Dubai: ‘How bad is it going to get?’ - for the UAE and the region’s ad sector this seems to be the only question worth finding an answer for this year. The industry is bracing for the worst - and then some - as advertisers try to see out the year on stripped down budgets.
And it’s not just the smaller players who are looking for limited ad exposures this year. Key categories and blue-chip brands within them - and who traditionally have consistently sought the limelight in the past - are going thin on their media plans for 2016. This includes automotive, real estate and those in banking and financial services.
“Our 2015 estimated budget drop is around 11 per cent versus 2014,” said Amer Al Haj, Executive Vice-President - Group Trading and Commercial Managing Director - Mena at Starcom Mediavest Group. “Advertisers are not optimistic in 2016 and are reluctant to increase their budgets.
“We are foreseeing slow spending in Q1 and Q2, and if the market remains unchanged, advertisers’ budget will face a cut similar to that of 2015. Based on our expectations, the market will be down by another 5 per cent deficit versus 2015.”
“This drop is due to a billing shortfall in local media, especially press and outdoor.”
That the lower ad spend patterns represent a continuation of what was there last year is telling. It was the first time since 2011 that the region’s ad spending numbers took a hit.
“Brand owners in the GCC markets - and the advertising industry at large - are taking a cautious stand with regard to their ad spend growth projections in 2016,” said Antonio Boulous, regional Vice-President - Operations at bpn. “This conservative approach mirrors a trend that started in Q2-2015.
“The drop in the price of oil is one reason behind this outlook (and) the tense geopolitical situation is another. The comparison of ad spend between 2014 and 2015 of several business categories reveals the actual picture.”
Indeed, they do. According to the estimates with Boulous, the dent in automotive ad spend was 5 per cent last year - to total $713 million - against the 2014 numbers. The telecom sector put down $723 million by way of ads through 2015, but lower by 2 per cent from 2014.
The numbers on household appliances makes even bleaker reading, down 20 per cent, and “the “upkeep products” sector that includes detergents, antiseptic, sanitary products, etc., did not fare much better with a 21 per cent drop,” said Boulous.
But there were still some categories that managed to spend more over 2014 - those on clothing and accessories were higher by 6 per cent, while furniture and decorations topped 9 per cent year-on-year. (The region’s media spend between January to November last year is estimated at $12.7 billion based on the official media rate cards.)
But the start of any new year represents a clean slate. What happened in the recent past need not be the pointer to what is in store.
While advertisers and agencies wait to find out how things will turn out for ad spend, Al Haj said there will remain one constant - “All advertisers will be on air, but the difference between one and another is the level of spending vs. the year earlier and the channels they will opt for in 2016.
“Multinational and local clients are both affected by the slowdown... (and) therefore will have the same pattern of budget drop. Slowing down their advertising means less share of “voice”. In order to gain their previous position, they need to spend more than expected to maintain their market share.”
