Bad Luck Haunts Advertising

Television advertising expects to see a bad year following the revolution By Lamia Hassan

(Business Today Egypt, May 2011)

Although many local and international satellite channels saw a sharp rise in viewership as unrest swept through Egypt, most also experienced a huge drop in their television advertisement revenues. The wave of protests here, as well as in several of Egypt’s neighbors, shifted what citizens watched. Instead of tuning into their favorite sitcoms, viewers were constantly checking for updates on 24- hour news channels, eagerly awaiting the latest information as Tunisia, Egypt and other Arab nations descended into chaos.

Like many industries dealing with the ramifications of the revolution, ad agencies are witnessing a serious slowdown in business, especially those specializing in television advertising. They, like many, are holding out hope that cash flows will return to this once profitable industry by the end of 2011, but insiders say they will be lucky to salvage even 50% of their business.

A murky path

When the protests began on January 25, people did not expect anything to come of the demonstrations, which meant companies and financial institutions remained

open for business. But soon after, the demonstrations became violent and commerce shut down around Cairo for at least a week. Many of those businesses stayed closed for much longer, with some shuttering offices even after former President Hosni Mubarak stepped down.

For television advertisers, the situation [would have been] even more complicated. “During the 18 days [of the revolution] it would have been impossible to advertise for anything, as this was a poke at the country and the whole world, so you definitely would not be advertising for toothpaste or anything similar during that period,” says Naila Hamdy, professor of journalism and mass communications at the American University in Cairo. “And, following that there was an economic situation, where people were still not sure and also advertisers were still not sure how to advertise.”

Usually, TV ads are booked depending on the viewership of a program or channel. The most expensive TV ads would often garner huge audiences thanks to their placement during breaks on popular talk shows. The highest rated shows enjoyed the premium advertisers, with the largest number and most costly ads booked during the muchanticipated Ramadan mosalsalat season that boasts the highests viewership ratings all year.

During the revolution, talk shows that used to discuss human interest stories, with a smattering of news, social and cultural

activities and entertainment, shifted their focus to hard-news coverage, while others shut down completely.

“For a very brief period of time at the beginning of the revolution, some channels

banned ads, but this was maybe a week only, while after this they started accepting ads

again, but the advertisers’ appetite was very low, as they were very suspicious about advertising,” says Shaheer Farag, head of business management at UM Egypt. “Mobinil and a minimal number of clients, for example, went on air with relevant [pieces] about the revolution, but there was definitely a delay in advertising during this period of time.”

UM Egypt is an ad booking and buying agency. Its job is to tell advertisers where to put their ads as well as slotting the best time for them and then purchasing that air time on behalf of the company.

Farag says even after the 18-day revolution, some advertisers were still skeptical about conditions in Egypt and whether it was the right time to go on air, particularly since most of the programming was dedicated to revolution news coverage, which isn’t something most companies had appropriate material for. He says as of April, the sector has seen a 70% drop in revenues compared to the same period in 2010.

According to “Egyptian Revolution and Impact on the Egyptian Advertising Scene,” a presentation put together by Mindshare MENA media company last month, most advertisers abstained from airing ads during the first few days of the revolution, despite a dramatic increase in viewership.

At the end of the month, the number of viewers was still high as compared to previous rates. That’s when entertainment show ratings started going up again, bringing some advertisers back to the scene with programs dedicated to Egypt, the revolution and patriotism.

In March, viewer numbers started to return to normal, but ad agencies and on air bookers were still reeling from a 27% drop in February versus the 58% increase in television- advertising profits the year before. The presentation also pointed out that advertisers were split between airing material related to Egypt, patriotism and nationalism, announcing new corporate social responsibility projects or airing their usual lineup of ads.

“I do not really see a reason why the television advertising sector will not be affected like everything else in the country that was impacted by the current events in Egypt,” says Hamdy. “All businesses are affected at the moment, and I believe things will start improving again gradually when the economy starts improving too.”

Hamdy says though the actual revolution ended after the 18 days, its effects are still rippling outward. It seems every minute brings some change, which shows the situation is not stable for the media and advertising worlds.

Mindshare MENA’s study of television viewership and attitudes between Januaryand the beginning of March 2011 shows dubbed serials were the most popular programming, followed by talk shows and Arabic series during the third week of January. In the second and third weeks of February, the highest rated programs were talk shows, with most viewers tuning into Al-Ashera Masa’an on Dream channel and then programing on the Mehwar network. During the fourth week of February and the first week of March, talk shows again garnered the highests audiences. However, during that time, advertising numbers did nto improve.

Ramadan shift

But according to Farag, there is a possibility that the sector might not be able to recoup its losses during Ramadan because fewer new and innovative programs are expected to air.

“Out of the total profits of the year, 50% comes from the ads aired during Ramadan,” says Farag. “People this year are not expected to be going after new material, so for example if last year you had 60 series, this year you will have only 10, which will highly affect the sector.”

This is a serious charge in light of the role Ramadan plays for television advertisers. During an interview with Business Today during Ramdan last year, producer Gamal Al-Adl of Al-Adl for Media Production said the number of Ramadan series rises every year, as they have become a large part of the “advertising revenue cake” and that advertisers in Egypt and the Gulf spend a combined LE 1.3 billion during Ramadan.

Farag says there will likely be fewer shows this year because many of the series produced during Ramadan require government funding.

“As the government and the ministries are now going through dramatic changes, expect that there will definitely be a drop in the number of programs or series that they used to produce before,” says Hamdy. “Also, Egyptians will not be giving their full attention to series during Ramadan like previous years because the few months between the revolution and Ramadan (set to start in August) are not enough to make everything go back to normal.”

Oxford Business Group’s Egypt 2010: Media & Advertising report states average daily viewership hours jump to seven hours during Ramadan, as compared to four and a half hours the rest of the year. It also states Egypt has the largest number of televisions per capita in the Middle East and North Africa at 200 television sets per 1,000 people.

Due to the instability, there are no guarantees that the situation will improve any time soon, but industry watchers remain hopeful.

Hamdy she expects things may start improving after elections. “Once we have a president for the country, things will improve,” she says.

Farag adds that the advertising industry grew substantially over the past few years because of real estate projects, government- sponsored ads and high competition between different agencies. It will take time before advertisers are sure what direction they want to go.

“The quality will not be compromised, on the contrary, now people are expecting even better quality, but it all revolves around stability,” he says. “If we, by the end of this year, get to 50% of 2010 [profits], we will be very lucky.”bt

 

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