Measurement of media exposure during the recession has seen vast variations between projections and reality with the industry seeing the worst dip in the recent past due to the global economic downturn, industry experts said.
Compared to figures published in the past two years' Arab Media Outlook reports, the year 2009 saw major disparities due to the economic crisis that hit the media industry. Additionally, figures released by various sources also brought to light, massive differences in their findings.
According to the Arab Media Outlook report 2009-2013, the UAE advertising market is expected to grow by 21.1 per cent in the year 2010. This projection is a rather moderate analysis compared with predictions made in the previous edition of Arab Media Outlook issued in January 2009.
The Arab Media Outlook 2008-2012 report justified its positive predictions saying, "the projections were produced before the impact of the global financial crisis on the regional economies, and hence on the media sector had begun to be felt".
The impact, said the report back then, of the crisis and the associated fall in oil prices in the second half of 2008 on the region's economies, was likely to be complex and both the extent of the impact and its timing were then unclear.
The subsequent year's report, however, continued to see a highly positive growth trend in the advertising market despite contradictions with other sources of data, including the Pan Arab Research Centre's (Parc) annual advertising report.
According to the Parc report, the UAE's advertising spend declined by 27 per cent to $1.466 billion (Dh5.38bn) in 2009. Meanwhile, the Arab Media Outlook report said the decline was more than 36 per cent, from $1.229bn to $784 million. These results vary tremendously from predictions published in the Arab Media Outlook report last year, where the ad spend in the UAE was expected to continue to grow by 12.2 per cent in 2010 compared to 2009, and a variation of between 12.7 per cent and 12.2 per cent was forecast for the years 2011 and 2012 respectively.
Recognising the gap, the Arab Media Outlook 2009-2013 report acknowledged that advertising revenues in the region had dropped by 14 per cent in 2009. However, a report for the same period by Parc showed a growth of nine per cent. It estimated the advertising spend in the UAE would grow from $784m to $950m in 2010 alone. This is likely to rise further to $1.042bn in 2011 (9.6 per cent growth compared to 2010), $1.12bn in 2012 (7.4 per cent growth compared to 2011), and $1.181bn in 2013 (5.4 per cent growth compared to 2012).
Based on these estimates, the Arab Media Outlook report expected the ad spend to return to the vicinity of 2008 levels, estimated at $1.229bn by the year 2011. Growth projections that were posted at a compounded average growth rate (CAGR) of 16 per cent for the UAE in February 2009, changed a few months after the global economic crisis broke out and started to resonate in the local market, and are currently at a CAGR of 11 per cent, according to the report's latest edition.
As media representative Elie Khouri, CEO of Omnicom Media Group Middle East and North Africa (Mena), said: "The advertising industry is expected to see a CAGR growth of five per cent over the next five years in the GCC region".
Contrary to Arab Media Outlook 2009-2013 report predictions, Khouri said growth rates would be more modest. He added: "We have a different perspective. Naturally, as a company we have to assess markets individually, but our view is that it will take us another six years to return to 2008 investment levels in certain markets. This long adjustment period is needed after the overinvestment bubble burst towards the end of 2008. In other Mena markets, it will take an average of three years to return to the peaks of 2008."
The Arab Media Outlook report noted that "despite the significant challenges that the media industry in the region is currently facing, there remains plenty of optimism among industry players. The industry itself is optimistic about the future, with nearly 60 per cent of stakeholders that we interviewed feeling positive about the state of the Arab media industry in 2010". Another 25 per cent of media professionals said they felt neutral about prospects for the Arab media industry this year. Maryam bin Fahad, Executive Director of Dubai Press Club, who commissioned the report, said: "In the Arab world we have no proper audits for circulation of newspapers or viewership of TV. There are vast differences in the various studies of the advertising market.
"Our predictions were graphed by Value Partners who performed an analysis of historical data documented for the years 2007 and 2008. We have also relied on various secondary research sources including Nielsen, Parc and IPSOS. In addition, we interviewed representatives from 125 media organisations from the 15 Arab countries covered."
The Arab Media Outlook report stated: "The report and projections will, of course, require periodic review, particularly considering the acceleration of changes impacting the media industry globally and regionally, including globalisation, online development, new mobile access devices and new media zones. All these trends have been analysed in this edition which forms a base to monitor industry progress, in anticipation of the next trends."
The Outlook's breakdown of the advertising spend in the medium-term in the UAE showed a CAGR growth of 39 per cent for the internet between 2009 and 2013 with an increase of its share of the advertising spend to six per cent from the current 2.5 per cent. According to projections, the internet will see growth of 50 per cent in 2010 over 2009 alone. The year-on-year growth rates until 2013 will touch 30 per cent in 2011, 26.5 per cent in 2012 and 16.1 per cent in 2013.
Khouri agreed roughly with the growth projections in internet advertising. He said: "Investments in digital platforms will witness more rapid growth with an average of 30 per cent over the next three years." Capitalising on the internet penetration growth to 70 per cent in the UAE, the latest report, the third in the series of the Arab Media Outlook editions, said: "We believe that the internet will present an attractive platform for advertising. While the economic crisis negatively impacted advertising on all other platforms, it actually encouraged advertisers to include the internet as a significant platform for media planning, as also confirmed by our industry interviews in the UAE."
The report said one major reason cited by interviewees was that as advertisers increasingly look to gauge returns from their advertising dollars, digital platforms, specifically the internet, offer more attractive alternatives. It added the average time spent by UAE consumers online is 2.7 hours, an average greater than the time spent watching TV which is estimated at two hours per day during the week.
The second edition of Arab Media Outlook 2008-2012 report had already predicted the growth of the internet but at less bold levels, projecting a growth of 12 per cent in 2010, 13 per cent in 2011 and 14 per cent in 2012, that is, at a CAGR of around nine per cent in 2012, compared to 2008.
Radio which was expected to see an unprecedented growth at CAGR of 60 per cent until 2012, according to the previous edition of the Arab Media Outlook, is currently projected to witness a CAGR of just 1.5 per cent. The second edition of the Arab Media Outlook championed radio advertising as the most promising platform in terms of growth in the next two years. Then, it said: "Most media agencies see radio as an important supplementary channel. It is considered particularly effective during rush hours in Dubai."
Lower growth for radio
Experts commenting on the projections made at the beginning of 2009 said the substantial growth was due to the fact that radio advertising was still not at its full potential. According to radio representatives, the growth would be starting from a low threshold. Comprising $11m of the total ad spend in 2008, radio advertising was expected to grow its share to $57m of the total ad spend in 2012.
However, these results seem far from the more recent projections placing radio advertising at a stable share of $16m for the next three years, hence the minimal growth.
The new edition of Arab Media Outlook explained that low advertising spend in radio could be a result of fragmentation. It added: "With 24 radio stations across the country, the radio industry remains state-owned. While about half of those radio stations are broadcast in Arabic, the remaining ones are broadcast in other languages such as English, Hindi, Urdu, Tagalog and Malayalam.
Little information on outdoor
Outdoor media advertising is not measured scientifically by any of the local or regional research firms. According to Sami Raffoul, Head of Parc, this lack of outdoor measurement is due to the very little information shared about outdoor media. He said the real estate boom in 2007 and 2008 resulted in huge speculation in outdoor media. During 2008, outdoor media were leased for multiples of their official rate card prices, where large-format scaffoldings almost hit Dh6m. As a result, the growth of outdoor media as reported remained unrepresentative of reality, since research firms such as Parc only relied on inputs from two or three of the major outdoor media companies.
Another reason was that research firms depended on quantitative research to determine market size market and no information was accurately available about the number of billboards on roads and on private lands. Yet, real estate advertising, which fuelled the hikes in outdoor media prices and volumes, had already seen a steep decline of 79 per cent, according to Parc.
Consequently, industry leaders estimated declines in prices to have reached 75 per cent, hurting outdoor advertising badly. Constant follow-up by Emirates Business, conveyed trends in outdoor media including huge reductions of prices to a point that would only cover operational costs with the condition that the advertiser undertook the costs of printing.
The Arab Media Outlook 2009-2013 report said: "Out-of-home advertising in the UAE has been on the rise over the past two years, driven by the surge in the construction industry. In 2008, real estate accounted for over 50 per cent of out-of-home advertising. Hence, it comes as no suprise that advertising spend on the platform contracted by nearly 30 per cent in 2009. Going forward, we expect outdoor advertising to recover and to regain its 2008 levels by 2013".
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