UAE ad industry fails to see Ramadan ad spike

Tuesday, Jul 05, 2016

Dubai: The much-anticipated pick up in advertising during Ramadan failed to materialise and ad agencies are now left scrambling for whatever action is possible during the Eid holidays. They now hope that the tactical campaigns run during Eid will be extended for Dubai Summer Surprises and help salvage — even partially — what has been an extremely difficult first-half for the ad industry.

“The overall dip in ad spend in the first three weeks of Ramadan compared to the same period last year resonates with the current market sentiments,” said Satish Mayya, CEO of the media buying firm BPG Maxus and part of UK-headquartered WPP. “Overall, most of the categories decreased their ad spends compared to last year, the highest drop being in furniture and decorations, followed by banking and automotive.”

Industry sources say this has been the worst since 2009, the only difference being that nothing was happening in terms of ad spending that year. Also, the ad industry — and its bigger agencies at least — had more time to prepare for the current dip, which was not the case in 2009.

Even then, cash flow is starting to become a major problem. “On the one side you have lower spending on the part of clients; on the other even for those campaigns already complete, most agencies are getting their cash after much delays,” said a senior manager at one of the biggest firms. “Someone or the other is always chasing payments and it’s creating a tense standoff between agencies and clients.”

Things are not that better for media platforms. According to BPG Maxus estimates, the number of ad in English language print was down 34 per cent between January to May, while for Arabic, it was lower by 11 per cent. The ad spend decline for English was 24 per cent, while it was 16 per cent for Arabic.

Radio — where ad exposures were relatively upbeat in the last two years — saw mixed results in the first half. Among the many stations competing for attention in the air waves, Hindi-language ones suffered the most, down 15 per cent in spot ads from a year ago position, according to number crunching by BPG Maxus. English language stations managed to limit the drop to 2 per cent, while there were gains for Arabic (up by 5 per cent) and Malayalam (by 4 per cent).

Among media platforms, digital still came up with some decent gains, built around Facebook and other social media, plus the many advertising variants that show up on portals. The overall increase on digital-led spending is estimated at 27 per cent year-on-year, led by real estate and food and beverage outlets.

For real estate, this represents a welcome return back in the public limelight, an indication that developers are trying to muster as much of buyer attention as possible before the summer break sets in. (Interestingly, based on BPG Maxus numbers, airlines are yet to fly in with a heavy media blitz to date.)

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Cash flow squeeze tells on ad industry workforce

The number of layoffs in the ad industry is on the increase, as agencies feel the squeeze from payment delays and key account losses. The retrenchments are being recorded across all verticals of the marketing, media and communications industry.

How key sectors stacked up between January to May

The sectors that saw a decline in offline ad spend

• Cars (by 6%)

• Real estate (31%)

• Banking (24%)

• Restaurants (11%)

• Exhibition & events (2%)

• Jewellery (6%)

The sectors that increased offline spends

• Telecom (13%)

• Commercial centres (27%)

• Food shops (7%)