Dubai: There are plenty of reasons for advertisers in the UAE to feel cheerful about their prospects in the new year. Advertising spend is set to sustain a nice momentum buoyed by growth in key sectors such as retail, travel, hospitality and even real estate.
And, just as important from their perspective, the cost of advertising on the various media — print, TV, digital, etc — hasn’t seen a major spike. “In fact, whatever increases cutting across media platforms have been marginal,” said Satish Mayya, CEO of BPG Maxus, the media buying agency. “The hikes have been limited to those imposed by inflationary cost increases for the media entities, nothing more. Where rate increases have come in, it’s been in the range of 5 per cent.
“There’s nothing the ad industry covets more than cost stability — and media tariffs is central to that.”
There had been talk late last year in some quarters that media rates would see some increases, or at least within some categories such as digital. But that has not yet happened. According to Mayya, “Digital media owners realise that it’s still a growing medium in this region and they don’t want to saddle advertisers with higher costs at this stage of their evolution. In fact, where possible they will be on the look out to make the cost of entry for clients as bearable as possible.”
But Tanvir Kanji, who heads Inca Tanvir, believes the link between media rate increases to inflation is tenuous at best. “In all my years in the business, I have never understood the logic of rate increases based on the calendar year,” he said. “Rate increases can only be justified based on incremental reach — if at that — in a highly fragmented and competitive landscape.
“Inflation is generally used as a justification ... and let’s not forget that rate increases by the media are a contributor factor to inflation.”
Based on advertising agency feedback, budgets for digital media spend by clients hover in the “low double digits”, in keeping with the steady increases they have been putting in during recent years. Print and television spots continue to dominate advertiser budgets — “Both are holding their own in this region and it will be a long time before there is a marked change to this mix.”
According to Mahesh Sundaresan of Ikon Media, “Television commercial spot rates have, with very few exceptions, remained stable vis-a-vis 2014. But in most cases, exceptions are always being made for advertisers with the right budgets.” According to market sources, the last time there was a sharp upturn in TV commercial rates was in 2011-12.
At the broader level, the general consensus is that there UAE’s ad sector could be in for another good year, though there are the occasional misgivings engineered by the decline in oil prices and the conflicts taking place elsewhere in the region.
“The best news is that the ad industry will generally be working on higher client budgets — most of the global clients will certainly be spending more in the region this year,” said Mayya. “Some of the local and regional clients are still unsure as to what their spending patterns should be ... but that can only be temporary. The fundamentals are all in positive territory.”
