The Saudi market: a survival game
Posted on April 23, 2017

Imad Beyhum, Managing Director at PG Integrated shares his sentiments regarding the overall business atmosphere in the Saudi market.

 

How would you assess the overall business atmosphere in the KSA?

The overall business atmosphere in KSA is of caution and anticipation. Marketers are being extra vigilant in spending money. Advertising spends are either being postponed or slashed on a quarterly basis, maintaining just the absolute mandatory activities that generate sales. 

 

What are your expectations regarding the volume of advertising in 2017?

Our expectation is around 20% lower than 2016, depending on the industry/category. For instance, luxury products and automotive brands have reduced budgets up to 50%, however, FMCG brands are in relatively better position. 

 

Where are clients' budget and attention being focused on the most? 

The main trend is the shift from traditional mass media towards social media content and on-ground activations. 

The brands are investing in genuine content creation rather than traditional ATL campaigns; however, there is a dearth of high caliber creative talent available in the market. Marketing spends clearly indicate a focus on short term initiatives and tactical activities to boost sales with least efforts on long term brand building. We expect only a few major new launches and that only done if channeled under sales volume generation to compensate overall income budget decline.

 

There is an increasing number of smaller agencies and one-man shop offering low price alternatives, which seem very attractive to clients on a tight budget. 

 

What are some of the biggest challenges you will be up against this year?

The biggest challenge for leading advertising agencies is to sustain their structures, retain talent and manage overheads while accepting reduced client fees and slashed budgets. In addition, there is an increasing number of smaller agencies and one-man operations offering low price alternatives, which seem very attractive to clients on a tight budget. 

 

What specific struggles will ad agencies in KSA be facing?

I believe that large agencies may suffer versus smaller specialised boutique agencies with specific offerings, low over-heads and agile response.

It is a survival game and prompt adaptation and diversification is the one way to protect the business on hand.