Arab Spring puts damper on regional ad spending

The Arab advertising market is set for "lacklustre" growth this year, with the impact of the Arab Spring predicted to keep revenues below $7 billion.

The Egyptian advertising market was badly hit by the civil unrest. Above, billboards in downtown Cairo. Dana Smillie for The National

Advertising revenue in the Arab world is forecast to be "lacklustre" this year, mainly because of the impact of political unrest in the region.

With spending expected to remain below US$7 billion (Dh25.71bn), which most experts agree is the real level - about half the "monitored" figures - growth in advertising across all media is predicted to be negligible this year compared with last year.

But reliable figures on the true size of the regional advertising market are not available.

"We have a lacklustre performance this year," said Sami Raffoul, the general manager of the Pan Arab Research Center (Parc), which attempts to track advertising spending in the region.

Parc said total spending this year was on target to reach $13.8bn, a marginal increase on the $13.7bn it reported last year.

However, the figures do not reflect the common practice in the region of media companies offering free or discounted advertising.

Some executives estimate the true level of spending for last year to be as low as $3.5bn.

The so-called Arab Spring is behind the lack of growth in the advertising market forecast for this year, said Mr Raffoul.

The Egyptian market had been tipped to be the best-performing in the region this year, but it was badly hurt by revolution there.

"Egypt's market was hard hit by the civil unrest. It plunged down by 52 per cent in quarter one and quarter two," said Mr Raffoul. "It's performing at nearly half of its capacity."

However, he predicted that the Arab Spring could boost the advertising market in the long term.

"In spring, we have planted, seeded - and we should collect the harvest sometime later. And that's exactly what we expect to happen in the few years to come," he said.

PepsiCo, Coca-Cola and the telecommunications company Zain were the top advertisers between January and September, he said.

However, advertisers in the property, automotive, financial services and government sectors have reduced their budgets.

Internet advertising is one sector bucking the trends of the wider market.

Isam Bayazidi, the chief executive of the Middle Eastern online advertising network ikoo, said recently he expected online advertising spending in the Arab world to hit $160 million this year, and at least $250m next year.

Global advertising executives said the greater amount of time consumers spent online was an increasing opportunity for advertisers.

"Ten years ago, 20 per cent of our lives was spent interacting with some form of media. Today that figure is nearer 50 per cent," said Marco Rimini, the leader of business planning at the media agency Mindshare. "And that's a fundamental shift in the way in which we use our own time as human beings."

Mr Rimini cited research that found that 70 per cent of consumers go online to check out a particular product before making a purchase.

"Digital is changing the way in which we buy products," he said.

In the Middle East, there has been a boom in social media users. Fredrik Bernsel, the sales director for LinkedIn's partners in the Europe, the Middle East and Africa, said the business networking site had strong membership in the UAE.

"We have 120 million members today, currently growing at about two per second. Here in the UAE there are 800,000 members," he said.

Mr Rimini and Mr Bernsel were speaking at the Mindshare Media Summit in Dubai.