of travel marketers.

In 2017, the e-commerce giant acquired Souq.com, which at the time accounted for nearly 80% of the region’s online shopping, for $580 million in cash.

Amazon has also been opening offices around the Middle East, including an Amazon Web Services Region in Bahrain opening this year and an additional office in Dubai.

According to CNBC, in January the company said it will launch a new Middle East marketplace targeting Saudi Arabia and the United Arab Emirates that will use the Amazon brand, creating a unified identity and encouraging sellers based in the United States to expand into the region.

It’s no wonder Amazon is investing in the Middle East. The region has huge potential for e-commerce growth, with online sales currently accounting for just an estimated 2% of total retail revenue.

And new research from Sojern indicates travel marketers are well aware of Amazon’s aspirations in the Middle East.

A new survey of 600 travel marketers worldwide found that only travel marketers in the Middle East rank Amazon as having the greatest potential to disrupt travel marketing in the next five years.

Forty-three percent of Middle East-based respondents chose Amazon, while 35% chose Facebook and Instagram, and only 27% selected Google Ads.

In contrast, the global results of the survey put Facebook and Instagram at the top (both with 49%), with Amazon second (46%) and Google Ads third (41%).

“Amazon is really important to people here now,” says Josh Beckwith, Sojern’s senior sales director based in Dubai.

“Their advertising technology is popular. They are making big investments in people; they are recruiting heavily in Dubai for Amazon Web Services. So it’s not necessarily that they will disrupt the online travel agency business, but if anyone can challenge Google and Facebook, now that Amazon has a very strong foothold in the Middle East, perhaps it’s them that could disrupt travel as well.”

Amazon’s advantage

Sojern’s survey also found that Middle Easten travel marketers say “keeping up with the fast-paced advertising and technology landscape” and “achieving ROI and profitability targets for my advertising investments” are their two biggest challenges.

Beckwith says this is another area where Amazon can step in to fill a need.

...if anyone can challenge Google and Facebook, now that Amazon has a very strong foothold in the Middle East, perhaps it’s them that could disrupt travel as well.

Josh Beckwith - Sojern

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“It’s a big confusing market, and regional and local businesses are having a hard time keeping up with the pure pace of development across that sector,” he says.

“They [Amazon] have a huge amount of data on people’s e-commerce activities, which gives them a good position to expand into travel.”

But to be successful in capturing travel ad spending, Beckwith says Amazon will need to develop a suite of products targeted to these customers, similar to what Google and Facebook have done.

“The way in which airlines and hoteliers and destination marketing organizations and the like use the internet to generate their online business is very different from any other sector,” he says.

“So I would see a situation where Amazon would have to build out travel-specific products - maybe not regional-specific, but certainly sector-specific.”

Social enterprise

Sojern’s survey also found social media captures the largest portion of digital advertising spending (22%) in the Middle East, with the majority of that (18%) on Facebook and Instagram and 4% on other social platforms.

And with mobile usage increasing in the region, 58% of respondents indicate they intend to spend even more on Facebook and Instagram in 2019.

“Where we are seeing the big growth in social spend itself is a slight decline in the news feed-type spending but a huge, huge growth in stories,” Beckwith says.

Forty-three percent of Middle East travel marketers used Instagram Stories in 2018, while 73% intend to use them in 2019. Facebook Stories usage is estimated to increase from 38% in 2018 to 68% in 2019.

Innovation is also high in the region, with travel marketers in the Middle East leading the way in using emerging technologies in their campaigns.

Globally, 37% of respondents intend to use chatbots in 2019, but in the Middle East, the figure is 47%. The discrepancy also holds true for audio advertising (37% globally, but 57% in the Middle East), and real-time travel audience data (39% globally compared to 57% in the Middle East).

“Although marketers are struggling to grapple with these technologies, they are quick to adopt and very willing to move into them,” Beckwith says.

He says part of that willingness to transition to digital, mobile-first strategies is being driven the region’s young population.

“Around 60% are millennials and Gen Z,” he says.

“They’ve grown up with the internet, they’ve grown up with smart phones. Penetration in some countries is still low because of infrastructure, but the demographics suggest that will explode in the next few years.”