Middle East focus: Egyptian channels lead rebound in pan-Arab ad market

The advertising market in the Middle East and North Africa has performed strongly this year, with Egypt, which saw a deep drop in advertising expenditure in 2011 in the wake of the revolution, seeing a recovery. Egypt has also been the source of a number of new channels with pan-regional appeal.

The Middle East TV market has long been seen as a free-to-air market and the growing popularity of new pan-regional services over the last year reinforced that impression. However, questions have long been raised about whether the advertising market is capable of supporting so many free channels. According to Sami Raffoul of the Pan-Arab Research Council (PARC), advertising growth over the past year has been led by a handful of markets including the UAE, Saudi Arabia, Kuwait and Qatar, with Saudi Arabia likely to record growth of 11% this year. The Saudi economy has fuelled growth in pan-Arab media including TV services from MBC, Rotana, LBC and the Abu Dhabi Media Company. “Saudi Arabia is the largest of all the markets around with limited – by its own account – media capabilities,” said Raffoul.

Seizing on remarks made by deputy information minister Riyadh K Najm at the recent Saudi Broadcasting Forum, Raffoul says that official Saudi recognition of the underdevelopment of the country’s media could herald a significant change in rules governing private investment in the country. The minister said that Saudi media was currently unable to compete with international players and there was a need to create an attractive environment for investors.

Raffoul said that a number of the many broadcasters to have emerged from post-revolutionary Egypt in particular have developed multichannel bouquets that have won a wide audience elsewhere in the region.

These channels have also attracted a significant slice of the pan-Arab advertising market, he said. PARC’s breakdown of the region’s advertising market distinguishes between ‘national’ and ‘pan-Arab’ media that crosses national boundaries. “Egyptian channels have snowballed in terms of advertising spend and have become a major force,” says Raffoul.

Consultant Ali Ajouz, managing partner at SAWA Media, said that the free-to-air market has seen significant changes over the past year, with countries that have gone through political transformations – notably Egypt – producing popular new channels including CBC, Al-Nahar and Al-Hayat, with more to come. New Libyan channels have also emerged, while, said Ajouz, a couple of Gulf-based projects have been cancelled despite significant upfront investments. “The limited TV budgets continue to put pressure on the bulk of FTA channels,” said Ajouz. “In addition, other advertising opportunities in the digital domain have started to attract advertising budgets. TV networks will now need to look into additional revenue streams whether horizontally, across other platforms, or vertically, through sponsorships and digital product placement.”

Raffoul meanwhile said he expects 2012 pan-Arab ad spend to be up about 25% on 2011, although this could hide deep discounting by broadcasters in free media zones. Egypt, which lost ground in 2011 in the immediate aftermath of the revolution and amidst continued political uncertainty, has bounced back with 18-20% growth this year. Other countries in the region have fared less well, with the effects of the conflict in Syria spilling over into neighbouring Lebanon and Jordan.