Falling oil prices will shrink MENA advertisement spending – Zenith

Spending in the advertising industry in the Middle East and North Africa is expected to contract by nearly 5 per cent by the end of the year due to falling oil prices, global agency ZenithOptimedia has forecast.

In a report, the Publicis Groupe media agency predicted a continued decline in ad spending over the next year. A 2.7 per cent drop is forecast for 2016 and limited growth of 0.3 per is expected by 2017.

The United Arab Emirates and Saudi Arabia are both expected to post negative growth this year. Falls of 13.6 per cent and 8.1 per cent respectively are forecast, largely due to firms imposing harsher spending restrictions on printed advertising.

Spending increased in 2014 with the announcement that the UAE will host World Expo 2020, but a decline in print spending is set to continue throughout 2016 and 2017, Zenith said.

However, minor improvements are expected within the local television industry despite the strong presence of Pan-Arab television.

Qatar is also expected to see a decline of 2.1 per cent this year, from $359m to $337m, despite playing host to the 2022 World Cup. No recovery has been predicted until after 2017.

Following previous declines due to political turmoil, markets in Oman and Bahrain are expected to remain flat for the next two years.

Ad spend in Egypt is predicted to fall by 6.5 per cent in 2015, despite it seeing a growth of nearly 10 per cent the previous year.

Meanwhile in Lebanon, the pattern of decline from the last five years is expected to level off from 2016 with a fall of 0.6 per cent expected in 2015.

However, the report states the country’s print and outdoor industries are still struggling following the ban on tobacco advertising, introduced in 2011.

“The drop in oil prices has had a much more severe effect on the economies in the region [than the conflict in Syria and Iraq], and has prompted advertisers to cut back their budgets in anticipation of lower consumer demand,” Zenith said.

Political instability across the region and the reduction in oil prices has also affected Pan-Arab TV spending. It is expected to shrink by nearly 4 per cent, from $2,362m to $2,272m in 2016.

Zenith records the MENA region as one of three no-growth areas for 2015, alongside Eastern Europe and central Asia.

Globally ad expenditure is expected to reach $554bn by the end of the year, with the highest growth rates of 7 and 8 per cent found in Latin America and “Fast-track” Asia. This area includes China, India, Indonesia, Malaysia, Pakistan, Philippines, Taiwan, Thailand and Vietnam.