x Abu Dhabi, UAEThursday 27 July 2017

Regional advertising spending hit by turmoil

The Arab advertising market fell by an estimated 10 per cent in 2011, brought down by huge losses in markets like Egypt and Bahrain.

Advertising spending in the Arab world declined by 10 per cent last year, according to one of the world's largest media groups.

Unrest in Egypt and Bahrain helped to drag down the multibillion-dollar industry, although markets such as Saudi Arabia and the UAE proved resilient.

Elie Khouri, the chief executive of Omnicom Media Group in the Middle East and North Africa (Mena), dismissed a report released yesterday that suggested a slight rise in advertising spending last year.

"We see in 2011 a market that has shrunk, not expanded," Mr Khouri said. "We estimate that it has dropped by an average of 10 per cent."

He said that the findings in a report issued by the Pan Arab Research Center (Parc) were misleading. Parc had suggested that the Arab advertising industry grew by 4 per cent.

Sami Raffoul, the founder and general manager of Parc, acknowledged that the first half of last year was tough because of unrest in the region.

Parc's figures showed advertising spending was 37 per cent lower in Egypt last year and down by 21 per cent in Bahrain.

"The biggest impact on the industry from the Arab Spring was in the major market of Egypt. It brought it down to half of its capacity," said Mr Raffoul.

But Mr Raffoul said the advertising market recovered later in the year.

"The most positive one was Saudi Arabia, with a domestic market increase of about 9 per cent. Saudi Arabia saved the situation," he said.

"The UAE was stable. It demonstrated that it was a market that can [catch] its breath and reorganise." Mr Khouri said that Parc may have recorded a rise in advertising spending because of "over-discounting" - the increased practice of newspapers, TV broadcasters and other media offering advertising below the published rates, or free of charge.

Parc estimates total advertising spending in the Arab world was US$14.27 billion (Dh52.41bn) last year.

But because Parc's figures do not account for discounted and free advertising, the true spending is estimated at less than half that amount. A poll of media executives carried out by The National last year suggested that the true spending in 2010 was as low as $3.5bn.

Omnicom's Mr Khouri agreed that the market in Saudi Arabia had proved resilient.

"If you look at the Saudi market by itself, it has not come down," he said.

Omnicom is the parent to the media agencies OMD and PHD, which buy advertising on behalf of their clients.

The company controls 15 to 20 per cent of the advertising in the Mena region, and could have a clearer view of the true value of the market compared with research agencies such as Parc.

 

bflanagan@thenational.ae

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