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05 March 2024

Advertising spend in UAE decline 27% last year

Luxury items such as jewellery and clothing saw a decline of 32 per cent in terms of ad spend. (EB FILE)

By Dima Hamadeh

Advertising spend in the UAE saw a decline of 27 per cent in 2009, according to the Pan Arab Research Center (Parc).

Sami Raffoul, General Manager of Parc, however, expected the year 2010 to see a positive growth of between six per cent and 10 per cent compared to 2009.

In his analysis, Raffoul said most of the figures shown in the report point to a level almost equivalent to that of 2007.

He said: "This result indicates, more than anything that 2008 was an exceptional year. Putting 2008 aside, the graphs in the report show that in December 2009, we were at a similar level as that of 2007."

According to the report, the total advertising spend of 2009 was $1.46 billion (Dh5.35bn), whereas the total spend in 2007 was $1.42bn. Raffoul said this meant the market is resuming from where it has stood in the end of 2007.

The decline clearly seen throughout the past year has been impacted mostly by massive decline of real estate advertising following the global economic crisis during the end of 2008.

The real estate ad spend saw a marked decline of 79 per cent by the end of December. This was an additional plunge of four points from the results of the first three quarters of the year released by Parc last June.

It indicates the fourth quarter of 2009 saw a slight additional decrease in real estate advertising.

Raffoul said: "If we look at the total ad spend in 2009 and that of 2008, we will notice that the difference is almost equivalent to the sum of the decline in ad spend for both real estate and financial services categories."

In numbers, the real estate ad spend declined from $644 million in 2008 to $135m in 2009. Additionally, financial services ad spend went down from $108m to $63m – a 42 per cent decline. The total decline of about $555m is equivalent to the decline in total annual spends from $2.012bn in 2008 to $1.46bn in 2009.

Meanwhile, the ad spend during the last quarter of 2008 saw a phenomenal increase of 41.5 per cent, a rate that was influenced by a frenzy of real estate spend that sent the prices of outdoor advertising through the roof, according to a consensus among media industry analysts.

Apart from those financial services and real estate, luxury items such as jewellery and clothing saw a decline of 32 per cent in terms of advertising spend, while automotive advertising plunged by 17 per cent.

Raffoul said: "The sectors that have seen huge declines are related mainly to real estate. The automotive sector experienced a decline in sales due to fewer bank loans, which resulted in ca brands cutting down on advertising budgets."

On the other hand, Raffoul said the monthly split of advertising spend showed an interesting trend.

According to the report, 2009 almost followed a similar track to 2007.

Raffoul said: "There is an exception, however. The first quarter of 2009 started at a higher notch compared to 2007. This is a continuation of the euphoric mood that prevailed in 2008 and before the industry had fully realised the repercussions of the global economic crisis."

He added: "The only decline seen in 2009 compared to 2008 was in the months of April to July. Moving towards the fourth quarter, the market has witnessed an increase that is unfamiliar with the trends of both 2007 and 2008."

The fourth quarter, according to the report saw an increase of 26.4 per cent from $333m in the period July to August to $421m in the period from September to December.

Raffoul said the month of December was expected to higher rates of increase, but was affected by the long vacations resulting from the concurrence of the National Day and Eid Al Adha.

"In holidays, most advertisers tend to cut on their spend, mainly because consumer trends show more tendencies towards leisure than retail spend," he said.

Commenting on the growth projections for 2010, Raffoul said the last quarter's results pointed at a correction, with some positive trends settling in between September and December.

"I think those trends will create a momentum at the beginning of 2010 that spur an increase in ad spend. This is also in parallel to the global economic trends, which are seeing positive improvements."

"The growth will mainly be influenced by increased ad spend from the banking sector. It is certain that financial institutions will not be able to remain silent for long, notably because of the need to retain their clients and maintain their share of voice in the market," he added.

In terms of sectors, the government retained its leading position as the top spender on advertising in 2009 with a total budget of $384m, a slight three per cent decrease from 2008. Shopping malls and retail stores ranked number two in 2009, with a one per cent decline compared to 2008.

Communications and entertainment saw the largest growth in ad spend with 39 per cent and 34 per cent increase respectively.

In the UAE, the top spenders across most media were telecommunications companies with the exception of magazines. The report ranked etisalat at the top of TV spend followed by du in the third place. It also topped radio spend followed by du in the second place.

Du topped newspaper ad spend and was followed closely by etisalat in the second place. It also ranked the third top spender in the magazine category.


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