High costs affect outdoor ad industry

Dubai: The advertising industry in the Gulf will not be affected by the financial crisis, as the most affected sectors of real estate and insurance represent only 12 per cent of expenditure, an industry official said.

International market players still continue to foray into the Gulf market, indicating a minimal negative impact on an industry that still provides a "conducive investment environment", according to Shadi Al Hasan, chief executive of Flagship Projects, a regional marketing solutions provider.

Although, "The industry is set for a shakeout in 2009, with the smaller agencies that were established primarily to service the real estate sector either folding up, or opting for mergers," said Al Hasan.

On the other hand, outdoor advertising is expected to be affected because of high cost. Though this sector constituted only 5 per cent of the total expenditure in the Arab world in the first nine months of 2008 according to PARC (Pan Arab Research Centre).

Communication operators and fast-moving consumer goods topped the list for TV ad spending, with a share of 43 per cent, and the list did not contain any real estate name.

An increase of 23 per cent was recorded in advertising spending among all Gulf Cooperation Council countries from $3.05 billion (Dh11.19 billion) in 2007 to $3.77 billion (Dh13.8 billion) in 2008, according to a PARC report.

The highest increase recorded in ad spend among GCC countries was in Oman with a 69 per cent increase to $120 million this year compared to 2007's $71 million, while the country which saw a dramatic slow down in such spending was Qatar, with a one per cent increase to $157 million in 2008 from $156 million last year.

Most of the advertising market share remained with newspapers with the Pan Arab countries spending $1.70 billion on advertising in newspapers, followed by television with $1.60 billion spent on television advertising.

Al Hasan said, "These companies will not be hugely affected by the crisis because they provide essential services and products."

Gulf markets will continue their growth in the long run and it will enhance the soundness of the economy, which will in turn consolidate the position of the Pan Arab advertising industry, he added.