Reeling in the customers: An expanding economy and growing media outlets bode well for the advertising sector

Considered to be the second largest in the Maghreb after Morocco, Algeria’s advertising sector has experienced slow but steady growth. As the economy becomes more open and the private sector grows, market operators expect that the advertising sector’s potential will finally start to be revealed in the years ahead.

Much of the delay is connected to Algeria’s economic structure. With growth based mainly on hydrocarbons exports and state-planned development, the demand for advertising services has been linked to the level of economic openness and transparency. But government efforts to diversify economic development have helped, as non-energy sectors become more important, leading to enhanced demand for advertising and communication professionals. According to local media reports, the advertising sector in Algeria was estimated to be worth €268m in 2011 and is expected to reach €1bn in annual value over the coming decade. As the level of competition within mass-market industries increases, much is also happening through changes of behaviour on the part of Algerian companies. “For a long time, Algerian producers had the attitude that if the market was asking for a product, there was no need to advertise,” said Alexandre Beaulieu, general manager for Algeria and regional director for North Africa at TBWA, a communications company. “This is now changing, especially with the presence of multinationals in the market.”

SECTOR STRUCTURE: Despite its growth potential, the advertising market remains fragmented, and a certain level of fluidity is set to continue as new media outlets such as the internet and private television channels increase their presence, sometimes in a context of legal uncertainty. Media liberalisation in the early 1990s saw the entrance and establishment of several private newspapers, which served to multiply the number of media vehicles. A considerable amount of advertising revenue in the numerous newspapers that are published daily in the country is provided by the government, via its National Enterprise of Editing and Advertising ( Entreprise Nationale de Communication d’Edition et de Publicité, ANEP), which oversees the advertising budget of major state-owned companies. State advertising represents a significant component of the total advertising revenue for print media, especially the top 10 newspapers, which receive up to 80% of ANEP’s total advertising spend. However, private advertising investment is increasingly being felt. Advertising revenue for the Algerian print media increased from AD3.5bn (€32.2m) in 2006 to AD5.6bn (€51.5m) in 2012. The newspaper sector continues to be divided among a set of established newspapers with high readership and a multitude of smaller papers.

NEW ENTRANTS: The number of advertising and communications companies has been rising over the years, with an estimated 3000 private operators now competing in the sector. However, rising demand for professional advertising and communications services has led to the establishment of a handful of larger players. The first online advertising agency in Algeria, Med&Com, was established in 2006, and Memac Ogilvy started to fully operate in the market in 2007 through its subsidiary, Memac Ogilvy Algeria. Other international heavyweights such as BBDO, JWT and TBWA Worldwide are also present and have helped to raise the competitiveness level in terms of advertising practices.

It is, however, the more locally rooted companies that can better adapt to market specifics. Similar to other markets, much of the advertising investment is currently driven by the telecommunications sector, and this is set to rise as it prepares for the possible arrival of 3G in the near future. The automotive sector is also one of the most important advertisers in Algeria, followed by food and beverage companies. Banking services account for a small share of advertising revenue in Algeria, although a switch is starting to happen as private foreign banks increasingly advertise.

PRICES: Media liberalisation helped to establish several private newspapers, which attract a considerable amount of advertising revenue. The prevailing gap between the importance of different advertising vehicles is particular to the country.

“Algeria is a very specific case where the print media is very open and vociferous, and the broadcast media – radio and television – have seen slower development. Obviously, advertising investment follows this reality,” said TBWA’s Beaulieu. Well established newspapers such as El Watan, Le Quotidien d’Oran, El Shorouk and El Khabar attract a steady flow of both government and private advertising, with the price of full-page adverts in the most distributed newspapers ranging from €2000 to €5000. In comparison, the National Enterprise of Television (Entreprise Nationale de Télévision, ENTV) charges a base price of AD350,000 (€3220) for a 30-second spot on one of its five channels.

ONLINE: Although far from matching the popularity of their printed counterparts, online newspapers and internet-based platforms are slowly establishing themselves as relevant advertising vehicles. Part of the push is coming from the prevalence of multinational companies in the market, who are used to having an online presence in other countries and tend to apply similar strategies in Algeria, despite its relatively low number of internet users, estimated at 5.2m in 2012. “Online advertising still remains a niche part of the market in Algeria, although it is growing in importance as a way to target younger audiences,” said Beaulieu. Prices for advertisements on online information platforms range between AD250,000 (€2300) and AD350,000 (€3220) per month for a banner. Other online newspapers, such as Algérie Focus, sell some of their content to print titles. But websites are also finding alternative ways of financing. Kamel Haddar, owner of Algérie Focus, plans to launch another news website called 31 Femme, which will target female audiences. In addition to advertising spots, the website is set to offer e-commerce opportunities. The site will also have its own online sales platform, which will offer discounts to readers. This will be done through a voucher system, since there is still no generalised electronic payment system in the country. “Several news sites appeared over the last couple of years, but not all of them survived. A good way that sites can help finance themselves is to diversify and to sell products,” said Haddar.

A larger push for online content will also come from the much awaited arrival of 3G in Algeria. Following delays over the years, the Regulatory Authority for Post and Telecommunications launched a tender for operators to bid for three 3G licences in late July 2013. Once 3G is set up, online news providers will have a more efficient platform to relate to online readers through mobile devices (see Telecoms & IT chapter). This will eventually also allow more customised advertising campaigns.

NEW BROADCASTERS: Despite maintaining an overall upward trend, advertising in television has fluctuated in recent years, but is set to increasingly be spread over more players. Between 2006 and 2012, TV advertising revenue grew from AD4.8bn (€44.16m) to AD7.8bn (€71.8m), according to a study by marketing and advertising firm Allegorie. This has been almost exclusively spent on ENTV, the state broadcaster that has five channels and gets 25-30% of its revenues from advertising. However, private television stations are establishing themselves. Despite still being unable to create legal entities in Algerian territory, these private stations can still broadcast from overseas by satellite.

In recent years, El Shorouk newspaper launched a television channel, followed by El Djazaïriya TV, Ennahar TV and the Switzerland-based Numidia TV. A new arrival in 2013, Atlas TV started transmissions before Ramadan, a competitive time for television stations in the region. “These new television stations already took about 20% to 30% of the audience from the established Saudi cable chains, so their presence will certainly be reflected in a change in terms of advertising flows,” Salah Lakoues, editor-in-chief of Le Maghreb newspapers, told OBG. There are still no private radio channels in Algeria, although state radio has a presence in all wilayas (provinces). Radio advertising revenue has risen from AD1.2bn (€11.04m) in 2007 to about AD1.8bn (€16.6m) in 2012, according to figures by Allegorie.

OUTLOOK: Advertising revenue is expected to follow economic diversification efforts and play an increasing role in several industries. Newspapers will remain an important part of the media landscape, although television is set to increase its share of total advertising revenue. Radio will remain a marginal vehicle for advertising revenue until new media legislation promotes the arrival of private radio chains. Online news platforms will benefit from the arrival of 3G, offering new possibilities in terms of advertising investment.