Arab world is far behind in market research spend

(SATISH KUMAR)   

 

Market research can be an invaluable tool to help companies evaluate their success and failures and assist in strategic planning.

While spending on market research has been growing globally, the Arab world still lags far behind the rest of the world, including other emerging markets. Emirates Business sat down with Eduoard Monin, Chairman and CEO of Ipsos Middle East and North Africa, to discuss the industry and recent trends.
 
Ipsos is one of the leading research firms in the Middle East with offices across the region, including in the UAE.

 

What is the state of market research in the Arab world today?

 

Market research is an old phenomenon and it started with conducting opinion polls. However, economic and social developments in recent years in the Arab world have motivated market research to follow suit.


The region’s growth percentage remains very low compared to other regions. But things are improving, though slowly. The world has changed and the Arab world has been undergoing interesting economic and social trends.

Nothing can be done nowadays without research. There are two types of information: internal where it is about offices and companies’ information, and external where it is about conducting research as part of the development of the market.

How much is spent on market research around the world and what are the expectations for 2008 and the coming years?


Spending on market research has been growing over the past years, but the Arab world’s share remains way behind.


During the last four years, the total billing of media research in the world was $21.9 billion (Dh80.4bn) in 2004, $23.4bn in 2005, $24.6bn in 2006 and $27bn in 2007. The rate is expected to grow at seven per cent worldwide for 2008. 


Has the US dollar’s fluctuation against other major currencies been affecting overall expenditure on market research?


Yes, this would make the rate actually stand at 5.9 per cent growth. This is compared to the worldwide advertising expenditure gro-wth rate in 2007, which was 5.5 per cent. To my knowledge, the worldwide gross domestic product was 5.2 per cent for 2007. 


What is the breakdown of spending on market research globally in terms of the amount spent?


The new emerging markets such as China, India, Latin America and Eastern Europe are witnessing more awareness towards market research  and the Arab world is included in that.
 
So from the total $27bn spent, North America represents a growth rate of 5.8 per cent, Europe is nine per cent, Russia, Ukraine and the Commonwealth of Independent States (former Soviet Republics) is 21 per cent, Latin America is 8.4 per cent, Asia Pacific is 7.7 per cent, China is 20.3 per cent and Japan is 4.3 per cent.


The Middle East, North Africa and the rest of Africa is 14.5 per cent.  Spending wise, Europe is 44 per cent, North America 36 per cent, Asia Pacific 14 per cent and Latin America four per cent. The Middle East and all of Africa barely make up two per cent.


Can you explain more about where the Arab world stands in terms of spending and share of market research?


The Arab world is divided into three sub-regions – the GCC, Levant and North Africa. The estimation of spending is that $170m was spent on research in 2007. 


The GCC represents 58 per cent, North Africa 27 per cent, the Levant seven per cent and others eight per cent. Due to the current trends and economic, oil price and construction boom  which all are affecting advertising expenditures, market research, consultancy and all communications sectors in the region  the growth rate on research is expected to rise by at least five per cent. 


Which countries in the region are expected to experience the highest growth rates in 2008 and beyond?


Saudi Arabia, Egypt, Jordan and the Maghrib region countries, especially Algeria and Morocco, will experience higher rates. Dubai is also a very important place as a business hub.


When it comes to Saudi Arabia, 75 per cent of the business is been ordered in the UAE, but implemented there. Also, Jordan has become an important market over the past two years and a very important place for communication in terms of advertising and research.

There is a willingness by people from the media sector, business, industry and research to develop the industry. They are doing a lot of conferences and campaigns in that regard.

 

What has changed about perceptions towards market research in the UAE, GCC and the rest of the Arab world compared to 10 years ago?


Discussions of market research have become more mature among the majority of sectors in the region compared to 10 years ago. Now clients are contacting the different research centres. New marketing departments are conducting research and advertising.


It is easier to talk to clients now and they can understand language in terms of the research language, what it is about and its benefits. More than 10 years ago, it was extremely difficult to talk to business owners and managers about what market research was all about.


Who are the main users of market research and can you give a breakdown of the different sectors?
 

Based on our business, most of the big international and multinational companies do use market research studies. Middle size companies are following suit in using research studies in order to find ways to compete and expand their business and operations and to consolidate their position in the markets.


In terms of sectors, UAE and worldwide, the most important sector for research is Fast Moving Consumer Goods (FMCG) companies.
 
When research is conducted, there are several types: marketing research, media research (watching what and reading what), political and social polls, customer satisfaction research and advertising research.

Research on marketing represents 60 per cent, political and social opinion polls 14 per cent, customer satisfaction surveys 10 per cent and advertising nine per cent, of the total world expenditure on market research. 


What is the breakdown of different sectors’ spending on research in the UAE?


This is rough estimation. The UAE is close to the international figures where 25 per cent of the expenditures on market research in the GCC comes from FMCG companies, 15 per cent from media, 10 per cent from healthcare companies, five per cent from the automobile sector, six per cent from the financial sector and four per cent from electronics and durables sector.


Why do you think different media outlets, mainly TV, receive different ratings by different market research or advertising agencies?


There is a problem, and it is causing a nightmare for many clients, where there is no respect to the rate card.  Bureaucracy, connections and different discounts make several clients have different ratings. It is a question of observing and monitoring, and both should reflect each other to be consistent. 


Do you believe market research should be regulated?


No, it should not. Market research agencies bear the responsibility to perform their tasks independently, ethically and with transparency for their credibility. 


The number of market research agencies have been rising in the Arab world in recent years. Do you see this as a move in the right direction?


What is important is not to fall into extremism. When we deal with multinational companies and professional research companies, it is healthy and it serves the clients.


But what you fear is the entry of newcomers from outside the business who try to conduct research without any experience and understanding of the culture.

There have been incidents in the region by agencies that claimed to be professional but ended up costing clients and the industry a lot of money, that was wasted.


 

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