Advertising companies are placing the Mena region in the back seat and throwing their money to stronger markets as low oil prices weigh on the region’s consumer spending.
Zenith, a media services network owned by Publicis Media of France, said it reduced its Mena figures by 6.3 per cent from June, and now sees an 11.8 per cent fall this year in advertising as the two-year lull in oil prices continues to batter the region. This, coupled with political instability, has shaken advertisers’ confidence, pointing to further declines in the industry. Money spent on advertising is projected to dip lower over the next two years, averaging about a 7.8 per cent decline annually.
The eight Mena countries covered – Bahrain, Egypt, Israel, Kuwait, Oman, Qatar, Saudi Arabia and the UAE – are suffering as ad agencies cut their budgets in anticipation of lower consumer demand.
Zenith, however, revised its global advertising expenditure forecasts to reach US$539 billion this year, up 7.3 per cent from June’s projections.
“The global ad market has strengthened over the past few months, thanks mainly to the resilient US consumer,” said Jonathan Barnard, the head of forecasting at Zenith.
With the rising strength of the dollar, Americans are spending more and advertisers are running to gain a larger share of the growing market. Conventional advertising such as television has grown strongly as a result of pharmaceutical and consumer packaged goods, while social media will lead with new formats as markets transition to further mobile internet consumption, he said.
The slowdown in Mena was expected by many industry insiders. Elie Khouri, the regional chief executive of Omnicom Media Group, told The National in December that he expected advertising spending to decline by as much as 20 per cent over this year and next.