UAE's Q1 ad spend surges 43 per cent

Surpassing all expectations of the previous years, advertising spend in the UAE increased by a staggering 43 per cent in the first quarter of 2008. The figures are driven more by the increase in costs and not so much in advertising exposure, believe industry experts.

Dubai-based Pan-Arab Research Centre, in a detailed report on the advertising spend in 2007, revealed that the country had witnessed a massive growth in the total advertising budget last year to $1,303 million (Dh4,785m) – an increase of more than 26 per cent over the previous year. In comparison, the UAE spent $1,077m in 2006.

This year, the ad spend has already crossed $441m in the first quarter, more than a one-third increase over the previous year.

The country is expected to retain its position this year as the highest spender in the region – second on the list is Saudi Arabia. In the past, the UAE's increase in ad spend has been lower than the regional increase, but this year the rise is expected not only to lead the region but surpass the regional increase percentage-wise.

The increase in ad spend in the pan-Arab region was 26 per cent in 2007 over the previous year, and, in comparison, the UAE's ad spend increase was 21 per cent.

Industry experts are attributing this massive increase to the rise in the cost of advertising. However, they are not ruling out further increases in the advertising budget as more retail outlets are to be added to the existing retail space.

"The massive Mall of Arabia and many more will be adding to the retail opportunities and hence the need to increase advertising," said an official from one of the leading media buying houses.

"There has been a tremendous increase in media options in every segment, be it print, electronic or outdoors," said Ranjit Kumar, CEO of Turning Point. "Outdoors was not such a fruitful option," he commented, but with the increase in traffic in the country, they offer one of the best exposure for brands.

"These options have come in time to accommodate the ever increasing needs of the real estate sector and are contributing massively to the country's and region's steep rise in advertising spend," added Kumar.

Dr Prakash Pathare, who is responsible for the advertising budget of Al Rawabi Dairy Company, believed that increase in advertising budgets is directly proportionate to the growth of the market as such.

"We have increased our advertising budget by more than 25 per cent over the past year and it is expected to go up even further for the coming years to accommodate the increase in market size in terms of both quality and quantity," Pathare said.

Jayesh Ravindranath, head of Corporate Communications at the Landmark Group, attributed the increase to the real estate boom in the UAE. "The real estate sector, which is also the driving force behind the country's economic boom, is mainly responsible for the boost in advertising spend. And a substantial increase in retail activities in the region is also contributing to this steep rise," he said.

The first quarter of this year continued to see the same trend in the division of advertising budgets, with newspapers claiming the largest chunk of advertising revenue, and magazines and television as distant second and third players. Outdoors showed a steady climb but will most probably still maintain its growth in the single digit. Last year the outdoors segment had five per cent of the advertising share.