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.
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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
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.”
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
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
“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.”
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
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,”
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.”
Spotlight: The Middle East Opportunity
Hear from two industry pioneers in the region on key trends happening in an incredibly young, social and mobile market at Phocuswright Europe in Amsterdam May 15-16.