The total advertising spend for the watch and jewellery trade in the GCC jumped by 16.6 per cent last year compared with 2006, according to Pan Arab Research Centre (PARC) figures.
And the spend for the entire Middle East rose by 44 per cent, a report prepared by MPParabia and based on PARC statistics has revealed.
The market is enjoying further growth this year as retail figures are driven up by cascading oil revenues and persistent demand for luxury premium goods.
The report says that in 2007 the total general spend for all categories in the sector rose by 26.2 per cent to $151.9 million (Dh559m) from $120.4m in 2006 across the GCC, Levant (Lebanon and Jordan) and Egypt. The region shows no sign of slowing down and the advertising spend for the industry so far this year has been the highest ever.
The big spenders continue to splash out even more with bigger advertising budget allocations. The emergence of new brands has stirred up competition within the industry and resulted in a boom in advertising spend across the board in all forms of media – print, radio, television and outdoor.
The emergence of mega malls and other large retail centres is also accelerating advertising spend in the region. And the opening of exclusive stand-alone brand boutiques is providing an impetus to the retail industry and translating into increasing advertising spends.
Traditional leaders Saudi Arabia and the UAE continued to maintain their top positions. For the first time, however, Saudi Arabia rallied from second place in 2006 to topple the UAE from its top perch to become the single biggest advertising spender in 2007.
Saudi Arabia's 2007 watch and jewellery advertising expenditure at $31.5m represented a 22.4 per cent growth over the corresponding 2006 figure of $25.8m.
On the other hand, the UAE's advertising spend of $30.6m in 2007 represented a drop of 3.8 per cent over the corresponding 2006 figures of $31.7m.
In total the six GCC countries constituted the single biggest regional bloc for advertising spend with an annual 2007 budget of $91.5m, or 60 per cent of total Middle East expenditure. The GCC is also the single largest retail bloc.
Researchers from MPParabia reviewed the pan-Arab media and concluded that a mix of print media, television and radio stations across the Middle East was the single biggest recipient of advertising worth $43.1m in 2007, where revenues increased by a giant 48 per cent over 2006. On the other hand, revenues were static for the Arasian media – a list of ethnic and vernacular publications, television, outdoor and cinema mainly serving the South Asian community across the Middle East – where growth was only 1.5 per cent.
The report, which involved a detailed study covering more than 250 top, premium, international watch and jewellery players revealed that as a generic product, watches attracted greater advertising revenue than jewellery.
In the GCC in H2-2007, for example, watches accounted for 81 per cent of the advertising spend while jewellery and accessories trailed behind at 18 per cent and one per cent respectively.
It was a similar pattern for the rest of the Middle East where watches took 64 per cent of the advertising budget with jewellery and accessories taking 35 per cent and one per cent respectively.
The UAE may have slipped to second place behind Saudi Arabia by a very slender margin, but it remains a very potent and leading spender of advertising money in different media.
A major consideration by international brands is the increasing use of pan-Arab media – not necessarily originating in the UAE – as an advertising vehicle to reach the Middle East target audience.
The UAE's advertising expenditure is expected to increase substantially during the second half of 2008 due to the expected opening of Dubai Mall, one of the largest shopping and entertainment destinations in the world, in addition to other mega retail venues and real estate communities and townships which are attractive targets for the booming retail trade.
Saudi Arabia, the biggest oil exporter in the region and which also boasts the biggest economy as well as population among the GCC nations, catapulted itself to number one position in terms of advertising expenditure in the region at $31.5 million and at 34.5 per cent accounted for more than a third of the total GCC advertisement budget.
Beyond the GCC, Lebanon has featured prominently on the list of top media spenders for the Middle East's non-GCC region. Lebanon has a healthy and robust media industry, which makes the country a natural recipient of generous media expenditure budgets. The advertising spend allocation for Lebanon was $7.317m during 2007, a 26.2 per cent increase over 2006.
Egypt's watch and jewellery industry has shown a tremendous comeback. The country's markets are opening up and by sheer size of population promises to provide rich pickings for international brands wanting to sell in this large North African country – one of the biggest in the Arab world. Egypt, at 57.55 per cent, recorded the highest percentage increase in advertising spend in 2007 over 2006.