Gulf Advertising Market Picks Up Steam

JEDDAH, 27 June 2005 — Advertising expenditure in the Gulf region increased during the first quarter of this year compared to the same period last year. The increase is 25.32 percent — $943.77 million in 2005 compared to $753.07 million in 2004, according to a market study by the Arabian Research Company.

The study found that for the first time in six years advertising expenditure in the United Arab Emirates surpassed Saudi Arabia which came in second. Advertising expenditure in UAE was $206.45 million for the first quarter of 2005 and in Saudi Arabia $203.79 million. While some Saudis in the advertising industry might blame some of the restrictions and obstacles advertisers face as a contributing factor for the difference, others think that this is temporary because the Saudi market is the largest in the Gulf region, if not the Middle East and that by the end of the year, the total advertising expenditure in the Kingdom will be on top again. Nevertheless, with Dubai becoming a major media center and with its favorable investment, employment and expatriate travel procedures, the UAE advertising market is competing with the Saudi one in attracting advertising companies to establish their offices there and creating ads for the region using local facilities and personnel even if most of the companies rely on the Saudi market for their profits.

The study found that the reason for the increase in advertising expenditure in the region is because of the increased expenditure in several local markets particularly Qatar, Saudi Arabia, Oman and the UAE. Qatar had the highest advertising expenditure increase — by 158.80 percent for the first quarter of 2005 from $12.87 million for the same period last year to reach $33.33 million. Saudi Arabia witnessed an increase of 67.88 percent from $121.38 million to $203.79 million. As for Oman, it had an increase of 48.93 percent with an expenditure of $20.78 million and in the UAE advertising expenditure increased by 45.22 percent and reached $206.45 million. In Kuwait, the increase was 14.40 percent at $93.49 million, and in Bahrain by 3.62 percent with $25.20 million during the first quarter of 2005.

Print advertising continues to have the lion’s share of advertising expenditure, according to the study. In Saudi Arabia, print advertising for the quarter was 82 percent of total advertising expenditure — 66 percent in daily newspapers and 16 percent in magazines — followed by television with 11 percent, outdoor billboards with 6 percent and finally radio with 1 percent. Other Gulf countries had a similar share distribution of advertisement mediums. Even though television viewing is very high and advertisers consider the Saudi market to be the largest in television advertising, the study found that advertising expenditure in pan-Arab media which is mainly the satellite channels, increased by only 1.14 percent. Advertising expenditure in the pan-Arab media had a share of 47.36 percent of the total expenditure in the first quarter of 2005 compared to 38.22 percent in 2004. The problem advertisers and media buyers face in television advertising is the inability to target campaigns based on realistic data as well as the quality of programming, fragmentation of media and reach.

According to the study, cleaning products — personal, home and beauty — received the largest share of the advertising market in the region with 15.12 percent. They were followed by food, beverages and tobacco with 12.85 percent; entertainment 7.84 percent; automobiles and their accessories 7.47 percent; communication and public facilities 7.27 percent; government institutions 7.08 percent; shopping centers and retail stores 6.31 percent; hotels, travel and tourism 5.86 percent; print and media 5.64 percent; employment services 5.13 percent; financial services 3.93 percent; home contracting 3.76 percent; fashion and jewelry 3.46 percent; insurance and real estate 3.40 percent; home appliances 2.90 percent; and last, general services with 1.97 percent of advertisements.

The advertising market in Saudi Arabia increased tremendously in 2004 compared to 2003. Advertising expenditure in Saudi Arabia increased by 37.30 percent in 2004 from $498.93 million in 2003 to $685.04 million in 2004. The Gulf region as a whole had an increase in advertising expenditure by 38 percent in 2004, from $2.8 billion in 2003 to $3.9 billion in 2004, which is the largest increase for the region in ten years.