Gulf advertsing in crisis mood (page 1 of 3)

What's wrong with the advertising industry in the Middle East? Whether you ask an ad executive, brand owner or media seller, the answer is pretty much unanimous: "plenty."

The media seller will complain about the decline in spending by major marketers during 2002, while the brand owner will harp on the mounting costs associated with running a campaign in these uncertain times. The ad exec, for his part, will lament that, unlike in the past, he is being held accountable for delivering results on very limited budgets.

The last year has been a mixed one for the industry - there have been some costly campaigns that bombed. The majority of the campaigns, though, have been particularly lackluster, mere rehashes of international campaigns with minor changes made to tailor them to the region. Creativity has been conspicuous by its absence. Only the very brave brand owner, it seems, prefers to add an element of local creativity to his message.

Behind the campaigns, successful or otherwise, the region's sprawling advertising sector is waking up to new realities. "The advertising industry, which had grown consistently over the last decade, has started to falter, and most definitely after September 11th," says Sunil John, executive director of Asdaa, affiliated to the Team Y&R network. "The advertising budgets of companies, especially the multinationals, have been cut considerably and that has had a considerable impact on the advertisers here."

While budgets have been slashed, the expectations of clients have not. "Getting more from less" seems to have become their slogan. Not surprisingly, this has led to a considerable degree of friction.

According to some very broad estimates, the advertising budgets of the top 50 marketers in the Middle East - comprising for the most part the top international brand names - have been trimmed 15-20 percent. In certain instances, the drop in ad spending has been even more marked - closer to 30 percent, say market watchers.

Even more alarmingly for the advertising execs, clients are looking at other avenues to spread their marketing spend. Event sponsorships have suddenly become the new game in town. "We would actively seek to be associated with the right kind of event, which would help us gain a lot more in reaching out to our target consumers than any number of static advertisements would," said a communications director for a leading automobile manufacturer.

"Event and social sponsorship would be a key part of the message that we will put out in coming years. Obviously, it has to come from our marketing budgets, which includes advertising as well." This is a sentiment that is being echoed in the boardrooms of other multinationals with increasing regularity. Dedicated public relations is also eating into the advertising budgets.

It is not as if the Middle East's advertising industry is anywhere close to maturity. Per capita advertising expenditure in the region is low. Fouad Bedran, the regional media director for Universal Media Seven, has all the figures.

"For comparison purposes," he says, "the ad spend per capita in the United States reached $473 in 2001, $254 in Britain, $150 in France and $65 in the Gulf." This reflects the poor state of the advertising market in the region despite the impressive gains made by the leading agencies in terms of creative output over the years.

Saudi Arabia - the biggest market in the region - is in recession. The opening of the prestigious Kingdom Centre, which is owned by Prince Walid bin Talal and contains the region's first Saks Fifth Avenue outlet, and other developments have not been able to pull the Saudi ad market out of the doldrums.