The advertising industry can look forward to a good year globally. The Middle East and North Africa (MENA) region however will have to brace for challenges. The drop in oil prices in 2014 has had a severe effect on the economies in MENA, and has prompted advertisers to cut back budgets in anticipation of lower consumer demand. Political turmoil and conflict have further shaken advertisers’ confidence in the region, according to Zenith. The agency has forecast an 11.1 percent drop in ad spend in MENA this year, followed by further declines of 5 percent in 2017 and 1.1 percent in 2018, averaging out at a 5.8 percent annual decline to 2018.
“This Will Not Be MENA’s Worst Year”
Zenith has forecasted an 11 percent drop in MENA’s ad spends in 2016 – making it the only region to register decline in the year. Jonathan Barnard, Head of Forecasting at ZenithOptimedia says that it is not all gloom.
On Silver Linings Amid Ad Spend Decline…
There are certainly some bright spots in the MENA market: internet advertising is growing rapidly here, as in most of the rest of the world. We forecast 22.3% growth in internet ad spend across the region in 2016, followed by 24.1% growth in 2017 and 24.9% growth in 2018.
On Internet Overtaking TV…
We expect the internet to overtake TV in MENA in 2018. In 2017 as well, internet spend in MENA will still be slightly behind TV spend.
On Bracing The Fall In AdEx…
At a time when every dollar spent has to be justified by its contribution to the bottom line, the industry needs to concentrate on helping marketers achieve their financial targets and rebuild their businesses to thrive in the current environment. We have consistently found in the past that advertisers that maintain their budgets during a recession end up in stronger financial positions and improved market share in comparison to advertisers that cut back.
On MENA’s Bad Year…
This will not be the worst year for the MENA ad market in recent times –– ad spend will shrink by less than half the amount it did in 2009, for example, when it fell by 24.9 percent, quickly followed by 10.9 percent decline in 2011. What is different during the current downturn are the persistent low oil prices, which are dealing long-lasting damage to the region’s economic strength. However, newer markets from the region, especially in Africa will grow more than MENA overall will shrink. We estimate that ad spend in Iran alone totalled USD 1 billion in 2015 and will double to USD 2 billion by 2018.