Advertising sector starts a shy recovery

Market valued at $24 million

Opinion

By Naji Boulos
Founder of Jicébé

The Lebanese advertising sector, has slightly recovered in 2022, coming out of two ‘annus horribilis’, the years 2020 and 2021, as a result of the economic crisis and the coronavirus pandemic. Advertising expenditures in 2022 improved nicely with a total approaching $24 million, double the figures of 2021.

This growth is attributed to two factors: the pricing of advertising space, which aligned throughout the year with the ‘fresh’ dollar rate, and the parliamentary elections that took place in May. These elections are a financial windfall eagerly awaited by the media every four years. The money spent during the election period, which spans the months of April and May, was a real boost to the industry.

The $24 million figure is not official, since there is no organization that audits advertising spending (except for one, whose advertising survey is based on published rates without taking into account discounts negotiated with advertisers, or free space offered by the media). This figure is the result of a poll conducted with the main market makers in Lebanon.

In spite of this growth, we are far from the figures of the mid-1990s, when advertising spending always exceeded $100 million, peaking in one year at over $160 million. For a country that launched advertising in the Middle East, opened up the Gulf markets, founded the largest regional agencies, and enjoys a free economy and a true advertising culture, this figure is far from adequate. Taking as a reference the global average ad spending per capita of $119.6 in 2022, ad spending in Lebanon should exceed $450 million for a population of 4 million.

This ad spend increase is not uniform across all media types. Radio, and especially the printed press, have not benefited from this upturn.

With approximately $12 million in sales, Out of Home (OOH) ranks, for the first time, as the leading advertising medium in Lebanon, surpassing television. OOH is the medium that benefited most from the election campaigns, which accounted for more than 50 percent of its revenue for the year. During this period, all networks, regardless of format, were fully booked, from the South to the far North. In addition, the sector charged its rates at full price with payments required in advance. In other good news, the year-end period was encouraging with an occupancy rate of almost 100 percent. OOH remains attractive to local advertisers because it is a cost-effective, efficient and flexible medium that reaches a large audience at the right time with the right message for a lower cost than television.

In comparison, television advertising suffered greatly and has barely reaching $10 million in ad spending. The figure does not include election spending outside of advertising screens, such as editorial content, interviews, special programs funded by political parties and candidates. Television will suffer for a few more years as major advertisers withdraw from the advertising scene. Multinationals (Procter & Gamble, Unilever, L'Oréal, Nestlé, and others), and the banking sector, account for the majority of ad spending on television.

Sales of radio advertising have not surpassed $1 million. It is attracting only small advertisers. The radio medium is being abandoned not only by large advertisers but also by the station owners. The sector, which lost most of its hosts during the crisis, is sorely lacking in innovations to adapt to the evolution of radio broadcasting. The number of listeners, especially young people, listening instead to radio on digital media, especially smartphones, is increasing. It is necessary for the local radio sector to adapt to new trends. However, radio remains a trusted medium for a majority of listeners.

Printed press advertising was the biggest loser during the economic crisis and will have a hard time recovering in the coming years. The battle is lost in advance for lack of fighters. More than 30 local media have disappeared in the past four years. There remain only a few dailies, and just a few sporadically published magazines. Press advertising is in constant decline and does not exceed a few hundred thousand dollars. This trend is likely to continue in 2023. To think that this media category racked more than $30 million of yearly sales in the 1990s!

Digital advertising, especially on social networks (Facebook and Instagram are in the lead), attract small advertisers (small and medium-sized businesses, associations, influencers, etc.) After an almost complete stop in 2020 and 2021 due to a lack of liquidity and means of payment in ‘fresh’ dollars, their recovery has been timid in 2022. The amounts invested are again less than $1 million, down from $5 million before the crisis. But the potential is still there. The only downside is that this spending is not injected into local websites but mostly benefit two global groups: Alphabet (Google, YouTube) and Meta (Facebook, Instagram). Advertising on social networks offers many advantages such as gaining visibility, reaching a qualified target at very low cost, and effectively measuring the return on investment. With 4.7 billion users worldwide in 2022, social networks have become the largest market for advertisers. In 2022, social advertising worldwide revenue grew by $42 billion to $226 billion and is expected to exceed $300 billion by 2024.

What does 2023 hold? It’s shaping up to be an uncertain year even as advertisers begin to adjust to the new economic climate. It will take several years to for the local advertising industry to regain the vitality and dynamism for which Lebanon is famous.