| Kippreport.com

Power shift, Part I

September 20, 2009 9:02 by Sam Potter

Whether consumers stopped spending first, or brands started driving efficiencies early, the net outcome was the same. The amount of money flowing into and through the media industry, so certain in the boom years of 2007 and 2008, was suddenly under threat.

It was a reality check for an industry that had previously known nothing but sunshine and blue skies. In the gathering storm, contracts were instantly the subject of heavy scrutiny, and marketing budgets were hastily earmarked for potential revision ­ downwards.

“The bottom fell out of the advertising market in the fourth quarter of 2008,” says Ian Sanders, partner at PricewaterhouseCoopers and co-author of the Arab Media Outlook. “Driven by the big advertisers in the region (financial services and real estate), advertising spend fell through the floor, and that fed its way through the system. In fact, that is still feeding its way through the system.”

The tightening of company budgets is no great surprise given the circumstances, but the pattern of financial behavior in the media industry is more complex than that. Advertising revenue, the key economic measure for the industry, appears to have remained consistent through the financial crisis. On the other hand, according to quarter one and two results, pan-Arab media spend (across all media) has actually increased in the downturn. According to Ipsos MediaCT, total ad spend in the first half of 2009 was about $2.2bn, compared with just under $2 billion for the same period in 2008-­ an increase of more than 12 percent.

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Tags: advertising revenue, digital, FMCG, Media, print, Real estate