Advertising industry shows signs of recovery

May 16th, 2009 in Online Marketing- Middle East

by Keach Hagey, The National

The advertising industry has begun to see a few signs of recovery after a tight first quarter, with last month the least difficult so far this year, executives say.

Much of the cautious optimism came from new campaigns in the Government, transport, telecom and fast-moving consumer goods sectors, especially out of Abu Dhabi, which have helped to offset the losses from the sharp drop in property advertising last quarter.

Advertising spending in the UAE dropped 14 per cent in the first quarter of this year, led down by a 60 per cent decline in property advertising, according to the Pan Arab Research Center.

“I have seen in the last two to three weeks signs of recovery,” said Ronald Howes, the Gulf region managing director for Memac Ogilvy.

“What we had in the first quarter was very much wait and see, with new business not wanting to commit to any long-term retainer fee. We are now seeing quite a few new business leads. What we have also seen is a marked increase in interest in advertising from Abu Dhabi.”

The interest is strong enough for the Dubai-based company to plan opening an office in Abu Dhabi by the end of the year, Mr Howes said.

Sam Husaini, the managing director of Impact BBDO’s Abu Dhabi branch, said his office had been making a pitch for a project a week recently. “There is a lot of new business activity happening,” Mr Husaini said.

“Some of it, especially with regard to the private sector, has pitched but not made any decision yet. But a lot of the Government entities are fine. They are going ahead.”

Impact BBDO’s work for Etisalat, for instance, has begun to dot the highway and streets in places formerly advertising the latest luxury residential tower.

Ramzi Raad, the chairman and chief executive of TBWA\RAAD, said: “We’ve never seen this activity in Abu Dhabi. The Abu Dhabi Government has stepped in and filled a major gap.”

Etihad Airways, a client of Mr Raad’s company, increased its advertising spending in the first quarter by 50 per cent compared with the previous quarter, while the campaign for the Abu Dhabi Formula One Grand Prix had also kept them busy, he said. Recent campaigns by Abu Dhabi’s cultural institutions had also filled advertising gaps in newspapers, Mr Raad said.

But not all the action is in the capital. After seeing a 15 per cent drop in revenue in the first quarter compared with the previous year, BPG Group has been inundated with work since it won the communications contract for the Festival at the Dubai Mall, according to Avi Bhojani, the group chief executive.

“The last month, we have not been busier,” Mr Bhojani said.

But he added that the pain from the loss of 38 per cent of the company’s revenue from property advertising last year would continue for some time.

“The spends have not bottomed out yet,” Mr Bhojani said.