As the internet increases its reach at a phenomenal speed and becomes an integral part of our lives, companies are getting on this information superhighway and using it as a tool for advertising, marketing and branding. For example, Google saw net income in 2008 rise to $1.35 billion (Dh4.96bn) from $1.07bn in 2007.
According to Barclays Capital, the internet accounted for 8.7 per cent of the $284bn in United States advertising spending in 2008, up from 7.2 per cent in 2007.
Research company eMarketer has forecast 7.2 per cent year-on-year growth in 2009 for online advertising in the United Kingdom at £3.58bn (Dh18.75bn). eMarketer is also expecting internet advertising growth of 10.1 per cent in 2010, 12.3 per cent growth in 2011 and 14.6 per cent growth in 2012.
Increasingly companies are using social networking sites such as Facebook, Maktoob, and Stardoll to market their products.
Emirates Business spoke to companies that use the Net to market their products online and branding experts to find out more about online marketing and what brands need to do.
Hamad Malik, Director Marketing and Corporate Communication, LG Electronics, said: "The digital medium is definitely the future of marketing in the region. It has already been initiated with a very shy and careful approach, but as this medium is fast growing in nature, it will develop soon."
Charles Wrench, Global Chief Executive Officer of Landor Associates, said: "As the volume of commercial noise and the level of customer choice grow exponentially every year, brands need to be ever more differentiated to stand out. Internet marketing and branding has arrived in the sense that brand promises can be communicated further and faster than ever before."
Taeko Danno, Deputy General Manager, Corporate Communication, Panasonic Middle East, said: "Online marketing in my opinion is still in its nascent stages in the Middle East. The web 2.0 and internet marketing is still catching up in the region and forms only a small fraction of most marketer's budgets.
"But with the ever-increasing internet penetration and easy access to the otherwise elusive Arab youth means online marketing and advertising would get a bigger share of the dollar spend in the near future. There is a lot of scope for marketer's to use social media to increase brand loyalty and build a buzz for their product or service."
Both Panasonic and LG Electronics use the internet as a marketing tool. While Panasonic is upbeat about the results being measurable and targeting being accurate, LG Electronics likes the fact that people can be accessed on a large scale via the Net.
Danno said: "The internet is an integral part of our marketing plan because the results are measurable, targeting can be accurate, the consumer can have a dialogue or interaction with the company, it can lead to immediate sales [e-commerce] and the youth can be influenced using the web."
Malik said: "Besides social networking, online marketing involves blogs, search engines as well as corporate websites and microsites. Thus messages can be sent across directly to mass audience or indirectly through blogs, debates and discussion groups and more."
Danno said: "Panasonic has developed its own CRM programme called 'plus card' and uses the web to promote products and offers to its most loyal customers. We have developed a CRM web where individual customers will find information customised to their field of interest. We are managing an e-store for all products accessories.
"We have developed individual microsites for strategic products such as flat-panel televisions and digital cameras to provide more information, product demonstration, run online competitions and compare products."
LG Electronics recently launched the third phase of its interactive online campaign in partnership with Maktoob.com the world's largest Arabic online community.
This campaign includes three categories in which participants can contribute by writing lyrics and uploading them on to the microsite. After this Arabic singer Wael Kfoury, who is the brand ambassador for LG mobile phones, will select the best song lyrics and set it to music. Participants can also develop an interesting video commercial for LG Electronics. And last but not the least, they can sing a song alone or with friends and upload it on to the microsite.
Malik said: "If cleverly put into good use, online marketing can prove to be an important tool to reach out to people worldwide."
The companies feel that despite the fact that online marketing is still in the nascent stages in the Middle East it has a bright future as there is definitely enough awareness about the Net among the youth in the region.
Malik said: "The biggest proof of internet awareness among the youth and the increasing reach of the Net in the region is the number of internet cafés and the wireless accessibility options that keep expanding even to rural areas.
"Generation after generation, the youth is more aware of the virtual world within and the younger they are, the more knowledgeable you will find them to be.
"Social networking sites are one way to reach out to the youth, as they are very popular in the region for making friends, chatting, discussing and debating current issues and more. They have increased in a noticeable manner in the Middle East. However, this is not the only way to reach youth.
"There are certain popular blogs and some internet search engines that can be optimised as well as microsites that we are already implementing."
However, branding experts warn that the internet can also be a double-edged sword.
Wrench said: "The explosion of digital channels now means that the payback on brand strength or price of brand weakness is now infinitely greater. Once, when a new brand or product was launched, word on the street moved slowly. Marketing departments had the time and tools to manage customer perceptions. But today, consumers have been massively empowered by the speed and reach of the internet.
"Today, when a new mobile phone comes out, millions of people hear about it and can circulate their opinions to millions more within seconds. If the blog chat is positive, you have an overnight winner. If it is negative, you're dead in the water. And all this before your first ad spot runs.
"I think that the management of a brand promise has effectively become at once harder and more critical than ever before."
Wrench feels that the web burst so quickly into the world that creative companies are all still jostling to establish what best practice looks like when it comes to how brands should be managed in the web space.
This is because one cannot talk of online and offline marketing as if they were separate brands. Consumers do not make this discrimination and it would be a mistake for marketing and brand managers to do so. At the end of the day, brands need to deliver a consistent and not a bi-polar experience.
Wrench said: "Thus far, I would say it has been the companies with the greatest technical capability that have led the charge. But I think this is changing. For in far too many cases brands have lost their sense of self on the web, being defined not by the need to be true to their unique promise, as they should, but by their desire to make best use of all the latest gizmos. So many of today's brands offer what I would call a technology-led brand experience on their portals.
"But the more astute brand managers are returning to first principles and looking to create a more brand-led digital experience – an experience that harnesses technology to affirm and celebrate what is special and different about their promise, rather than subsume their promise to the power of technology. We see this more and more as clients who used to work directly with the big enterprise site builders coming to us and saying 'help us make our site a true extension of our brand experience'."
However, despite all these warnings from the experts companies remain upbeat about online marketing.
Malik said: "Digital media is a mean to reach out and influence uncontrolled audience worldwide whether directly or indirectly. I think everyone realises that and will soon follow suit."
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