x Abu Dhabi, UAESunday 23 July 2017

Advertising spending set to decline

A freeze in the key media market of Egypt will be a major factor behind this year's expected 3.7 per cent drop in advertising spending within the Mena region.

Raja Trad, the chief executive of Leo Burnett in the Mena region, says that advertising spending would be flat compared with last year.
Raja Trad, the chief executive of Leo Burnett in the Mena region, says that advertising spending would be flat compared with last year.

Advertising spending in the Mena region is forecast to decline by as much as US$150 million (Dh550.9m), or 3.7 per cent, this year because of the impact of political unrest.

A freeze in the key media market of Egypt will be a major factor behind the expected drop in the region's $4 billion advertising industry, according to a poll of key executives conducted by The National.

Some forecast the turmoil in the region will mean a decline in spending of 10 per cent or more, while only one executive said there would be an increase, of a modest 3 to 5 per cent.

On average, the forecast drop in spending in the region stands at 3.7 per cent, representing a decline in revenues of about $150m.

Tarek Miknas, the chief executive of the FP7 advertising agency network for the Mena region, said the drop could exceed 10 per cent.

"I'd imagine that, due to North Africa, it would be down at least 10 per cent and I wouldn't be surprised if it was higher," said Mr Miknas. "The general feeling is one of anxiety."

Reda Raad, the chief operating officer for the Mena region at the advertising agency TBWARAAD, said the decline in the region's advertising spending could be more severe: "Considering the current situation in Egypt and North Africa, we can anticipate a reduction in ad spend in the vicinity of 10 to 15 per cent.".

Egypt is the region's biggest individual advertising market, according to figures for last year from the Pan Arab Research Centre.

Advertising activity in the North African nation has ground to a halt since the beginning of the protests in January.

Elie Khouri, the chief executive of Omnicom Media Group in the Mena region, said advertising spending in Egypt was down 50 per cent in the first quarter of this year, but "things are getting back on track".

"You're looking at minus 20 per cent in Egypt this year versus last year," said Mr Khouri.

Omnicom is the parent company of the media agencies OMD and PHD that buy advertising on behalf of their clients, and which controlabout 15 to 20 per cent of the advertising spending in the region.

Mr Khouri said he expected a 5 per cent increase in advertising in the GCC, which would help to offset losses in Egypt to give no change in the Mena advertising market this year.

"We're looking at the GCC being up 5 per cent versus last year," he said. "We're going to be about the same in Mena this year. Egypt's drop has been compensated by a rise in the Gulf."

Raja Trad, the chief executive of Leo Burnett in the Mena region, agreed with Mr Khouri that advertising spending would be flat compared with last year.

But he said the volatile situation in the region meant making such predictions was "like fortune telling".

"From where I'm standing today, I'm expecting no growth. It will be at a par with last year … but this can change tomorrow," said Mr Trad. "I'd say that this boiling situation is creating a sort of unease and tension on everyone."

The impact of the unrest in the region is likely to be high on the agenda at this week's Dubai International Advertising Festival, which starts today.

Highlights of the event include an address on social media by Mike Cooper, the worldwide chief executive at the media agency PHD, and a discussion headed by Mark Tutssel, the chief creative officer at Leo Burnett Worldwide.

Osman Sultan, the chief executive officer at du, and Mohamed Fawzi, the marketing director at BMW Middle East, will take part in a debate moderated by Martin Newland, the editorial director at The National.

The festival also includes the Dubai Lynx advertising awards, which takes place on Wednesday.

bflanagan@thenational.ae