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Sun 29 Jan 2006 04:00 AM

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Look to Iraq and Iran, industry told

The advertising industry in the Middle East needs to wake up to the potential of undeveloped markets such as Iran and Iraq or see growth falter, agencies have warned.

The advertising industry in the Middle East needs to wake up to the potential of undeveloped markets such as Iran and Iraq or see growth falter, agencies have warned.

The prediction comes as new figures confirmed that 2005 was a record-shattering year for the advertising and media industry, particularly in the UAE and Saudi Arabia.

Samir Ayoub, CEO for the Middle East and North Africa for media agency MindShare, said it was only a matter of time before the real estate-fuelled boom slowed.

“I would say that we’ve been through an unusual phase, but also a very positive one,” he said. “But this will not last — there will be a stage when we start to reach saturation point. The driving factor is real estate, but things will start to settle down and I am sure that the overall market will follow.

“Whenever we face a situation of a plateau, we must start to look at other markets to remain competitive in the longer term — that means North Africa, Iran and Iraq,” he said.

“Iraq is potentially a very promising market, obviously that will be linked to the security situation and you can’t predict how it will go, but it’s a massive market.”

Media owners have already begun to wake up to Iraq’s potential, with Beirut-based outdoor firm Pikasso having already made a sizeable investment in the country.

Antonio Vincenti, Pikasso’s CEO, said: “The potential for Iraq is huge, everybody knows that. It is a promising market with 27 million inhabitants. We already have 2000 faces there and we keep on increasing.”

Philip Jabbour, managing director at Starcom Dubai, said it was too early to turn attention away from real estate growth, especially with the increased pace of development in Abu Dhabi, but agreed that it would be good business sense for new markets to be given greater consideration.

“Real estate will be short-term,” said Jabbour, “Iran, Iraq and North Africa are booming, but there is still room for growth in the region, especially in Qatar, Abu Dhabi and Oman.”

The figures published last week by the Pan Arab Research Center suggested that overall ad spend in the Middle East rose by 17% to US$5.4 billion last year.

The figures are based on monitoring media and rate-card values, which means they tend to be overstated, although they are seen as a good indicator of market trends.

The UAE saw the fastest growth in 2005, up to US$904 million, an increase of 43% on the previous year’s figure of US$634 million, and overtaking Saudi Arabia in the process. KSA saw an estimated spend of US$891 million last year — an increase of 27% on 2004.

Other countries which recorded a sizeable rise in ad spending were Oman, up 44%, Jordan, up 42%, and Egypt and Qatar, which both rose by 28%. However, Lebanon’s awful year, triggered by the assassination of former prime minister Rafik Hariri, was confirmed, with a 4% drop in ad revenue.

Shadi Kandil, consumer insight director, at OMD Middle East, predicted a slow-down in the market within 18 months. “The boom will continue for a while, perhaps a year and a half, but once real estate slows, everything else will slow as well,” he said.

“However, other key players will still contribute hugely — car manufacturers and distributors, banking services, tele-communications, shopping malls and luxury products.”

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