Digital Business Transformation in Advertising: Effects on E-services Revenue

In this heyday of the digital economy, digital advertising has emerged as a powerful means for businesses to engage with consumers. Despite its vital role in the microeconomy by helping companies to grow, there is still limited empirical evidence on how digital advertising expenditures influence revenue generation at the macro level, particularly within the e-services sector in the Middle East and North Africa (MENA) region. To address this gap, this study investigates the long- and short-term effects of digital media market revenue and total digital ad spending on e-services revenue across five MENA economies: Qatar, the UAE, Saudi Arabia, Egypt, and Iraq. Using annual panel data from 2018 to 2023, an era shaped by the accelerating digital shift triggered by the COVID-19 pandemic, and applying an Autoregressive Distributed Lag model, the analysis reveals that both variables have no significant short-term impact but produce a positive and statistically significant effect on e-services revenue in the long run. The study offers actionable insights for business leaders and policymakers, emphasizing the need for robust data governance, sustained digital advertising strategies, artificial intelligence-integrated marketing strategies, and supportive digital infrastructure to accelerate economic transformation in emerging markets.