Arab advertising market set to top $5bn as digital booms

The value of the advertising business in the Arab world is forecast to top $5 billion this year, propelled by strong growth in the online market, according to Deloitte.

Total spending on advertising was estimated at $4.9bn last year, but a bigger focus on websites, smartphones and tablets will help push this higher in 2013, said Santino Saguto, a Middle East-based partner at the consultancy and accountancy firm.

It is “very likely” that total spending – including advertising in newspapers, magazines, radio, online and other media – will exceed $5bn this year, Saguto said.

“It’s linked to the economic growth in the region. There are still some uncertainties in markets like Egypt. But the trend is increasing confidence in countries like the UAE and Qatar,” Saguto told Al Arabiya.

Growth of the advertising market this year would mark a continuing recovery in the industry, which was hit hard in 2009 by the financial crisis, and again in 2011 by the Arab Spring. The industry was worth around $5.6bn in 2008, according to the Arab Media Outlook, which Deloitte also contributed to.

Deloitte forecasts that the Middle East’s digital-advertising market will grow by 35 percent annually, and by 2015 account for 10 percent of the region’s total advertising spending.

That forecast was made in the Deloitte’s annual Technology, Media & Telecommunications (TMT) Predictions 2013, which for the first time included a special section on the Middle East.

The report did not lay out spending forecasts for the Arab world’s overall advertising industry. But Paul Lee, the director of Deloitte TMT Knowledge & Research, said he was confident that the market as a whole would grow this year.

That is partly because advertising spending is growing from a relatively small base, he said. “For the Arab region in general, there is fantastic potential for growth, just because some of the revenues that you’ve got are quite low,” said Lee.

Deloitte’s global TMT predictions also forecast that a record one billion smartphones will be shipped worldwide in 2013.

“This is the first year that smartphones will ship over a billion units,” said Lee. “More and more people will be buying smartphones by default.”

Despite this, not all buyers of smartphones will use the various functions available, with up to 20 percent not accessing the internet on their device, Lee said.

Another trend identified by Deloitte was the launch of more super-fast mobile-broadband networks, known as long-term evolution (LTE).

Regional operators such as STC in Saudi Arabia, and Etisalat and du in the UAE, have already launched LTE networks.

“Globally there is a big momentum towards LTE,” Lee said. “In the [Middle East] you will have well over 10 operators that launch LTE [this year].”

However, Lee said that the faster broadband services will not have a revolutionary impact on what consumers can do with their smartphones.

“What will LTE do that is different? The answer is, not that much. Effectively what you can do is more of the same,” he said.

Deloitte warned of the security risks involved in new technologies. It warned that more than 90 percent of user-generated passwords will be vulnerable to hacking in a matter of seconds.

The Deloitte TMT Predictions 2013 were launched in the Middle East in collaboration with Dubai Media City.

Mohammad Abdullah, managing director of Dubai’s Tecom Investments Media Cluster, which comprises Media City, said the report would bring “fresh, new insight” into the industry.