Spending on internet advertising in the GCC and Levant is forecast to hit 9 per cent of the total advertising market this year, and is fast approaching the proportions spent in developed markets such as the US and Germany.
Digital advertising has been considered a poor relation to television and newspapers, which remain the dominant media for advertising in the Arab world.
But new research by the agency Omnicom Media Group (OMG) suggests online advertising is set to account for US$170 million (Dh624.43m) this year - or 9 per cent of the total $2 billion advertising market in the GCC and Levant.
That is a greater proportion of online advertising spending than in markets such as India and Belgium, and is close to levels in developed markets such as Germany.
In the US, spending on digital media accounts for 13 per cent of the total advertising market - and the GCC and Levant are fast catching up, according to OMG.
"Digital is taking up a significantly bigger percentage than people think," said Dimitri Metaxas, the regional executive director for digital at OMG in the Mena region.
"In the Middle East [it] is about 9 per cent, which puts us not far off markets like Germany and the US in terms of net share of digital."
The figures, published in a paper entitled "Digital in Mena: Multi-speed sophistication", was likely to "raise a couple of eyebrows", Mr Metaxas said. That is because previous estimates put the levels of digital advertising spending much lower.
Other industry executives disputed OMG's forecasts.
"I don't think it has reached 9 per cent," said Elie Aoun, the managing director for the Mena region at Ipsos MediaCT, which tracks advertising spending in the region. "My estimate is that the spending is not more than 3 to 4 per cent."
Mr Aoun said TV remains the dominant advertising medium in the region, but acknowledged that online advertising was increasing.
"Digital is growing and will grow, but it is still very negligible in this region," said Mr Aoun. "For sure, it is increasing. Three to four years ago, it was only half a per cent or 1 per cent [of the total ad market]."
Mo Elzubeir, the managing director of the media intelligence consultancy Mediastow, based in Dubai, said digital represented an "ultra-thin slice of the overall ad spend".
While he said digital ad spending was growing, he believed it to be slow.
"The trend is gradual increase," said Mr Elzubeir. "You can see industry estimates being bullish on digital, with some estimating an 80 per cent increase this year. I find these estimates to be optimistic."
Digital advertising has proved resilient throughout the recession, said Mr Metaxas. Spending in the GCC and Levant is forecast to hit $170m this year, a 30 per cent increase on last year.
Digital keeps jumping up quite dramatically as a percentage increase year-on-year. And when you actually look at the overall market it has remained relatively flat," said Mr Metaxas.
While the proportion of digital advertising in the region may be comparable with other markets, the total levels of spending remain low.
According to the Arab Media Outlook 2009-13, the region has one of the lowest rates of advertising spending worldwide. In 2009, it was estimated that just $22 per capita was spent on advertising, compared with $462 per capita in North America and $273 in western Europe.
Mr Metaxas said the industry must look to grow the overall levels of advertising spending.
"Per-capita advertising spends in this part of the world are very, very small, which means that the entire market needs to grow dramatically," he said.
"We've done a good job in getting the share of digital up to a pretty healthy level, but the overall market itself needs to grow if we are to get on to any level terms with Europe."
bflanagan@thenational.ae
Tips for job-seekers
- Do not submit your application through the Easy Apply button on LinkedIn. Employers receive between 600 and 800 replies for each job advert on the platform. If you are the right fit for a job, connect to a relevant person in the company on LinkedIn and send them a direct message.
- Make sure you are an exact fit for the job advertised. If you are an HR manager with five years’ experience in retail and the job requires a similar candidate with five years’ experience in consumer, you should apply. But if you have no experience in HR, do not apply for the job.
David Mackenzie, founder of recruitment agency Mackenzie Jones Middle East
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Recycle Reuse Repurpose
New central waste facility on site at expo Dubai South area to handle estimated 173 tonne of waste generated daily by millions of visitors
Recyclables such as plastic, paper, glass will be collected from bins on the expo site and taken to the new expo Central Waste Facility on site
Organic waste will be processed at the new onsite Central Waste Facility, treated and converted into compost to be re-used to green the expo area
Of 173 tonnes of waste daily, an estimated 39 per cent will be recyclables, 48 per cent organic waste and 13 per cent general waste.
About 147 tonnes will be recycled and converted to new products at another existing facility in Ras Al Khor
Recycling at Ras Al Khor unit:
Plastic items to be converted to plastic bags and recycled
Paper pulp moulded products such as cup carriers, egg trays, seed pots, and food packaging trays
Glass waste into bowls, lights, candle holders, serving trays and coasters
Aim is for 85 per cent of waste from the site to be diverted from landfill
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Look north
BBC business reporters, like a new raft of government officials, are being removed from the national and international hub of London and surely the quality of their work must suffer.
WOMAN AND CHILD
Director: Saeed Roustaee
Starring: Parinaz Izadyar, Payman Maadi
Rating: 4/5
