Predicting how a year will turn out is not easy at the best of times and it’s harder still in the region. Though it proved somewhat more challenging than expected, 2013 was still a growth year.
It looks like this trend will continue over the next 12 months. In 2014, the growth in advertising investments is expected to double the five to six per cent growth rate of 2013. This may sound bullish but there certainly are good reasons to feel this way.
Several studies show that advertising investments and GDP are positively correlated. When an economy’s prospects rise, advertising investments increase too and the forecasts for MENA and the Gulf are generally positive.
There are also more specific aspects that contribute to a promising outlook. The first is that 2014 will be a World Cup year. Football runs deep in the region and the World Cup is a major event not just for football aficionados but broadcasters, sponsors, advertisers and also the world at large.
Dubai’s win of the Expo 2020 bid will lead to increased activity in the country and a morale boost after years of recovery. It may be seven years away but the passion the UAE has demonstrated for the bid will certainly transform into action on the ground. So much pride rides on it that the country will pull all the stops to create the greatest show on Earth.
The clouds that hung over the region, particularly in Egypt, the region’s third largest advertising market, are starting to dissipate. There is a gradual return of stability that will hopefully restore confidence and optimism among residents in the country who sorely need it.
Tensions are also starting to lessen with Iran as steps in the right direction have been taken for the first time in years. Should these lead to the permanent end of sanctions, the prospects of the country, which makes up almost a quarter of the MENA’s GDP, will prove irresistible to many.
Closer to home, Saudi Arabia is taking stock of the Saudisation drive and expulsion of foreign workers in a bid to create more job opportunities for locals. While the non-oil economy is likely to be affected for a while, the market has shown its ability to overcome uncertainty, including over the royal succession, and advertising growth is expected to return in 2014.
This growing confidence will only emphasise the trend towards digital advertising platforms. It took a long time for digital media investments to reach one per cent of the total and it’s taken a lot less for them to reach 10 per cent. Today we’re roughly at $450 million, 2014 should achieve $600 million. In about three years’ time, we will cross the $1 billion mark.
The rise of digital is largely driven by the fact it gives people a voice. YouTube, Facebook and increasingly Twitter have been massively embraced in the region, particularly in Saudi Arabia. Digital platforms give consumers more control and provide media and brands with alternative ways to reach and communicate with them. They’re no longer an add-on but an intrinsic element of communications planning.
The ever-increasing presence of digital in people’s lives and brands’ media choices isn’t necessarily detrimental to other media. TV isn’t only holding well in viewership terms, it is also finding new ways to distribute and monetise its content through digital platforms. The media market is continuing its digital evolution and this shows no signs of slowing down in 2014. This is affecting many sectors, with e-commerce expected to achieve significant growth levels.
The internet economy in the region isn’t a mirage, it’s already here and it will only grow.
Elie Khouri is CEO of Omnicom Media Group MENA