Yahoo aims to go local in Saudi Arabian expansion

Yahoo, the world's second-largest internet search company, has applied for a trade licence in Saudi Arabia to establish a sales and editorial presence in the kingdom's growing media market. Ahmed Nassef, the managing director of Yahoo Middle East, said the effort will also make it easier to hire local staff. "The goal here is localisation," Mr Nassef said. "We want to be able to offer localised services over time. Having that trade licence will help us with more flexibility with hiring and visas and office space and stuff like that. We don't need to work with a third party to do that."

The US company has trade licences for Egypt, Jordan and the UAE following its acquisition of Maktoob for US$164 million (Dh602.3m) last August. Mr Nassef expects the Saudi licence to be approved within six months. "I just got an update from my counsel last week that the process is already on track," he said. "Saudi Arabia's just complicated. It's the most complicated country in the region as far as trade licences go. It just takes time."

Google, the number one search engine, has a consultant that works with companies based in Saudi Arabia but does not have a trade licence to operate there, said a company spokeswoman in Dubai. Various reports suggest that internet advertising spending in the Middle East is expected to increase from 4 per cent of the total ad spend last year to about 13 per cent by 2014. Being the largest and most influential media market in the Gulf, Saudi Arabia is expected to command the lion's share of online ad revenues as more companies establish offices in the kingdom.

The region's online advertising market grew from $65m in 2008 to $90m last year, according to the consultancy Booz and Co. "The advertising industry is still very much focused around Dubai," Mr Nassef said. "Most of the campaigns that are coming out of the Dubai agencies are targeting the Saudi market. A lot of final buying and planning is being done out of Dubai but we expect over time there's going to be more localisation happening for decision making. But it will take some time for it to shift to Saudi Arabia."

Mr Nassef said he would not know the size of Yahoo's presence in Saudi Arabia until the company received its licence and decided on a hiring strategy. "With Yahoo, there's a whole process to vet the various options between having a service office space and a full office," he said. Until Yahoo's Saudi plans are finalised, Mr Nassef is preparing for his own office move. The Yahoo Middle East team plans to move next month into the Al Salam Tower in the Dubai Media City.

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