Telcos seek help from Google, Yahoo

Faced with declining revenues and increased capital costs, telecom companies are pressuring ‘over-the-top players' such as Yahoo and Google to help pay for billions of dollars of infrastructure by potentially sharing a small slice of the cash the portals earn in global online advertising. Behemoth internet content portals, however, have made no financial commitments to help telecoms offset network upgrades as demand for faster fourth-generation broadband capabilities grows. Ari Kesisoglu, managing director of Google Middle East and North Africa (Mena), told Gulf News at yesterday's first-ever Google Day conference in Dubai that the online advertising market is still in its infancy in the Mena region and offers telecoms and internet portals untold opportunity in the few short years ahead. He declined to say whether Google is weighing calls for some form of financial partnership with Middle East telecoms. "We are open to partners," Kesisoglu said. "What we want to do is help everyone understand the internet industry. We want to partner with telcos and help them get a benefit from that. Telcos sit at a central stage on this." Industry estimates suggest the total global advertising industry is worth about $500 billion (Dh1.836 trillion) annually with the Mena region worth about $6.5 billion all in, including traditional and newer online forms. Kesisoglu said in this region there is a "$180 million online advertising market [worth] two per cent of the total". That compares to the United States and the UK where online advertising now represents about 25 per cent of their total domestic advertising markets. "You could argue that Mena is four years behind," he said, adding that as the Mena market matures to catch up with its Western counterparts, "there is a big gap of $450 million now that will [close] in the next few years". Google estimates that five per cent of the global online community is Arabic and that the growth of online Arabic content has grown within the last year from only one per cent of all global content to 1.5 per cent thanks to efforts to bring more language and culture specific apps, data and video to the Arab world. Google has recently launched ebda2, a competition of sorts to encourage start-up companies to create more Arabic content. The winning entry will receive $200,000 no-strings-attached from Google to launch. "Where there is such huge growth there is opportunity," Kesisoglu said. "It's not only users coming online, business are coming online." The surge in small and medium enterprises going online in the Middle East and North Africa will bolster the financial element of online marketing, he said, estimating that there are 10 million SMEs in the region. "These guys are going to move online," he said. With the addition of more and more online businesses into the Mena market, Kesisoglu said "there's no reason why a smart company can't benefit" from the increased enterprise community presence on the internet.