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The impact of the Red Sea Project and the futuristic city of Neom on Saudi Arabia’s ailing advertising industry has been immediate and could be far-reaching, industry commentators told Arab News.
Boosts to advertising spend, increased investment and an emphasis on improved communication are all likely to materialize over the course of the next few years as the projects begin to be realized.
“We have already seen the positive impact of these projects and others on overall media investments in Saudi Arabia,” said Faisal Shams, managing director of media agency OMD Arabia.
“We expect this trend to be even more pronounced in 2018. The 2020 transformation plan includes a lot of initiatives and projects that have yet to be announced to the public.
“It is important to note that a lot of the big projects are being advertised on a international scale, specifically in the GCC, the US, the UK, France, Germany, China and Japan. In other words, the Saudi media market isn’t the only beneficiary of these developments.”
The Red Sea project aims to turn 50 Saudi Arabian islands into luxury tourism destinations, while Neom will be a $500 billion sci-fi city on the Kingdom’s Red Sea coast, replete with robots, biotechnology and advanced manufacturing. Both are part of a national push to diversify the country’s economy and reduce dependence on oil.
“The launch of such huge initiatives will help to free the Kingdom of dependence on oil exports and regain the trust of global and local investors,” said Assaad Kassis, general manager of UM Saudi Arabia. “Along with a clear message of modernizing the Kingdom, this change will impact the economy positively, which will lead to an increase in advertising spend.”
Any increase in advertising spend will be warmly welcomed. A faltering economy combined with budget cuts, particularly within governmental sectors, has affected advertising spend and led to a severe downturn in the advertising market.
In September, media agency Zenith predicted that total advertising spend in the Kingdom would drop by 35.7 percent this year, with further falls expected in 2018 and 2019. These figures are not universally accepted, but the decline in advertising spend has nevertheless been severe.
“This comes on top of the 30 percent drop between 2015 and 2017,” said Shams. “But we’re seeing more public spending on key projects at the end of this year, so the expectation is that we’ve bottomed out.
“Next year should be flat or possibly marginally positive. Projects like Neom will help boost investments but we will also need private-sector businesses to add their weight to the momentum and stimulate demand as the economy recovers.”
The biggest beneficiaries are likely to be out-of-home (OOH) and digital media, which is to be expected given Saudi Arabia’s position as one of the most digitally engaged societies in the world.
“So far, we have witnessed a stronger focus on OOH and digital (particularly social media), followed by TV, radio and print,” said Shams. “The announcement of these projects is often driven by the need to create an impact and alter public perception, hence the reliance on OOH for impact and digital for precision targeting and engagement.”
This will be good news for firms such as JCDecaux, one of the largest OOH operators in the country. It has been operating in partnership with the General Authority for Civil Aviation to handle advertising at the Kingdom’s 26 airports since October 2010.
“Innovative projects such as Neom offer an opportunity for early planning with regulators as they are at the initiation phase,” said Bassam Alaujan, managing director of JCDecaux Saudi Arabia.
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