Civil unrest in parts of the Arab world is expected to wipe out any growth the advertising market was expecting this year, a senior industry executive says.
A standstill in spending in Egypt and negative sentiment elsewhere will result in "flat" growth in the Mena region advertising industry this year, said Elie Khouri, the regional chief executive of Omnicom Media Group.
"At the beginning of the year we were looking at an extremely positive 2011 … It was a 20 per cent increase versus last year," said Mr Khouri. "I would be happy with a flattish to low single-digit increase this year, given what has happened."
Mr Khouri attributed the change in ad spending forecasts primarily to events in Egypt, but also to "uncertainties everywhere else", including the "big issues in Libya".
Egypt is one of the Mena region's key advertising markets and, before the turmoil there, was growing "phenomenally", said Mr Khouri.
He now predicts a decline in the advertising market in the North African nation this year. "We're seeing 2011 to be a negative year for Egypt … in terms of investment.
"A lot of clients are still off air in Egypt, they are not advertising now," he added. "What's happening in Libya, what's happening in Bahrain will have implications."
However, Mr Khouri said he expected a recovery in Egypt next year. "The potential for 2012 and moving onwards is phenomenal," he said. "I think 2012 will be the harvesting year, because everything will change this year … Advertisers jump on to the bandwagon quite quickly. The minute things are normal, you see them the next day."
Omnicom Media Group is the parent company of the media agencies OMD and PHD, which buy advertising on behalf of their clients. Mr Khouri said the company had a "15 to 20 per cent market share" in the Mena region.
Other advertising executives said while the Egypt market had been hit hard, there may not be as severe a regional drop as predicted by Mr Khouri.
Amer el Hajj, the regional buying director at VivaKi, which operates the media agencies Starcom MediaVest and Zenith Media, said Mr Khouri's earlier statement that the market could have grown by 20 per cent was "very optimistic".
"The growth that we were predicting in 2011 is between 5 per cent and 7 per cent - 10 per cent maximum," said Mr el Hajj.
Many clients had withdrawn advertising from North Africa, he said. "We have lost the first quarter of our billings in Egypt and North Africa."
But he added he had only lowered his predictions for the Mena region as a whole by 2 percentage points.
"For the GCC itself, everyone is cautious as to how to spend, but it's not to the extent of what happened in Egypt," he said. "Overall budgets, given the situation in Egypt … may drop two points."