WORLDWIDE ADVERTISING: Pushing into Pan Arabia - The Middle East is a complicated region where oil wealth and deep poverty, freedom and strict media regulation exist side by side

Economic development in the Middle East is extremely uneven.

However, two factors make the region attractive to marketers and media

owners from other parts of the world.



The first is oil. Although some Middle Eastern states are now

diversifying their economies to avoid over-reliance on oil, the wealth

generated by black gold has led to a higher standard of living in the

Middle East than in most other non-Western economies.



The second is ethnicity. With language and religion uniting Arabs from

North Africa right across to Saudi Arabia, it is possible to devise a

cost-effective pan-regional media strategy to complement or drive

activity in local markets.



Although ethnicity unites the Pan-Arab family, it is crucial to

understand the fault lines that divide the region, Mike Readman,

Universal McCann's network director, Europe, Middle East and Africa,

warns.



Readman, who has just returned to the UK after a lengthy stint in

Bahrain, identifies North Africa (Morocco, Tunisia, Libya), the Levant

(Egypt, Syria and Lebanon) and the Gulf (Saudi Arabia, Qatar, Bahrain

and the United Arab Emirates) as the key sub-regions.



Although Egypt vies with Saudi Arabia for regional leadership and has an

aggressive media programme, a combination of widespread poverty and

institutional corruption have reduced that market's appeal to foreign

investors. Likewise, the North African region is too underdeveloped to

make it a priority.



Instead, Samir Ayoub, the Dubai-based managing director of MindShare

Gulf, says: "The Gulf region remains the market with the most

potential." Narrowing it down, Readman says the key to regional success

for marketers in the near-term is Saudi Arabia, which has a wealthy,

young population of 20 million. Although Saudi Arabia's economy is not

growing very fast at present, this population compares favourably with

the combined 3 million to be found in Bahrain, Qatar and the UAE.



Breaching Saudi Arabia is not easy, however. As a strict Islamic

country, western businesses need to show great sensitivity. "It is vital

to understand Arab culture and how the Arab consumer behaves," Ayoub

says. In particular, local custom dictates a sophisticated approach to

targeting families and women.



Clients targeting Saudi Arabia also need to understand the logistical

difficulties, Readman says. "Within Saudi Arabia, there are cultural

differences between Jiddah (west), Riyadh (north) and Dhahran (east).

Companies need to appreciate the distinctions between the three and that

they are divided by hundreds of miles of desert."



Although Saudi Arabia is the big prize, most western companies manage

their regional strategy either from the progressive Emirate of Dubai or

Bahrain (home to Coke's regional office). Both provide easy access to

Saudi and have liberal environments for outside investors. Ayoub says:

"Dubai is the best place for international clients to have their

regional office and the vast majority are based here. The facilities are

good, the city is booming and the location of Dubai is excellent from a

strategic point of view."



The Gulf States have also made efforts to woo companies with tax

breaks.



Dubai, anxious to position itself as the Middle East's commercial and

new-media capital, has recently opened a free enterprise zone that

allows companies to repatriate their wealth with relative ease.



Qatar is another territory seeking to open up to outside influences.



Although it lags its Arab neigh-bours, it recently hosted the first

women's tennis tournament in the region (with Martina Hingis and Mary

Pierce playing).



It has also been awarded the prestigious job of hosting the 2006 Asian

Games.



With these nuances in mind, the most effective way of targeting the

Middle East is through the plethora of pan-regional satellite TV

services.



There are three digital pay-TV platforms serving the Middle East and

North Africa. These are Showtime, a joint-venture between Viacom and the

Kuwaiti investment company KIPCO, ART/ADD, which is backed by Sheikh

Salah Kamel and Prince Alwaleed Bin Talal, and the market leader, Orbit,

backed by Saudi Arabia's powerful Marawad Group. Between them, these

platforms provide a mix of Arabic and western content to around 500,000

subscribers in the Middle East.



Although the pay-TV platforms reach upscale audiences, more significant

from an advertiser's perspective are the entertainment channels MBC and

LBC, which are beamed free-to-air via satellite to the entire

region.



MBC is very popular in Saudi Arabia. Estimates from Zenith Media and

Universal McCann suggest two-thirds of Saudi homes have a satellite

dish, despite an official ban on them. Readman says: "It is hard to get

accurate figures but we believe MBC attracts a 45 per cent share of

daily viewing in Saudi Arabia. Its liberal programming makes it an

attractive alternative to state-run Saudi TV."



The widespread appeal of MBC and the Lebanon-based LBC provides a cheap,

effective media option for clients. According to Zenith, the Pan-Arab

channels are also eroding the share of ad revenue generated by domestic

Saudi media because they are subject to fewer ad restrictions and offer

more flexible prices.



That said, Zenith stresses that the Middle-East press provides an

important complementary marketing tool (see tables): "Although the

most-read newspaper in the country, Al Sharq Al Aswat, is pan-Arab, the

market is very localised and a number of Saudi titles are popular in

their areas."



Although Zenith has concerns about the growth of Saudi-only media, it

forecasts good potential for radio - a view shared by Readman. "Given

the amount of time people spend in aircon cars, I think radio is

underdeveloped as a medium," he says.



Outdoor is relatively buoyant with megasites alongside desert highways a

common sight, although Zenith sees pan-Arab TV as a threat to this

medium's revenue base.



Although Readman's division of the region into Gulf, Levant and North

Africa is a useful guide, there are other territories of note.



Firstly, there is Jordan - which Readman groups with the Gulf

territories because of its historic ties to Saudi Arabia (despite being

close to the Levant). Jordan is a small state of three million with an

ailing public broadcaster.



Long term, Ayoub believes there might be good opportunities in Jordan,

Lebanon and Syria, although he stresses that this is "subject to the

peace process which, at the moment, is not encouraging".



Secondly, there are the 80-90 million inhabitants of Iran and Iraq.

Although this massive population is being eyed with interest by

marketers, it is not, as yet, a commercial target for obvious

reasons.



Finally, Israel is treated as distinct from the Middle East to avoid

upsetting Arab sensibilities. Notwithstanding this, Israel is a media

market in transition. Last year, the country saw the launch of its first

digital satellite platform, Yes TV. Yes, which is backed by the telecoms

giant Bezeq, is attempting to break into a pay-TV market dominated by

three big cable players, Golden, Matav and Tevel. In response, the cable

players want to merge in a bid to defend their position from Bezeq.



Despite the questionmarks over long-term growth in the Middle East,

clients are keen for agencies to develop knowledge of the region.

Typically, agencies are setting up offices or signing up affiliates in

Jiddah, Bahrain, Dubai, Cairo, Beirut and Casablanca. "Clients are

putting pressure on agencies to increase their research and strategic

knowledge in order to support their marketing plans," Readman says.



PAN-ARAB ADVERTISING FORECASTS (USdollars m)

2000 2001 2002

Newspapers 14 15 13

Magazines 50 62 51

Television 535 620 682

Radio 13 15 15

Total 612 712 761

SAUDI ADVERTISING FORECASTS (USdollars m)

2000 2001 2002

Newspapers 225 227 229

Magazines 47 46 45

Television 17 15 13

Radio 25 24 23

Total 314 312 310





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