Billboards on the outside

Outdoor ad revenues drop as companies cut back on spending

The amount spent on outdoor advertising in Dubai and Sharjah fell by more than 36 per cent in the first quarter of this year, largely due to the withdrawal of property companies after the downturn. The drop, compared with the first quarter last year, came despite a large cut in the cost of renting outdoor advertising space from boom-time highs, when single billboards in prime sites in Dubai would cost more than US$4 million (Dh14.69m) a year. Such billboards were commonly used to advertise high-end property developments. In the first quarter of last year, $148.4m was spent on advertising for billboards, lamposts and other outdoor sites in the two emirates.

But that fell to $94.6m this year, according to figures provided by Ipsos MediaCT, which does not provide figures for other emirates. There are plans to include Abu Dhabi in the data from next month, the company said. Most of the difference was due to property companies cutting their spending. In the first quarter of last year, such companies spent $53.3m on outdoor advertising, compared with a mere $10.9m in the same period this year.

The drop in spending could be even more severe because of the way the figures are collated. Advertisements that are still on display but not necessarily paid for are still included in the figures, said Elie Aoun, the MENA region managing director of Ipsos MediaCT. "The drop is more than [36 per cent]," Mr Aoun said. "Billboard adverts are booked for one or two months, but they often stay there because there is no replacement [advertisement].

"I once heard that a scaffolding [billboard] on Sheikh Zayed Road would cost you as much as a two-week campaign on a leading TV station that would go out across the entire Arab world. "For a scaffolding on Sheikh Zayed Road, they were paying Dh4m for two or three months. It will never come back to that, I think." Outdoor advertisers also attributed the drop in spending to the fallout from the overheated property market.

"A large percentage of advertising for out-of-home was from property advertisers," said Patrick Chaundy, the president and chief executive of Right Angle Media, which has a contract with Dubai's Roads and Transport Authority to build and operate the city's airconditioned bus shelters, including the rights to sell advertising on them. "It created a unique market and when the property market stopped advertising almost overnight, people were left high and dry. It caused an inflationary bubble in the media, which priced out a lot of normal out-of-home advertising."

But Mr Chaundy said the market was slowly improving. "Things are getting better but from a low base. It's a fragile recovery but at the moment things are definitely improving compared with 12 months ago." One area of growth in outdoor advertising is fast-moving consumer goods (FMCGs). Advertising of hygiene and beauty care products rose to $3.9m from $2.9m, while food products rose to $2.8m from $1.6m.

"For multinational FMCGs, we're seeing more of an interest in outdoor advertising, because it's cheaper and less cluttered. It's an opportunity to test the market," said Elie Haber, the managing director of the media planning agency Mindshare in the UAE. "But I'm not sure I agree with the statement that it's become more popular [across all sectors]. It's not like there's been a revolution in outdoor," added Mr Haber.

Collections are also proving difficult for outdoor advertising firms. Trinet Outdoor Advertising has filed a claim for more than Dh10m it says it is owed by the property developer Nakheel for six advertising billboards along Al Khail Road in Dubai. [e-mail] [e-mail]