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Saudi institution under threat from revived publishing brand

Saudi institution under threat from revived publishing brand

The Kingdom’s publishing titans clash as the august Asharq Alawsat prepares a counter-attack to Al Hayat’s aggressive bid for dominance.

August 26, 2008 8:15 by

Scott MacMillan

Marwan Dimas seems to be on a roll these days. With his company flush with revenue from the kingdom’s booming print media market, the general manager of Al Wataniya is at the receiving end of praise for his aggressive marketing of Al Hayat, a decades-old pan-Arab title. Advertisers say Al Wataniya is leaving its main rival, Saudi Research and Marketing Group (SRMG) and its flagship title Asharq Alawsat, in the dust in the battle for dominance of Saudi Arabia’s dailies scene.

And the battle is just beginning: Dimas says Al Wataniya now has its eye on more dailies. He is guarded when it comes to revealing specifics of the company’s expansion strategy, but says the publisher “will acquire new media and acquire existing media on the market.”

Since launching localized editions of Al Hayat three years ago, Al Wataniya has raised the number of home subscribers from zero to 100,000. With a claimed total circulation of 140,000, the editions bring in 200 million Saudi riyals ($53.3 million) in advertising turnover annually.

“Our fundamental strategy is to get in, very soon, one or two dailies,” he says, mentioning business, sports, and youth-oriented content as potential opportunities for specialized titles. Pressed on what titles he plans to acquire, Dimas asks, “Did I use [the word] ‘acquisitions’?” He laughs. “If I did, well then, good. I will have to find an existing title and acquire it.”

A degree of caginess is understandable. Given the number of players competing for a slice of Saudi’s print pie, many eyes are watching Al Wataniya’s next moves – not the least of which are those of SRMG and its shareholders. Asharq Al Awsat, SRMG’s most famous title, has long been seen as the newspaper of choice for intellectuals, statesmen and opinion makers across the Arab world, competing with Al Hayat for the position of pan-Arab standard bearer.

WHO’S ON TOP? As with all newspapers in the Kingdom, both titles have the support of powerful patrons: SRMG is chaired by Prince Faisal bin Salman, while Al Wataniya is owned by Prince Khalid bin Sultan, both of whom are nephews of King Abdullah. Though both papers have been critical of the government at times, they toe an editorial line that is broadly both pro-Western and pro-Saudi. But in the marketplace, neither respect nor wasta necessarily translates into financial success. “We believe that any newspaper, to be successful, needs to be commercially successful,” says Dimas. “It needs to have profitability coming from advertising sales.”

That’s far easier in Saudi Arabia than in most places in the world. Compared to ad spending in developed markets, Saudi print media is still something of an anachronism: Publishers here actually make money, and lots of it.

“While European and American publishers are in retrenchment mode, things are just beginning to get interesting in the Middle East,” Shuaa Capital wrote in a report following SRMG’s initial public offering in 2006. Two years later, the market is in the midst of a boom that few expect to abate anytime soon. SRMG posted net profits last year of 366 million Saudi riyals ($97.6 million), up 40 percent from 2006, with shareholders rewarding themselves with a dividend payout of 240 million riyals ($64 million), or 3 riyals ($.80) per share.

With no independent circulation auditor operating in the kingdom, it is impossible to identify the market leader definitively. The Kingdom boasts more than a dozen newspapers, with other leading titles including Jeddah-based Okaz (claimed circulation 250,000, according to the Middle East Media Guide), Riyadh-based Al Riyadh (claimed circulation 180,000) and Dammam-based Alyaum (claimed circulation 180,000). All newspapers are privately owned by powerful figures in the Saudi establishment. Unlike other countries in the region, the government itself has no direct vested interest in the dailies market, though editors are subject to government approval and newspapers require a royal decree to operate.

Talking to the companies themselves is unlikely to bring any degree of clarity to the murky question of who’s on top. “We are the most circulated newspaper in Saudi Arabia,” says Dimas. “I’m very sure of the figures, both of the others and my own.”

You’ll hear almost the exact same thing at his rival’s office: “On a national scale, and on a GCC scale, we’re No. 1, hands down,” says Bander Asiri, managing director of Al Khaleejiah Advertising and Public Relations, SRMG’s ad sales subsidiary.

IT’S THE MARKETING, STUPID. An informal poll of Riyadh media buyers, all of whom spoke anonymously on background, gives Al Wataniya the edge. The reason, these buyers say, is simply better marketing. Previously published only in a single international edition, Al Wataniya launched three different Saudi editions, one for each of the kingdom’s major metropolitan areas, in 2005. Its injection of 20 pages of local news – not just national news, but local news, tailored to the interests of reach region – was a bid to counter the dominance of city papers in the national media landscape. Al Riyadh is the top newspaper in the capital, for instance, yet it is nowhere to be found in either Jeddah or Dammam. “Today, Al Hayat is a local newspaper,” says Dimas.

To boost subscriptions, the company began using FMCG-style promotions tactics, giving away pens, cash prizes, and even 20 BMWs in a bid to hook readers on its brand. Asked if this amounted to marketing the newspaper like a bar of soap, Dimas replies: “Yes, but a good one. Nobody ever said a bar of soap was something cheap. A bar of soap is a very thought-out product, very well-studied in laboratories.”

According to Dimas, readers are propelled to buy newspapers by the same psychological mechanisms that lead them to buy the same washing powder time and again, even when another brand might be cheaper. “The same mechanics in the mind, in the soul, in the head and in the heart – the same thing that makes somebody go and buy Coca-Cola rather than Pepsi – is what makes you buy Okaz rather than Al Riyadh. The same mechanics. Not the scoop, not the news. The scoop and the news do not build readership.”

This year’s Al Hayat promotion uses scratch-and-win coupons where subscribers win cash gifts. Everyone wins something, otherwise the promotion would go against the anti-gambling injunctions in Shariah.

These promotions have impressed advertisers, some of whom now say SRMG appears to have become arrogant and complacent by allowing Al Wataniya to steal its thunder. “I can’t say anything against Asharq Alawsat as a quality newspaper or reputable brand,” says a buyer at one Riyadh media agency. “But Al Khaleejiah is going down.” (In the world of Saudi media buyers, SRMG is more commonly referred to by the name of its ad sales unit.) The promotions have given Al Hayat the push it needed to displace Asharq Alawsat from the top, nationwide, over the last three years, says another media buyer. “It’s not the product,” the buyer says. “It’s the marketing.”

PREPARE FOR THE COUNTER-ATTACK. Not so fast, says Asiri, who took the helm at Al Khaleejiah last year. “If you look at what Al Wataniya has been doing during the last two years compared to us, it seems like we fell behind,” he says. “But when you take into account that Al Hayat was basically introducing a new title, and their target was Asharq Alawsat, which has been on the market for 20 years, they had to invest the way they have been investing. And I don’t think it was strategically viable, from our side, to compete on the same level or using the same techniques or strategy they’re using. We had our plans, but they fell in line with who we are.”

Asiri speaks of long-term brand enhancement rather than tactical promotions. SRMG, he says, has restructured itself internally to be able to better service subscribers, establishing a separate subsidiary, Arab Media Company, devoted solely to managing subscriptions. On a tactical level, the company has responded to Al Wataniya, but in a manner befitting a more established brand. A promotion running now, for instance, offers new subscribers vouchers for purchases at specified retail outlets. The response “wasn’t as aggressive” as Al Wataniya’s initial volley, Asiri says, but with good reason: “We were not giving away 25 cars, or 40 cars, or 100 cars. … We didn’t want to dilute our brand name by attaching it to a BMW or a Lexus. We just wanted to say, ‘This is our brand, it’s worth being a subscriber and if you do so, you get this over and above’ – not the other way around.”

The company is conducting research, the results of which Asiri says will be evident in 2009, to pinpoint and quantify consumer demand. SRMG’s room to respond quickly and aggressively may be limited not only by its status, but also by its size – the company’s vast portfolio of titles takes 35 percent of the entire Saudi print advertising market – and the fact that it is publically listed. Shareholders used to taking home tidy dividends are unlikely to be sold on the idea of giving away cash, for instance, to maintain market share.

Asiri concedes one point to SRMG’s critics, which is that the company may have taken its eye off the ball when it moved into outdoor advertising sales. “I think when Al Khaleejiah went into outdoor two years ago, there was a bit of losing focus,” Asiri admits, but says he remedied this shortly after taking over by spinning off Al Khaleejiah Outdoor into a separate unit.

As for more tactical manoeuvres, the current vouchers promotion is “just the tip of the iceberg,” Asiri says. Based on its ongoing research, the company will respond more decisively next year.

A GOLDEN DECADE. Saudi publishers still have another prosperous ten years ahead of them, Dimas says, even while outdoor and digital eat away at the ad-spend pie and television takes over as the medium of choice for advertisers and viewers alike. “We are losing dominance, but we will still be prosperous,” he says. “Television is taking our place in dominance, that’s for sure. The Internet is growing, other media are also growing – we might be slowly losing dominance, but we will still be very profitable.”

Unfazed by technology that threatens to undermine “old media,” he argues that publishers sell words and pictures, irrespective of delivery method. “They used to ask whether the Web would take over the newspaper. This is the wrong problem, and the wrong question to ask, in my humble opinion,” he adds. “Newspapers are content generators. My product is my news – the way I look at my news, the way I talk, to whom I talk. Whether I use the Web or any other kind of technology is not important.”

Al Wataniya is “in the laboratory” with regards to mobile- and online-delivery methods and will invest in whatever technology the future Saudi media consumer demands, he says. “Don’t concentrate on the technology. You will buy the technology, whatever is on the market. If a podcast supplier comes and says, ‘I will do this and that for you,’ I might accept it, I might not. My concentration should be on how I produce my content, the way I talk, my tone of voice – what I present to my readers, not the way I present it to them.”

But perhaps talk of new technology is looking too far ahead. Opportunities in Saudi print media still abound. Dimas, for instance, sees a gap in media targeting the massive youth segment: No existing dailies, he says, speak the language of young people, a group with interests similar to those of the elder generation, but who want their content delivered in a different tone of voice.

Al Wataniya may not even own the next titles in its management and sales portfolio – perhaps explaining Dimas’s reluctance to commit to the word “acquisitions,” since it implies an equity buyout. “If you have an idea and your idea is good … I can provide newsroom-management solutions, strategic direction and positioning, circulation solutions, advertising solutions in terms of advertising representation, up to even managing the whole thing,” he says.

Dimas is clearly in the market for ideas. But aspiring moguls can’t wait forever for those light bulbs to come on. With the Saudi media market expected to start resembling the rest of the world’s, the window for print is closing – albeit, as with everything in the Kingdom, slowly.

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