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Newspapers bear the brunt of 'advertising recession'

dubai - The regional drop in ad spend reflects the overall global slowdown

The total advertising spend across the UAE and pan Arab media during the first nine months of 2016 dropped 1.05 per cent to $7.96 billion from $8.04 billion in the same period last year, with newspaper advertising taking most of the brunt.

"The drop in ad spend highlights the fact that the advertising recession has finally reached the UAE and the pan Arab media. All the hope is for a recovery to take place in the last quarter, keeping in mind that the UAE advertising market had shown great resilience during the past economic crisis. We remain confident that it will turn around this year too," said Ramzi Raad, group chairman, TBWA\RAAD Middle East, a leading advertising company.

In his 'Advertising Market Update', Raad, an industry stalwart, said the regional drop in ad spend reflects the overall slowdown on the global scene.
"While all media sectors have contributed to this drop, only the television segment witnessed an increase of 2.92 per cent and radio also posted an upswing of 3.35 per cent over the same nine months of 2016 in comparison to 2015."

"Newspaper advertising suffered most as the drop between the same period of 2016 in comparison to the previous year amounted to $160.77 million, representing a 26.84 per cent drop," said Raad.

He pointed out that the drop in newspapers' ad revenue is not unique to the UAE as newspapers across the world are not any better as readers no more wait to read news the next morning since they are able to watch it live as it happens via satellite TV and social media.

Analysis, editorials
"Newspapers' role seems to have been restricted to analysis of the news and editorials," he said.

The advertising market size of all GCC states regressed during this nine-month period. Qatar witnessed a 26.89 per cent drop, followed by similar declines of 24.26 per cent in Kuwait, 19.73 per cent for Saudi Arabia, 18.19 per cent in Oman while Bahrain seems to have suffered the least as its 2016 ad market size dropped only by 7.11 per cent in comparison to the same period in 2015.

"In stark contrast with the non-oil rich markets, Egypt bucked this trend and grew by 31.77 per cent, while neighbouring Sudan grew by 15.02 per cent. Also, Lebanon grew by 4.98 per cent and Jordan by 3.64 per cent," said Raad.

"Obviously, it is normal to see a drop of 22.68 per cent in Syria and 14.6 per cent in Iraq while battles continue to flare up in both markets. However, this negative ad market sentiment across Mena tends to be justifiable in the global context as 2016 acquired the label of being the 'rollercoaster' advertising year before it began," said Raad.

Advertising industry analysts had anticipated that the world economic slump, caused by the drop in oil prices, the relentless regional wars and the flood of refugees to Europe, would cause a freeze on advertising spend figures at their 2015 level.

A global survey on advertising investment trends that was conducted in early 2016 projected a 4.5 per cent increase over 2015, taking the global total to a $538 billion threshold.

Global sport events
"This increase had been anticipated from the many global sport events planned in 2016 such as the UEFA Euro 2016 [France in June], the Monaco Grand Prix [Monte Carlo - June], the 2016 Olympic Games [Brazil - July to September] as well as the presidential elections in the US whose preliminaries, conventions and debates were anticipated to attract huge amounts of additional advertising budgets due to the high ratings it delivers," said Raad.

The fragile security situation in France after the terror scare, the Russian and Irish football hooliganism that caused havoc at the Euro 2016 games scaring sponsors and advertisers away, and the extended state of emergency in France were among key reasons that caused the ad spending downgrade.

In the UK, the Brexit vote resulted in an instant downgrading of its ad spend forecasts - not only for 2016 - but for 2017 as well. "All in all, the United Kingdom - which is one of the world's largest advertising markets - took a serious hit as result of its decision to exit the European Union," said Raad.

"Last but not least is the fact that both China and Brazil - two of the world's fastest-growing ad markets - have reported downward revisions in recent months.

- issacjohn@khaleejtimes.com