1. In long run, ad spent typically follows consumer time spent
Ad spend will tend to find an equilibrium with brand allocating ad budgets in the same proportion as consumers’ time spend on a certain medium. To put it simply, with attention and time spent moving online, so will advertisements. We have already seen that in the USA and expect that trend to continue in MENA.
Share of Time Spent vs Ad Spend, CY 2020 Estimates
2. With short form, we are now in the fourth wave of digital content-innovation
We have seen the digital content platforms innovate into new mediums every 5-7 years.
i. Late 1990s: At the end of last century, Google became the ubiquitous search directory enabling us to find anything on the internet – that gave rise to search and banner advertising.
ii. 2005-2010: Social and video media platforms such as Facebook and YouTube soon followed providing consumers with new ways to interact and brands adopted those platforms for ads.
iii. 2010-2015: In the third wave, image-based platforms such as Instagram and Snapchat gained traction.
iv. 2016 onwards: Now, we are seeing that consumers are increasing adopting short-form videos. The time spent on shortform platforms has been increasing steadily since this model allows for easy tailored entertainment content with organic discovery.
3. Consumer adoption of shortform on the rise in MENA
Already in MENA, the time spent on short-form content is close to the time spent on messaging apps overall. There are also positive early signs for monetizing this model since 50+% of consumers in UAE mentioned that they will use short form players such as Tiktok for product discovery this Black Friday. The impact of this form of media could be far reaching.
Digital Media Consumer Penetration, % of respondents using a digital media platform for ad engagement on Black Friday
4. Short-form users seem to have attractive spend characteristics
We expect more brands to leverage such platforms as consumers who use shortform are generally digitally savvy and tend to spend more online than non-short form users.
Online Purchase Annual Spend By User Type, Annual spend (K $) by sector