JEDDAH, 2 December — Major companies operating in Saudi Arabia have cut down their spending on advertising by up to 50 percent following the Sept. 11 terror attacks in the United States, which triggered a global economic slowdown.
Financial reports of many companies showed that they had slashed advertisement spending by 30 to 50 percent compared to the same period last year.
Analysts attributed the spending cuts to an anticipated decline in demand for goods and services in the aftermath of Sept. 11. This dissuaded producers and dealers from investing huge sums in marketing campaigns because they feared that they would not be able reap any benefit from such campaigns.
Fahd Bakhaider, director general of Tihama Advertising Company, told Arab News that the advertising sector was heavily affected by the Sept. 11 tragedy like other economic and services sectors.
Bakhaider said he expected the advertising market to pick up in the coming months.
Bashar Dayyab, regional director of the Arabian Advertising Company, said the sharp decline in spending during the past three months had affected the revenues of the companies and establishments that depended heavily on advertisements to reach their clients.
The companies, in fact, held back some SR50 million set aside for marketing during the past two months. Dayyab pointed out that the volume of spending during this period accounts for 40 percent of the total outlay in a year.
The terror attacks in the US have substantially reduced revenues of the advertising sector by more than 20 percent after many foreign companies stopped advertising in the Kingdom.
International automobile companies and their agents in the Kingdom spend the largest amount on advertising within the country, followed by cosmetics, perfumes, garments and watches. Food products come third.
This equation, however, changes in November when companies spend large sums on advertising food products to make maximum out of Ramadan sales.
Commercial companies and advertising agencies normally review their budgets in December when they decide on advertising allocations for the year ahead. Many foreign firms decide their budget in the light of anticipated demand for their products.
According to a media expert, the Kingdom’s advertising sector was poised to make a huge leap in the next few years.
“The volume of advertising will grow by an average of $500 million annually for the next five years, thanks to an expanding consumer market and the qualitative growth in the media field,” said Talal Al-Dhulaymi, a member of the board of directors of the GCC Advertising Association. The Saudi market will register the highest growth rate in the region, he added.
The print media will take away a major share of the market despite the proliferation of the electronic media, he said. This is because newspapers will continue to remain as the most dependable medium for news and information, he added.
Dhulaymi believed the Kingdom’s entry into the World Trade Organization would help large companies in the industry while smaller ones would find survival hard. There are over 2,000 advertising agencies, most of them small, in the Kingdom.
