Advertisers cut back during Ramadan

Advertising spending in the Middle East during Ramadan dropped by a quarter compared with last year, the industry's local representative body said on Wednesday. Ghassan Harfouche, the treasurer of the UAE chapter of the International Advertising Association (IAA), said unprecedented spending from the property industry boosted advertising spending last year, especially in the UAE, but this had since dried up. "This year, the overall scene has witnessed a drop in advertising spend, and in the UAE, the drop was even higher than on a pan-Arab level," he said. The decline came from the property sector, which contributed up to 50 per cent of media spending in the UAE last year, Mr Harfouche said. Ramadan, when families gather in the evenings to watch big-budget dramas and comedies on television, typically represents about a third of the annual advertising revenues for leading television broadcasters in the region. Early indications are, however, that even the fast moving consumer goods and telecommunications sectors, which are normally among the top Ramadan advertising spenders, pulled back their marketing budgets this year. "Many clients did not advertise this year, and many clients have also reduced their spend," Mr Harfouche said. The result was a consolidation of spending, particularly in television, on the major outlets, he said. "The first stations, which have the most viewers, will definitely suffer less than a less-watched television station, because the clients will obviously concentrate their dollars on that medium," Mr Harfouche said. "So this year, the TV stations like MBC 1 suffered much less than stations like Dubai or Abu Dhabi or Rotana." In addition to his role at the IAA, Mr Harfouche also serves as the managing director of Middle East Media Services, the division of the Choueiri Group that sells television advertising for Dubai Media Incorporated's television channels. The tough economic environment has caused a widespread problem of late payments in the UAE's advertising industry. Mr Harfouche estimated in the spring said there is as much as US$150 million (Dh550m) in overdue payments from clients to advertising agencies. Agencies themselves often have little choice but to pay up front the money to buy media time from broadcasters. The IAA has been attempting to help those in the industry find agreement over late payments. While Mr Harfouche said there had been considerable progress on this front in the past few months, he could not estimate the amount of late payments outstanding. There are some signs of optimism for the advertising industry. The IAA suspended some of its educational programming at the height of the crisis, but now plans to resume these programmes, along with monthly networking events. Mr Harfouche said he saw the advertising market stabilising over the next two to three quarters. "I certainly wouldn't see any huge improvements neither in the last quarter of this year not the first half of next year because things do not move like this," he said. "But nor do I see a drastic drop from here. I would say that we've got to be witnessing the same type of activities and levels [of advertising spending] as 2009, looked at in its entirety. I won't look at summer of 2009 as a benchmark, but I definitely wouldn't see a huge increase in ad spend in the next six to nine months." khagey@thenational.ae