Accurate audience measurement system set to provide clearer picture, say media executives, which could lead to more realistic pricing.
Ad spend figures are overstated, say experts
Regional media monitoring companies overstated advertising revenues for last year by up to three times their true value, industry experts say.
The total advertising spending in the MENA region was between US$3.5 billion (Dh12.85bn) and $4bn last year, media executives said. But the two main advertising monitoring companies in the region, Ipsos MediaCT and the Pan Arab Research Centre (PARC), put the gross figures at $15.3bn and $13.7bn, respectively.
The monitoring companies blamed a lack of transparency within the industry for the inflated figures.
Local media and advertising executives said those figures were misleading, and called on Ipsos and PARC to produce more representative reports.
Eddie Moutran, the chief executive of the advertising agency Memac Ogilvy, said the reported ad spending figures were inflated.
“You can’t just take the numbers and say we have a $10bn or $15bn industry – because we don’t. I’d estimate that the real number for total ad spending in the MENA region is between $3.5bn and $4bn,” said Mr Moutran.
Most media executives said the total regional advertising spending was at least half the “monitored” figures, valuing the total market at less than $7bn.
The reason for such a huge disparity is that Ipsos and PARC measure advertising spending according to published “rate card” fees – and do not take into account the widespread practice among media companies of offering discounts and free advertising.
Industry executives point to discounts of up to 90 per cent on rate card fees.
“The more progressive the market is, the less the discount is … I’d love to have more accurate figures to know where the market is going and where I am in it,” said Mr Moutran.
Ali Jaber, the dean of the Mohammed Bin Rashid School for Communication at the American University of Dubai and a consultant at Dubai Media Incorporated, said the gross figures were misleading.
“The figure of $13.7bn is ridiculously inaccurate and based on silly accounting of ads … This is largely misleading and has been the source of the industry predicament since the outset,” said Mr Jaber.
“Media can never grow in the Arab world as long as false, misleading numbers and lack of transparency continue to prevail.”
Raja Halabi, the executive director of the commercial division at Abu Dhabi Media Company, which also owns and publishes The National, said the disparity between the real and reported ad spending figures was “to some extent … confusing and misleading”.
“The numbers are inflated. I’d urge PARC and Ipsos to have a better look at the market. Before publishing those numbers you should have a greater sense of the market size,” Mr Halabi added.
But the two monitoring agencies hit back, saying a lack of transparency within the industry and “unco-operative” elements of the media made it impossible to determine the true level of advertising spend in the region.
The agencies both acknowledge the figures they published are based on gross rate card spending, and do not take into account discounted and free advertising.
Sami Raffoul, the general manager of PARC, said some media, especially radio and online, were not prepared to work with monitoring agencies. Mr Raffoul put that down to “a lack of co-operation” in certain areas of the industry.
Elie Aoun, the managing director for the MENA region at Ipsos MediaCT, acknowledged his company’s ad spending figures were inflated.
“Our figures are showing a total of $15.3bn for 2010 compared to $12.1bn in 2009,” Mr Aoun said. But the real advertising spend was much lower. “It should be around $6bn to $7bn … For sure, it is less than half,” he said.
Mr Aoun said that if the various parties were willing to disclose what was actually paid for advertising, ad spending would be easier to measure accurately.
“The problem is coming from a lack of transparency from media, agencies and advertisers,” he said. “In developed markets there is transparency. In Europe and the States, the margin between the gross and the net is minimal.”
Mr Aoun claimed some media and advertising companies welcomed the inflated figures.
“They all want to report growth figures,” he said. “Everyone wants to have those inflated figures. They want to show that they are getting more revenues.”