Media sector evolves after a period of challenges

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By Vigyan Arya  www.business24-7.ae 

As the year 2009 is winding up, we look back at the year that was and embark on the challenge of 2010 that will be based on the foundation of maturity and development of the industry that it witnessed this year.

Many advertisers planned their campaigns in short spurts of quarterly, as against the annual campaign. (EB FILE)
Many advertisers planned their campaigns in short spurts of quarterly, as against the annual campaign. (EB FILE)

Weathering the storm, the market and the industry has evolved with measurements and steps that many professionals believe were a necessity and had to happen sooner or later. According to PricewaterhouseCoopers Global Entertainment & Media Outlook 2009-2013, industry will see a 3.9 per cent drop in 2009 and a 0.4 per cent advance in 2010.

At Emirates Business, we followed the industry very closely and talked to some of the top professionals from the region and abroad to get a comprehensive view of the developments, the industry and the emerging trends.

The economic turmoil that shadowed not just the country or the region but the entire global market has had its toll on the media sector, too. While most international players recorded about 30 per cent decline in advertising spend, the local market, believe some media professionals, took a plunge beyond 50 per cent over the last year.

The official figure by Pan Arab Research Centre showed a 30 per cent decline in the first three quarters from $1.49billion (Dh5.47bn) to $1.94bn in the first three quarters. The government establishments seem to have come to the rescue as the largest single adverisers, despite the 26 per cent drop over the last year. By the end of the third quarter, the ad spend by government entities had gone down from $302million to 269m, according to Parc.

RTA’s ad contracts (Jan)

Dubai’s Road and Transport Authority (RTA) made the biggest news announcing some of the biggest advertising contracts that included naming rights of the railway stations and awarding their own advertising campaigns.

RTA announced the names of 13 of its metro stations after a formal bidding that saw more than 250 local, regional and international companies bidding for it. The authority called for bids from local, regional and gobal companies with a bidding fees of Dh440,000. The bids started at Dh6m for a year and could go as high as Dh12m a year, depending on the location of the station and its branding potential.

Naming rights require a commitment of 10 years, which means companies could shell out as much as Dh60m to Dh120m for a period of 10 years.

Additionally, the RTA also gave a Dh3bn boost to the advertising industry announcing the largest advertising contract with a consortium of companies. The consortium comprising three advertising companies – SMRT Media (Singapore), Kassab Media and Wellmark Communications – will plan the advertising space, and attend to design, operation and marketing of media services in Dubai Metro stations and on board train carriages. RTA revenues of this project are in the order of Dh3bn.

Emirates airline’s innovative approach (July)

A Brazilian talent, who spoke non-stop for more than 14 hours on the inaugural flight of Emirates airline to Sao Paulo landed the airline with a sought after advertising award. Emirates and London-based online advertising agency, Lean Mean Fighting Machine, won a gold award at the prestigious Creative Circle advertising awards in London for this innovative campaign.

The prize was presented for their non-stop Fernando digital advertising campaign that promoted the launch of the airline’s non-stop Dubai-Sao Paulo service.

The advert, which many thought would never fly, is based around a character called non-stop Fernando, who hoped to set a new world record by talking non-stop about his home city of Sao Paulo. Filmed at his house in the city, the marathon natter continues for the time it would take to fly Emirates from Dubai to Sao Paulo – 14 hours and 40 minutes. The cameras kept rolling; there were no breaks, no cuts and no edits.

Emirates seeks partners (August)

Emirates airline is looking for new advertising agencies in a revision of its strategy for handling their worldwide corporate communication. Maurice Flanagan, Executive Vice-Chairman Emirates Airline and Group has conveyed that the size and complexity of its business made its present ad hoc system unviable.

The airline has maintained an ad spend of around three per cent of the revenue. In 2007, the group revenue crossed all expectations to Dh41.2bn and the airline expectantly spends around three per cent of the same, that amounts to about Dh1.08bn.

The 2008 figures that were released recently by the airline have recorded a drop in the revenue, but it won’t see a proportional drop in the ad spend, according to airline officials.

New face of Emirates (April)

Boutros Boutros took over as the new Divisional Senior Corporate Communication manager of Emirates airline on March 31. This was announced in an internal communiqué from the office of Sheikh Ahmed bin Saeed Al Maktoum, Chairman of Emirates airline Group and President of the Department of Civil Aviation in Dubai.

Boutros in his job is responsible for the entire corporate communication of the group including the avionics – airline’s onboard entertainment division. He has been working with the group for more than 17 years and has been responsible for “media relations, Public Relations and sponsorships

Digital platform (March)

Media experts believe that current financial crisis, in tandem with the fast-changing demographics of the region will increase as much as 80 per cent of advertising on digital platforms like net and mobiles. Echoing the findings of the latest edition of the Arab Media Outlook 2008–2012, some speakers said broadband would make a strong impact on the media scene, bringing efficiency and cost-effectiveness.

The new edition of the Arab Media Outlook, brought out by Dubai Press Club in conjunction with PricewaterhouseCoopers has revealed that demographic factors are among the principal reasons why the Arab World is most suitable for the growth of new forms of media, such as digital media and mobile TV.

Short-term contracts (March)

In response to the current financial crunch, many advertisers planned their campaign in short spurts of quarterly, as against the annual campaign that has been the practice in the industry.

Advertising agencies have also felt the crunching pressure from clients and have to accommodate the need of the hour. Media houses, including publishers, TV and radio channels had to accommodate this new-found request from agencies and willingly taking on short-term bookings monthly.

Awards and rewards (June)

Print remained the largest target of creative minds vying for honours at this year’s Dubai Lynx Awards held as part of the Second Dubai International Advertising Festival, which started yesterday at the Dubai International Convention and Exhibition Centre.

Organisers received a record number of entries of 2,079 applicants from 165 companies representing 18 countries of the region. Out of this, there were 740 entries in the print section, with a major share coming form UAE-based agencies (454). Qatar was the only other country from the region to send entries in three digits (101). Other major representatives from the region included 30 from Egypt, 69 from Lebanon and 33 from Saudi Arabia.

International status (July)

British advertising giant WPP has gone past US-based Omnicom Group as the world’s largest owner of media agencies based on reported revenue.

Martin Sorrell as Chief Executive of WPP has been on a worldwide acquisition binge and had acquired major stakes in the region as largest marketing firm The Holding group.

Under the umbrella of WPP are some of the largest media and marketing firms including Ogilvy & Mather and JWT and other marketing, media and PR companies such as Wunderman, MindShare and Burson-Marsteller. Together these firms posted a $13.6bn in revenue for 2008 and managed to squeeze past Omnicom, which reported 2008 revenue of $13.4bn.

Dubai Lynx (October)

Following a “fraud” this year in Dubai Lynx awards, the organisers announced measures to counter any such attempts in the future. According to an official communiqué: “To establish the way forward, industry opinion has been gathered from both the organisers of Dubai Lynx and the IAA UAE Board.

For agencies to enter pieces of work that were not created for bonafide clients insults the hard-working international jury and the other, honest, entrants.”

This is in reaction to FP7-Doha pitching for the Dubai Lynx awards with a set of artworks that were not assigned by the principals.

NDTV Arabic closes operations (July)

In less than two years of its operations, NDTV Arabia saw the closure, falling prey to the current circumstances, which have lead to a sharp decline in media spend.

Officials representing the channel in the Middle East called it a “technical glitch”, but confirmed the fact that “NDTV Arabia will go off air in a day or two and most likely be back only after Ramadan period”.

However, sources at NDTV office in New Delhi conveyed that the current business environment has no room for expansion plans and NDTV Arabia will have to be put on hold until further notice.

Showtime-Orbit join hands (November)

Showtime and Orbit merged to become the largest pay TV platform in the Middle East and North Africa, confirmed official communications from both the establishment.

Investment firm Kuwait Projects Co (Kipco) conveyed that it has merged its pay TV channel unit Showtime Arabia with the Riyadh-based Orbit Group owned by Mawarid Group.

“The new company is a partnership between the Orbit Group, a member of the Riyadh-based Mawarid Group, and Showtime Arabia,” said Kipco in an e-mail statement. It did not give details on the value of the deal.

Seeking media settlement (August)

A special committee was formed to look into the matter of outstanding amount from advertising firms in the region towards media houses that will seek a solution. More than seven of the leading advertising firms were part of this combined effort that control “almost 80 per cent of the business”.

GCC-wide figure of “between Dh350m and Dh450m was pending for payment settlement. However, industry professionals say majority stake of the settlement is for agencies in the UAE.

Rotana tie-up with Disney (December)

Rotana Media Group announced a multinational tie-ups with The Walt Disney Company to enhance its content and increase viewership. The strategic partnership between the two giants, was a result of more than Dh100m deal to acquire licensing rights to broadcast Walt Disney Company content on Rotana Group channels – including Fox International Channels (FIC), the international television channels arm of Rupert Murdoch’s News Corporation.

The deal, which is set to come into effect immediately, will bring Disney and ABC’s much-loved television series and movies to the region’s viewers free-to-air on Fox Movies and Fox Series channels, including content from the Academy Award®-winning animation studio, Disney/Pixar.

DMI expands its media platform (August-September)

The oldest Arabic-language newspaper in the country, Al Bayan, moved from Arab Media Group (AMG) to Dubai Media Incorporated (DMI) by a decree of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.

Another decree the following month transferred the ownership of Emirates Business, Emarat Al Youm, Masar Printing Press and Noor Dubai Radio and TV, with all their assets, properties and rights, and all commitments and obligations, from AMG to DMI.

Article 2 of the decision provides that all workers in the aforementioned bodies shall be transferred from AMG to DMI. The decision shall be effective from the date of publishing in the official gazette.

With this step, DMI became one of the largest media establishments operating in the region in terms of the number of bodies working under its umbrella, or the broad and comprehensive range of specialisations.

Yahoo acquires Matoob (August)

Yahoo acquired Maktoob, a very popular Arabic web portal that offers services including search, payments, social network, and auctions. The MaktoobBusiness Twitter acccount notes the deal will unite Yahoo’s 20 million users from the Arab World with Maktoob’s 16 million.

The deal effectively gives Yahoo an instant foothold in the market. According to MaktoobBusiness, products will be cobranded with Yahoo and Maktoob, with the deal completing in the fourth quarter and new products rolling out next year.

However, the deal does not include a number of Maktoob’ products, including Souq (an eBay-like auction site), CashU (prepaid card payment system), Araby (search), and Tahadi MMO games. These will become part of Jabbar Internet Group, which we hear may be headed by one of Maktoob’s founders.

Predicting beyond 2010

Next five years will see a very slow pace of growth in the entertainment and media as every sector of entertainment and media industry has been impacted by the current economic gloom, according to PricewaterhouseCoopers Global Entertainment & Media Outlook 2009-2013.

The global entertainment and media markets as a whole, including both consumer and advertising spending, will grow by 2.7 per cent compounded annually for the entire forecast period to $1.6trn in 2013.

Initially the industry will see a 3.9 per cent drop in 2009 and a mere 0.4 per cent advance in 2010, with a period of much faster growth during the remaining period to 7.1 per cent in 2013, according to the report.