Campaign Report on Worldwide Advertising (IAA Special): Egyptian media enjoy economic boom - Advertising is feeling the benefits of a confident Egypt, but operational hitches need resolving

Egypt is one country all advertisers agree can’t be ignored. Growth is the keyword in the advertising market and across the country’s economy as a whole.

Egypt is one country all advertisers agree can’t be ignored. Growth

is the keyword in the advertising market and across the country’s

economy as a whole.

According to figures from the Pan Arab Research Centre, based in Dubai,

advertising spend grew by 35 per cent last year, an increase felt by all

sectors of the media. Over the past three years, the Egyptian

advertising market has grown by 55 per cent in total. Spend on

newspapers soared by 42 per cent to USdollars 150 million while, in TV,

spend jumped by 29 per cent to USdollars 106 million. TV maintained a 38

per cent market share, while newspapers took 54 per cent of the


On top of this, the country’s economy is currently in a stronger

position than it has been for decades. Growth has increased steadily

from 3.7 per cent in 1991 to 4.7 per cent in 1995 and 5 per cent in

1996. The government predicts growth of 5.3 per cent for 1997.

The recent attack at Luxor, in which 58 foreign tourists were killed,

hit investor confidence as well as tourism and has galvanised the

government into speeding up the pace of privatisation to help reassure

the international community that Egypt is still worthy of outside


The liberalisation of the Egyptian economy and, with it, the extension

of the private sector, has furthered development of the advertising

sector and, as a result, the number of agencies has risen - in both

state and private sectors. Some international agencies have local

affiliates in the country, including Saatchi & Saatchi, Team

International, Young & Rubicam, AMA Leo Burnett, Impact/BBDO, TMI/J.

Walter Thompson and DDB Needham.

Newspapers remain the dominant vehicle for advertising, the biggest

being Al Ahram - which has editions for Europe and the Arab world -

Akhbar Elyom and Al Gomhouria. The Egyptian edition of Al Ahram is

packed with advertisements for electrical goods, mobile phones, banks,

fashion accessories and recruitment, although ads for alcohol, casinos

and the National Lottery are all banned.

Dr Samir Mohamed, marketing director for Al Ahram in London, says the

government’s push towards privatisation will have an enormous effect on

the advertising market. One of its main priorities is the privatisation

of the telecommunications sector. Ericsson, one of the newspaper’s top

brand advertisers, currently promotes mobile phones through the

government but Mohamed expects to see more advertising from competitors

once the sector is opened up and companies launch joint ventures.

Similarly, liberalisation in the car industry and cheap labour has led

to the establishment of foreign car assembly plants in the country - of

which there are currently eight, including BMW, Mercedes-Benz, Honda and

Daewoo. Production also started recently for Rolls-Royce and Jaguar. Al

Ahram has begun publishing eight-page colour supplements with its Friday

edition to help absorb advertising.

Privatisation is sweeping through the tourism industry and an overall

increase in visitors and the growth in personal incomes for the middle

and upper classes has put hotels, seaside villas and leisure complexes

among the top advertisers in newspapers.

While newspapers tend to be the favoured medium for reaching a target

audience with a high average purchasing power - given the high

illiteracy rate and low purchasing power among most of the country’s 61

million people - much of the television advertising is for the mass

market. The top brands on television last year were Ariel, Persil,

Coca-Cola and Pepsi.

Broadcasters say that although they expected to lose up to 50 per cent

of their ad revenue to satellite when it took off in the early 90s, this

has not proved the case. They point out that while the mass population

in the Gulf, particularly Saudi Arabia, enjoys a high purchasing power

and, therefore, access to satellite, this does not apply to Egypt. But

satellite in Egypt still can’t be ignored. Nile Sat is about to be

launched in the next few months and the leading stations - MBC, Future

Satellite, ART and LBC - have been quick to sign up. If advertisers only

use the medium to capture a certain percentage of the huge population,

the target audience is still potentially high. In tandem with the launch

of the Egyptian satellite, a media production city just outside the

centre of Cairo has been under phased construction for the past few

years. This year will see the beginning of construction of a huge studio

complex for television production and filming facilities.

Much of the country’s advertising is dominated by government agencies

owned by the two biggest publishing groups, Al Ahram Advertising Agency

and Al Akhbar Advertising - the source of much complaint by privately

owned agencies. They claim these agencies offer huge discounts to some


Joe Ayache, the managing director of Team International/Y&R in Beirut,

helped set up the Saatchi & Saatchi operation in Egypt in the 80s and is

now based in Beirut with supervisory powers over Team’s operation in

Egypt. ’The public agencies have a lot of power,’ he says. ’There are

certain things the government will turn a blind eye to. The government

charges a 36 per cent tax for all advertising, for example, a cost which

has to be passed on to the client. But the question has to be asked that

if you are a government agency, are you paying the tax?’

Ayache adds that the only way the private sector can compete is on

professionalism and claims private agencies talk the language of the

multinationals that are coming to the market better than the public

agencies, and are better versed in the areas of research, innovation and

media planning. ’When I helped set up Saatchis, the fight was for pure

financial issues but now the issue in Egypt for the private agencies is

creativity. Multinationals want standards they are used to in other

parts of the world,’ he says.

Wael Hussein of Saatchis in Cairo agrees a big problem for private

agencies revolves around discounts. ’On top of the 36 per cent tax on

advertising, there is a further tax for advertising prime slots,’ he


For the future, given the huge potential of the industry, many have come

to rely on the advertising industry being included in the government’s

current privatisation agenda.