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- Dubai 04:54 06:07 12:12 15:34 18:10 19:24
Advertising sector took the biggest hit from the real estate industry as the sector slashed more than 69 per cent of its advertising budget in the last quarter of 2008.
The total real estate advertising spend in the UAE fell from $81 million (Dh297.2m) in October 2008 to $46m in November and down to $25m in December, according to figures issued by Pan Arab Research Centre in Dubai (Parc).
The real estate sector used the growth in the first three quarters to balance the average annual result.
Insurance and real estate sectors were the top spenders in the UAE.
They marked a significant 102 per cent growth in spending in 2007 and overtook government and other sectors advertising.
Its 2007 growth was estimated to be 46 per cent.
Sharing details of the quarterly survey, Elie Al Jichi, production manager at Parc, said real estate advert spend during the first three months of 2009 is expected to come to an almost halt.
"I do not think the real estate advert spend will witness a further decrease during the first quarter of 2009. Real estate and financial services have been the most affected by the global crisis.
"I believe, fast-moving consumer goods (FMCG) will continue to spend on advertising without any substantial decline."
December advertising spend in particular saw close to zero variation compared to the same month of the previous year.
The rest of the months ranged from 23 per cent variation to 66 per cent in October, marking the peak of advert spend growth.
Al Jichi said: "The growth witnessed this year was a consequence of the huge ad spend during the first three quarters of 2008.
"The decline became more evident in November."
October, when the news broke out about the global crisis, was active due to Ramadan, Cityscape and other major events.
Deyaar is reported to be the top real estate advertising spender and the second-largest spender in the UAE.
Emaar fell back from being the top overall advertising spender in real estate.
Its budget rose by almost $1 billion over the 2007 budget but its newspaper ad spend fell down by five per cent, according to the 2008 annual report.
The 2007 report saw a six per cent growth in Emaar's newspaper ad spend alone.
Emaar's shift removed real estate completely from the top 30 spenders in the GCC for 2008.
Instead, the list is currently dominated by telecommunications, cars, FMCG and personal care products.
In the UAE, the total growth reached 40 per cent to $1.986bn, slightly less than the first half results in 2008 and similarly less than the expected 47 per cent by the end of the year. Those results appeared in the annual advertising spend report 2008, released by Pan Arab Research Centre.
Ayaz Salim, Client Servicing Director, Publinet, said: "In 2009, we expect the billing volume to decrease by almost 50 per cent in mid-size advertising agencies.
"Multinationals might experience a fairly smaller loss of around 25 per cent.
"This difference is due to the rather more diversified client portfolio retained by multinational advertising agencies. A lot of real estate companies still do not understand that they need to address the end users. In previous years, the target audience for real estate players used to be speculators and investors. After Cityscape, the landscape has changed.
"From an audience of speculators and investors to end users, real estate companies are overwhelmed by the homework that needs to be done to redesign their communication strategies.
Salim said: "Under the current situation, a real estate developer will have to address five people to get one sales transaction done. The buyers' preferences, expectations and needs have changed. After sales services are a requirement."
From an advertising perspective, added Salim, real estate is not as mature as FMCG and retail sectors.
"I believe that the FMCG, retail and automotive sector will continue to spend on advertising.
"FMCG has more highly qualified marketing experts, rather than sales specialists, and this makes a big difference. Retail will push ahead as media prices go down.
"We expect outdoor media rates to decline because of the diminished demand of the bulk was real estate. They will have to make lower profit margins."
Commenting on the difficulties facing the automotive sector, Salim said: "The automotive sector is facing challenges because banks have tightened their grip over car loans. But this issue does not exist anymore, and I think the industry will pick up. After all, the best automotive success stories were made in times of crises."
According to the report, the GCC's 2008 advertising annual results showed a 24 per cent growth over 2007.
This compared to 2007 growth rate of 20 per cent represents a five per cent year on year growth.
The figures are in line with media experts predictions that GCC ad spend would exceed $8bn by the end of 2008, reaching $8.27bn.
The 2007 total advert spend was $ 6.5bn.
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