UAE to witness double-digit growth in direct marketing

The UAE’s booming economy has triggered the rapid growth of the advertising sector, with broadcasting, print, outdoor and cinema adverts all trying to grab the consumer’s attention.

Now a new medium is emerging – one that is less expensive and more focused than conventional channels. Direct marketing (DM) – where the advertising message is sent straight to prospective customers through mailshots, e-mail, SMS and other means – is expected to see double-digit growth in the UAE in the next few years. Ahmad Tahlak, CEO of Emirates Marketing and Promotions (EMP), a subsidiary of Emirates Post, explains what DM has to offer.

EMP has commissioned independent research into the advertising market. How does DM perform when compared with other forms of advertising such as media and outdoor?

What are the particular benefits of DM?

Direct mail and new channels such as SMS, e-mail and one-to-one phone marketing are being used more frequently and offer better value for money than other methods. DM is more meaningful and saves money and time on promotions. Its ability to create value is what makes it different.

Can you give any examples that prove this point?

In the US, the Direct Marketing Association found that each dollar spent on DM generated a return of $11.65 (Dh42.75), compared with a $5.29 return from every dollar spent on other forms of marketing. This clearly demonstrates DM’s return on investment is twice that of other methods. DM generates 10.3 per cent of the US’s gross domestic product and this shows the size and value of its contribution to development.

What is the situation in the UAE?

There are no reliable sources of information on the size or performance of the different DM channels here. But this form of marketing is currently in the development phase, and the market is expected to see double-digit growth over the next couple of years.

Who are the major players in the UAE?

One of EMP’s key focuses is to promote and strengthen DM and direct advertising in the UAE, and also the GCC.

What is EMP’s view of digital advertising, which has been growing but still represents a small part of the advertising sector?

Etisalat has one of the largest penetrations of e-mail account subscribers in the world, which does not indicate that the contribution of digital media is small. The number of mobile phone users, market size and penetration are ranked as among the highest in the world. This means SMS, which is a digital medium, has one of the highest penetrations here. The use of the digital media in EMP’s portfolio rose by the largest amount yet in 2006 and 2007. We believe this segment will continue to rise in the years to come.

What makes DM stand out?

It is more than just a marketing channel – it is a business process and an integrated strategy that deals with customers directly. This is the biggest and single most powerful element, that differentiates it from other methods. We are talking to customers on a one-to-one basis.

How does DM personalise the communication process compared with other types of advertising?

It enables businesses to build mature connections with customers, one at a time, by recognising their individuality and communicating relevant information in a responsible way. In this way it achieves results for both parties involved in the process – the advertiser and the consumer.

Print and broadcasting media have been in the spotlight due to the implementation of auditing to measure their performance. So TV advertising cannot be dismissed.

We are not questioning the power, penetration and reach of other advertising methods. Traditionally, TV has been well-established and powerful. But each channel has its strengths and shortcomings.

So who decides which method is most effective?

Customers decide which medium attracts their attention. But remember – the customer pays for the cost of advertising.

What are the main factors contributing to the growth in DM in the UAE?

We use marketing channels to promote this medium via data research, mailings, e-mail, SMS and tele-marketing campaigns. One major factor is accountability. As consumers turn increasingly to emerging media for information, marketers must account for their return on investment and in this area DM delivers – and delivers big.

Few agencies represent or devote themselves mainly to DM and advertising in the UAE, so how can the postal service present itself as a major player in the sector?

It is true that few other organisations, companies or private sector agencies focus on direct advertising, but we regard it as one of the fastest growing media channels in the UAE. It has been picking up pace in the past four years.

EMP has been well-established as a leading UAE organisation in data management and DM, offering more than 2.8 million records across the country and several unique services in a one-stop-shop.

Our services range from market research to data access, creative development, mailing, response management, call centre management and promotion.

How is the postal service involved in direct marketing?

Generally, the mail sector in the GCC consists of a PO box-driven postal system, which has the advantage that everyone can be reached through it. The postal services provide this network. It is the private sector and growing customer needs, that are expected to dictate the use of such a channel. In a free-market economy the customer is king, the one who decides which is his or her preferred medium.

What are your expectations for DM in the UAE in 2008 and the coming years?

I expect it to become the most preferred channel of communication, as it is in every other developed economy around the world.

EMP has eight clients, who are well established in the UAE. How much do you expect that figure to rise?

EMP does not make public announcements about its clients to protect their interests and as well as ours, but it has grown dramatically since its launch in 2005.

EMP says its Postcard Millionaire scheme is recognised as the “best advertised and most rewarding promotion of its kind”. How do you justify this claim?

We were the first to come out with a Shariah-compliant idea, that promotes the sales of our postcard products and brings in unique added-value benefits to the growing number of consumers in the UAE. Customer volumes for Postcard Millionaire have been growing steadily year-on-year.

Does EMP plan to launch new promotional campaigns in 2008?

Yes, we will launch The Grand Draw UAE retail marketing incentive programme with On Line Media, along with other partners such as Gulf Greetings and Sharaf DG. The Entertainer cut-price dining scheme and 24 Seven convenience stores will also be involved. The promotion will provide extra value for consumers. And EMP also plans to launch a 3D postcard promotional pack
in 2008.

How can EMP play a major role in creating better public awareness of the benefits of advertising?

EMP remains committed to providing the best infrastructure to provide DM support for customers, and will continue to protect customers’ interests, and will always offer the highest quality of products and services.