Cover Story
2016, a Major Shift to Digital
We are living in a region that has the best recipe for crisis, be it war zones, fluctuating oil prices, and political unrest. 2016 was definitely a tough year, the toughest since the crisis of 2008, if not even tougher. And in tough times and because most companies are managed by accountants and financial people, the first decisions are always the easiest ones, cut the expenses and start saving. As a result, the first victim is always the advertising budget and the employees.
Those factors are big contributors to the advertising budget cuts and I would personally add another important factor, which is the shift from Offline to Online. This matter is further compounded by the lack of information and knowledge in our market, which is confusing people about dealing with this situation.
For many years, we have been hearing about people mourning Offline media, and paying praise to Online as the successor. How many times have we heard that Print is dead, TV is dead, etc… We have been hearing talk that people are no longer consuming TV, reading a Newspaper, or listening to the Radio. They are not even looking at Outdoor panels either. Everybody’s attention has shifted to the electronic screens, so if you want to advertise and reach people, say good bye to TV and other vehicles, because Digital is your new best friend.
Due to a lack of knowledge, or even fear of coming across as old-fashioned, many followed the trend blindly. As a result, talk about the death of Offline has been circulating. In contrast, Digital is being hailed, especially since it can easily be measured and the ROI is clear…
The current trend shows that nobody is consuming Offline media and budgets should shift to Digital. The weakest link was Print, where we started seeing budgets shifting from Print to digital. All eyes were mainly on the fattest cow, namely TV.
Suddenly, Video on Digital and Social Media became the new thing. The challenge now is to prove that a Video campaign on Digital and Social Media, is way more effective than TV, or can add more incremental each if added to any TV campaign. Of course, this had to be proven by Digital or Social Media publishers themselves. Everybody had to believe that and never dared to question this. As a result, we started hearing people mourning even TV and pledging their loyalty to Digital.
However, many factors came into play and the game started to stabilise: 1- People became more educated and
knowledgeable. 2- People started to understand that Digital is a channel similar to any other media and cannot work alone. 3- People started to understand that digital giants cannot be the players and the referees at the same time and for the first time, we started to hear this coming from big industry players.
So the need for 3rd party measurement companies increased and every single study done by Ipsos or any other measurement company, showed the big effect of traditional media in a marketing mix. It also showed that Digital, similar to any other media, cannot work alone. People just needed to understand more about digital ad effectiveness compared to campaign effectiveness on TV and other media. People want to understand the effects of ‘likes, clicks’, and most importantly about video viewability.
People finally realised that Digital is a channel to be used with different media. Nonetheless, what also became clear is that at times Digital could be used on its own, depending on the product, the strategy, or even the sales platform. So, for the first time this year, we started to hear that Digital in our region needs to be organised. As a result, there is a very important initiative happening now, with the IAB in MENA planning to organise this digital industry. We also started to hear people learning when to use Digital and when to use Offline.
Looking at the numbers of 2016, excluding Online, our numbers, as most of you know, are based on rate cards, which means those numbers are inflated and continue to be so as long as the market is not transparent and media offering competitive prices. However, and despite all the inflated numbers, the total advertising expenditures in the region (excluding Online) decreased in most countries except for Egypt, who despite all its problems witnessed a growth of 25%. The Pan-arab market is stable, but all the other markets who rely mainly on Print, have dropped heavily. KSA went down by 18%, Kuwait by 20% and UAE by 9%.
Analysing the numbers by Media, TV got the lion’s share with 75% of the total expenditures in the MENA region. Egypt grew by 9%, while Newspapers witnessed an extremely bad year falling 23%. Magazines declined by 19% and Outdoor media grew by 4% and Radio by 2%.
Looking at the numbers by brand, Dettol was number one in the MENA region in terms of Adex, followed by Saudi Telecom and Etisalat in 2nd and 3rd place. Dabur came in 4th, Pepsi in 5th, Coca Cola in 6th, and Samsung 7th. The 8-10th positions belonged to Vodafone, Al Marai and Zain. What is interesting to note is that of the top 10 brands, 4 are telecom, which means that in terms of categories, the telecommunication category is in 1st place, Real Estate in 2nd, Cars in 3rd, followed by banking and Restaurant.
I am happy to report that this is the first year we publish online advertising expenditures separately, not within the total. Saudi Telecom is the number one brand online, followed by Zain and Mobily in 3rd position, Samsung came in 4th place, Toyota 5th and Mcdonald’s in 7th. The 8-10 places belonged to Ford, Nestle, and Chevrolet. The number 1 website attracting the biggest number of Ads is Youtube, MBC is 2nd, followed by Koora, Dubizzle in 4th, and Yahoo in 5th place. The remaining 6-10 spots belonged to Al Riyadh, Khaleej Times, Al Arabiya, Timeout Dubai, and Gulf News.
In 2017, based on my discussions with many agencies and advertisers, budgets
shifted from Offline to Online and will reach a maximum ceiling of 20-25% of the total budget, which is very realistic and optimistic. Some clients have shifted from Print and to a lower degree from TV. On a more positive note, some clients will be increasing their budgets in 2017 by using Digital. On a more pessimistic front, some clients informed me that they will continue cutting budgets in 2017 and will mainly use digital. Not surprisingly, those clients have one thing in common, their marketing budgets are controlled by financial officers, not media specialists.
In conclusion, 2017 looks to also be a very challenging year, and something should be done to inject more transparency and education for the people working and managing the advertising and media business in our region. We should not jump to conclusion at the first sign of a crisis. We should better understand the link between Online and Offline, and deal with the latter as a channel similar to other media. In addition, we should also make sure that decisions are taken by the people
who make the money not the people who count the money.
In closing I extend a big thank you to the entire Ipsos team for working hard throughout the entire year to gather the numbers presented.