As much as 80 per cent of the money that companies spend on television advertising disappears, an industry leader says, blaming an opaque and anti-competitive industry for holding back the growth of regional media. Marc-Antoine d'Halluin, who heads the pay-TV company Orbit Showtime Network (OSN), said yesterday he recently asked an advertiser how much had been spent on a campaign that aired on the network.
The answer was a sum far greater than the amount recorded in OSN's books. In fact, OSN saw just 20 per cent of the fee paid in that case, Mr d'Halluin said. "So I have to ask myself a question: where did the other 80 per cent go?" Mr d'Halluin said. "And this was not an exception. This is more of a rule." In other markets, media agencies sometimes keep as little as 15 per cent of clients' spending to cover their costs, passing on the remaining 85 per cent to the media owner. In more complex or emerging markets, the agency may charge a little more.
A lack of transparency, questionable commercial practices and poor market data mean the Middle East's TV advertising market remains underdeveloped, industry leaders said yesterday at The National's first Industry Insights forum. Although the region is home to more than 300 million consumers and 450 TV stations, advertisers have largely avoided the market, spending a small fraction of what they would in developed economies. An average of just US$7 (Dh25.71) per capita is spent on TV advertising in the Arab world, compared with $62 in France and $229 in the US.
The problem lies with poor industry practices, said Mr d'Halluin, whose network is the region's largest pay-TV operator. "I have worked in many countries, and I have never come across a market that lacks so much transparency." Others agreed, pointing to the inability of the industry to create a single, credible system to measure TV audiences. The market currently relies on data generated by telephone surveys in which household members are asked what TV channels they viewed the previous night. The methodology is widely considered to be outdated and unreliable.
"It's a well-known, established, scientific fact that telephone-based, day-after recall interviews do not work for TV ratings," said Karim Sarkis, the executive director of broadcast at the Abu Dhabi Media Company, which owns and publishes The National. "I don't think its fair of the industry or honest of the industry - and I include ourselves in this, because we're guilty of it sometimes: we don't like the data, but when it says something good we use it to go and sell. We're all going along with this nice facade, this charade."
For years, many in the industry have pushed for the roll-out of "people meters"- set-top boxes installed in a selected number of homes - to transmit a constant stream of data on household viewing habits. The use of such systems in other markets has led to drastic changes in reported TV viewer figures. "It's a must for us to have this data. It's not a luxury, it is imperative," said Mazen Hayek, the director of communications and public relations for MBC Group, the region's largest free-to-air TV broadcaster. "The lack of this data is contributing to TV being undervalued, and it is contributing to the industry not growing."
Other panellists said the industry was held back by the dominant position of Lebanon's Choueiri Group, the media representation agency that is the exclusive sales agent of the MBC Group and a number of other highly successful stations. With the channels it represents accounting for the lion's share of viewers - particularly in the prized Saudi market - advertisers and rival stations struggle to compete.
"Beyond which percentage of a market do you actually have a monopoly?" said Mr d'Halluin, whose OSN relies mainly on subscription fees, not advertising. "I don't know if it is 60, 70, 80 per cent, but I think we are not far from that situation in this market. "Then I can ask another question: should we have a regulator across at least the GCC that would effectively enforce an audience measurement system, and beyond that, ensure that competition rules are enforced in the region? ? Because that's the only way the [advertising] pie will grow - the pie is not growing today because a lack of regulation is allowing some commercial practices to take place that are forbidden elsewhere."