Ramadan advertising a casualty of the financial downturn
Courtney C. Radsch (Dubai, UAE) - Spending on advertising during the Muslim holy month of Ramadan, TV’s holy grail of ratings, fell compared to last year according to industry experts, whose initial optimism about the season proved unwarranted.

The industry was hoping for a recovery during Ramadan, which is typically the biggest advertising season in the Middle East, when each day people watch TV two hours more on average and indulge in food, drink and sweets for the festive dinners that break each day’s fast.

But the Choueiri Group, the Middle East’s largest media sales representation company, said advertising spend declined during Ramadan, which this year started Aug. 21 and ended Sept. 19 in most Arab countries.

“This year, the overall scene has witnessed a drop in advertising spend,” Ghassan Harfouche, managing director of Middle East Media Services at Choueiri Group, told the Emirati daily the National. He said spending fell by 25 percent.

The Middle East, especially the Gulf, has been hard hit by the global financial crisis, which hit the real estate and financial sectors, some of the biggest advertisers during the halcyon boom days, hardest.

The fall came even though most broadcasters left rates unchanged from last year’s record rates, AdNation’s Eliot Beer told me.

“From people I’ve spoken to in the market it seems to be down, some suggest a drop of 20-30 percent overall would be about right for the TV market,” said Beer.

Many regional companies devote more than half their budgets to buying ad time during Ramadan, with TV dominating the advert buys. And the month typically accounts for about a third of annual advertising revenues for leading television broadcasters.

But the economic downturn has hit the industry hard, with initial indications showing a dramatic decline compared to the highs of 2008, though industry insiders say the region has not been hit as hard as other markets.

Michael Malkoun, regional sales director for Choueiri Group, attributed the drop to a fall off in advertising by local companies, especially those in Saudi Arabia, defying forecasts that any decline in spending would come from multinational corporations and regional advertisers.

“Which was surprising because nobody was aware or expecting that to happen, we were all expecting it from the regional side not the local side,” he told me. “They (regional advertisers) wanted to protect their market shares here, so they kept their level of spend.”

Difficulty of Predictions

The negative results contradicted early indications of a strong Ramadan advertising season that would help turnaround an industry hard hit by the implosion of the property sector.

The Pan Arab Research Center (PARC) said midway through Ramadan that preliminary data showed an increase of around 15 to 20 percent compared to 2008 and it had predicted increased advertising spending this Ramadan.

But experts note that the Middle East advertising industry is underdeveloped, saturated on some platforms and nearly absent on others, with few metrics. They say the lack of research, measurement and ratings hampers the development of a more robust industry.

“There are no proper mechanisms in place for measurements,” explained Sonia Larsen, communications director for the International Advertising Association’s United Arab Emirates chapter, the largest one in the world.

She said there are discussions about introducing people meters and other tools for audience measurement, but that they will take time to get integrated.

The Middle East accounts for only one percent of global advertising expenditure and average per capita investment in advertising is a fraction of that in Western countries, where industry averages are eight percent per capita.

Ramadan Bonanza

Advertisers appeared to have saved their budgets for “sure things,” with major broadcasters of Ramadan specials like MBC1 and Rotana attracting advertising on par with last year

“Compared to last year, sales are up 30 per cent,” Nezar Nagro, the president of Saudi-owned Rotana Media Services, said as Ramadan got underway in late August. “I think some of the clients that didn’t spend in the first half of this year, because they were worried about the recession, have now started to spend.”

The Arab Advisors Group (AAG) reported that a 30-second Ramadan spot cost $3,362 this year, though ad executives told me that so much depends on the show’s ratings and reach as well as the specific market that such averages are meaningless.

Regional heavyweight MBC Group, which boasts all of the top 10 highest rated shows, was able to sell spots for upwards of $35,000 for the top-rated Ramadan series Bab al-Hara, which reaches more than 50 percent of viewers, according to Austyn Allison, managing editor of the Dubai-based Communicate magazine.

Its Arabic flagship MBC1 boasts some of the most popular Ramadan series, and typically invests about a third of its acquisition and production budget on the channel, which returns a similar percentage, MBC Group director of marketing, PR and commercial Mazen Hayek, told me

“In Ramadan, MBC1 becomes in a league of its own when it comes to its ratings,” said Hayek. “This has led to sustained advertising on MBC 1. The levels are very close to 2008, which was by all means a record year.”

Fall from 2008 highs

Middle East advertising dropped off sharply at the end of 2008 as the world financial crisis hit the Gulf and devastated the property and financial sectors. It did not pick up as expected after the traditionally lean winter months of January and February, so the industry was looking to Ramadan to rescue its sagging fortunes.

Yet despite the global economic downturn, advertising is slightly up overall this year, with increases in several Gulf and Levant countries, according to PARC.

Regional broadcasters were the big winners this year as advertisers focus more on pan-Arab satellite stations like LBC, Fox Movies and MBC, parent company of Al Arabiya, with seven of its eight channels ranking in the top ten for ratings, according to Allison.

And these stations have seen the highest-ever ad rates, according to AAG, with rates on major channels 25 percent higher than the year before, though still low by global standards, especially considering the purchasing power of viewers in the Gulf.