A GCC advertising expert has predicted that the volume of the regional advertising market will witness a record increase over the coming years. He attributed this prediction to the huge projects planned for Saudi Arabia, which are estimated at US$ 300 billion. Advertising expert Faisal Abdulla, Group CEO of Visuals Marketing Communications Group, a member of the International Network of independent Advertising Agencies “IN”, has said that the advertising expenditure per capita in the Gulf region is still far below the international rate. He pointed out that the Gulf advertising expenditure per capita was US$ 29.00 during the first quarter of 2006, against US$ 110 per capita during the first quarter of 2006 in the United States of America.
As to the continuation of newspaper advertising amidst increasing satellite invasion, Faisal said: "Relatively, this will continue in our region for a longer time than in the West in view of the loyalty of people of the region to the sources of news and information, unlike the West in which I expect shorter life for newspapers. US statistics show an increase in expenditure in electronic publications that reached 34.9% during the first quarter of 2006, compared to the increase of 0.3% in the printed publications. The difference between the first quarter of 2005 and the similar period in 2004 was 24%. This indicates that the annual increase in advertising expenditure is declining for printed publications and increasing for electronic publications".
In an interview with Al Sharq Al Awsat, Faisal Abdulla said: "We witness a growth that is naturally commensurate with that of all sectors. The quantum leap forward being experienced by the region is the main reason for the growth. What is pleasing is that the advertising awareness among advertisers is improving over previous booms and years. Advertisers' view was that so long the market was in a good position, advertising was unnecessary. Today, however, with the increase in sales advertising expenditure has relatively increased. This is in addition to reinvestment of the profits of regional companies instead of taking such profits overseas, as in previous years. All this has created new opportunities for the advertising market and encouraged it to grow, although the market is not relatively as large as expected. The statistics published my Marylinch about the sums of money expected to return after the September 11 incidents were estimated at more than one trillion dollars. With the boom the region has been experiencing since then, the volume of liquidity would have been more than the three trillion dollars new being invested in regional projects. If we assume that advertising expenditure is 3%, such expenditure would now exceed 90 billion dollars. However, it was hardly over 10 billion dollars over the last three years. The liberalization of markets and the relative elimination of monopolies of certain sectors, such as the telecommunications, have resulted in an increase in expenditure. Statistics indicate that Mobili spent more than 8 million dollars during the first quarter, compared to 3.8 million dollars by the Saudi Telecommunications. Thus, the Saudi telecommunications sector alone has contributed to more than 11% of the total GCC expenditure during the first quarter, according to statistics by a specialized company. Therefore, we anticipate a prosperous future for the industry".
He also said: "Statistics for the first quarter of the year indicate that the advertising expenditure was US$ 29 per capita in the first quarter of 2006 (approximately 1 billion dollar by 35 million people) in the GCC countries, against US$ 110 per capita (35 million dollars by 270 million people) during the first quarter of 2006 in the United States. In my opinion, this can be attributed to several factors, at the forefront of which is the difficulty to reach recipients, while, in our region, the area is limited and the situation is easier. Another important factor is the economic freedom as competition is server among companies. If we take the telecommunications sector only in the United States, we will find thousands of companies competing over the same categories of clients. In the GCC region, the sector is monopolized by a very small number of companies, although we do not deny the change that has taken place recently by relatively eliminating monopolies, the effect of which has been obvious for the advertising sector".
With respect to the leading position in advertising expenditure recorded by the UAE advertising market during 2005, and why the UAE advertising market was able to withdraw the carpet from under the feet of the Saudi market which was in the lead over the past years, Sharif said: "The reason is that the UAE market began to target wider horizons and take new dimensions. The Government support and expenditures are very high, apart from the fact that Dubai and its giant companies began to penetrate international markets. It is pleasing to sea an Emirate Airlines advertisement in the 2006 World Cup football fields. I think it was the only Arab company to do so, while we have been watching the logos of international companies in our local fields for decades. This shows the successful international philosophy of foreign companies, which have built up good reputations for themselves through the use of our local media".
As to his prediction about the Saudi advertising market in 2006, Sharief predicts an unprecedented boom. "By a simple mathematical process, we can predict certain figures. Advertising has been made for projects in excess of 300 billion dollars in Saudi Arabia over the coming years. The estimation is that each 1% of such budget is equivalent to 3 billion dollars, i.e. almost 75% of the GCC expenditure. The main question to the industry agencies is "what if these projects decide to spend the equivalent of 5%?"
He pointed out to the investment sector in general in view of the boom being witnessed by the region and investment in real estate after the recent recession in the stock market.
In connection with the reliance of most advertising companies on non-Arab elements and the reason for shortage in Arab young people working in this industry, Sharif said: "This question has two dimensions. The first, which I quite agree with, is the precedence of the West. We enlist their services and experience to direct our local teams. The other dimension, which I disagree with, is that Arab young people do compete effectively after the failure of some foreign companies in understanding the Arab marketing communications strategy or Arab recipients".
Faisal thought that all indicators, including negative political indicators, support the growth and push up the advertising expenditure. "Looking at the past three years, we would see a growth of 17%. We are happy with the growth over the first quarter which exceeded 20%. Similar to other regional sectors, we expect the growth of this industry".
As to seeking Western ideas, he said: "if the nature of business in the region is itself imported, what is the wonder? How many businessmen have we heard saying 'why we reinvent the wheel while we have access to foreign countries to take agencies and import from them?' Often such foreign companies have their marketing partners who impose their products on local agents, regardless of whether or not such products meet the local requirement. The other saddening aspect is the mentality of some businessmen who unfortunately think that the blond (foreign) companies understand more than their fellow citizens, regardless of the contents provided in both instances. For information, these foreign companies either seek assistance of local persons or companies or that some businessmen, with all my respect to them, have taken responsibility for training such companies, while there are local companies which need no training".
Describing the ingredients for the Arab advertising industry, he said: "probably, one of the important ingredients is the confidence of clients in their Arab advertising partners. In addition, the strong Arab products and industries need an Arab advertising partnership. If we look at Japan, for example, we will find a giant company such as 'Dentsue' competing with the largest and oldest international brands because of its monopolization or semi-monopolization of giant Japanese companies. This also applies to American and European companies".
Referring to the absence of free and creative ideas, he said: "Unfortunately, we find the Arab market not in a leading position in terms of strategy, although it enjoys strength. In brief, we require a leading group to lead the liberalization movement and to guide Arab creativity to Western shores in a spirit of free and leading competition. We are quite confident that we will be able to obtain a part of the cake".
