Automated advertising: Digital media is becoming a force to be reckoned with in ad spending

Economic growth depends heavily on Dubai’s retail, tourism and real estate sectors. Following a peak of $1.2bn in 2008, the UAE’s advertising spend dropped significantly to $720m in 2009 due to the global financial crisis. However, there are positive signs that the sector is recovering as spending has stabilised between 2011 and 2012. Currently a $700m market, advertising still represents a far smaller portion of GDP and ad spend per capita when compared with the US and Europe. As the sector matures, businesses are likely to increase spending, leading to future growth.

Advertising in the GCC region has traditionally focused on conventional outlets such as newspapers and outdoor billboards. Low costs and high visibility in Dubai combine to make it an attractive platform for companies. The cost of outdoor advertising has dropped significantly over the past several years as a result of the global financial crisis, sinking from $4m for prime space in 2008 and 2009 to under $100,000 in 2010, according to Ipsos, a global market research body.

REVAMPING THE BUDGET: While these traditional platforms will continue to dominate the sector for the foreseeable future, the recent global economic crisis has shifted how companies target their advertising budgets and has ushered in a new era in the UAE’s advertising industry. Dubai’s relatively wealthy and welleducated population is driving a trend for consuming news online. Newspapers and magazines continue to remain the dominant advertising platform, accounting for almost 60% of the total advertising spend in 2012, but other platforms should gain popularity rapidly.

DIGITAL POWER: Businesses are increasingly targeting more specific audiences with digital media. In 2009 80% of advertising spend was split evenly between television and newspapers, while the remaining 20% went into outdoor advertisements, radio and magazines. Just three years later, however, digital ad spend quadrupled as companies chose more targeted and cheaper ways to allocate advertising budgets. Spending in the digital media sector has grown from just $15m in 2009 to almost $79m in 2012 and this is expected to double again by 2015. Current analysis suggests this shift will come at the cost of advertising spend in print media.

Social media platforms are also gaining popularity; Facebook dominates the market with 28m users in the Arab region. Many top newspapers in the UAE have social media strategies to attract the younger generation and all maintain websites that enable content to be shared through social media sites. The “Arab Media Outlook 2011-15” estimates 15-25% of traffic to the top regional websites originates from social networking sites.

“More than half the population in the GCC is below 35, resulting in a rapidly increasing consumption of media,” Mohammad Abdullah, the managing director of the media cluster at TECOM Investments, a Dubaibased IT and telecoms investment services firm, told OBG. “Combined with improved internet and broadband penetration levels across the region, we anticipate an accelerated growth for those companies looking to capitalise on content creation and delivery across multiple platforms.”

PROTECTING REVENUES: Responding to the threat of lower revenues from advertising, more newspapers and magazines are moving to audit distribution and readership figures in a bid to improve advertising potential for the sector. Companies like BPA Worldwide, a firm specialising in verified audience data and media analysis, have seen increased demand for auditing services. BPA Worldwide has a pipeline of over 100 publications to be audited in the region and the majority of these publications are based in the UAE.

Media groups with a regional or global reach and a diversified portfolio of print and online content are generally better positioned to deal with advertising market fluctuations. More companies are offering innovative package deals that include print and online advertising, often involves collaboration with marketing firms, such as Middle East Media Services in the case of Dubai Media Incorporated. This consolidation provides advertisers with a variety of platforms, supplying new value.