Valued at approximately €123m in 2008, the advertising sector in Algeria has demonstrated steady growth over the last several years, having doubled in value between 2008 and 2012 to around €250m. While up-to-date figures are hard to come by, Algeria is still considered to constitute the second-largest advertising market in the Maghreb in terms of value and has the potential to become number one, with experts projecting the market will expand by over 500% in the next 10 years if annual economic growth is maintained at 5%. Demand for advertising services is expected to continue growing as local firms increase their capacity for innovative projects and as greater competition in mass-market industries necessitates investments in publicity.
MARKET STRUCTURE: Since liberalisation in the 1990s, Algeria’s advertising sector has witnessed the entrance of a plethora of new actors. Despite the continued prominence of state-owned editorial and advertising agency Entreprise Nationale de Communication d’ Edition et de Publicité (ANEP), over 2500 private advertising companies participate in the sector, according to the National Commercial Registry Centre. While ANEP continues to deal with the advertising needs of state companies and institutions, private firms handle mass advertising for expanding consumer markets like mobile phones and food products. Major actors include private domestic firms and international agencies alike that compete in a growing but fragmented market, with few firms specialising in specific types of advertising.
Though competition is not fierce, a large turnover and growing demand for sophisticated services has led to a number of large players dominating the private market, including Med&Com and Memac Ogilvy. Established in 2006, Med&Com is the first online advertising agency in the country, and Memac Ogilvy entered the market in 2007 under its direct subsidiary Memac Ogilvy Algeria, although the company has been present in the country since the early 2000s through its shares in the agency Mindshare. Major international firms are also present, such as TBWA Worldwide, represented by its local subsidiary TBWA/DJAZ, and New York-based BBDO and JWT. However, international firms do not always enjoy the highest turnover, but rather the companies most adapted to local circumstances.
“Algeria is a very unique market with a lot of potential.
It is still a developing market with its own cultural preferences, so it is important to be patient,” Benazza Arslan, deputy general manager at TBWA/DJAZ, told OBG.
ADVERTISING TYPES: According to Arslan, the most efficient media combination for reaching Algerian customers is the written press, radio and outdoor advertising, which account for over 80% of major mixed-media campaigns. Within that, newspapers are a key medium for communicating to the public, with major papers like El Watan, Le Quotidien d’Oran, Echorouk, and Ennahar serving as the most popular platform for print advertising. Prices for print ads average between €1500 and €3500, while logos can reach €5000 – still 20% lower than costs in European markets. Radio advertising is another effective means for communicating as it is one of the cheapest mediums, costing on average between €200 and €250 for a 30-second spot, outside of the month of Ramadan. Advertising agencies also rely on media buying, which encompasses around 25% of the market. Agency fees for promotional campaigns using media buying can reach roughly €15, 000-25,000 and include artwork, design and creation costs.
Broadcast has an approximately 20% share in total sector activity. Algeria’s audio-visual advertising fell from approximately 64,000 ads in 2003 to 24,000 in 2007. Though the audio-visual market has yet to gain momentum due to a lack of viewers for state television, the market holds potential, as is evident by the success of the industry in Morocco. The presence of more television channels in Algeria’s neighbour has led to an increasing reliance on audio-visual advertising in Morocco, which accounted for almost 50% of the total market in recent years. This suggests that the liberalisation of Algeria’s television market will expand opportunities in this type of advertising. Although audio-visual ads are the least utilised, this form of publicity holds the most value because it is the most expensive to produce, averaging €3000-4000 for a 30-second TV commercial and comprising over 40% of sector spending in 2009. During Ramadan, these prices can easily increase up to three times the normal cost. However, the expansion of television advertising will likely drive down prices as well for this type of publicity, with a mixed national television and radio advert campaign currently costing between €150,000 and €200,000, according to Arslan.
Another promising trend in Algeria’s advertising industry is the increasing usage of the internet. According to Le Quotidien d’Oran, during the third quarter of 2008, the sector experienced a 300% increase in web advertising in comparison with the same period in 2007. A study conducted by Med&Com also concluded that major brands and industries are increasingly utilising internet promotions, with the month of Ramadan inspiring the launch of 81 online campaigns by 40 brands. According to year-end figures, specific sectors exploring the potential of the web include the automotive industry, comprising 27% of internet publicity expenditures from 17 advertiser during 2008; the ICT and IT sector, with 14 advertisers accounting for 22% of total outflows; and the communication and web publishing industry, spending 15% of expenditures. Emphasis on this type of publicity is projected to increase with the evolution of Algeria’s IT capabilities.
OPPORTUNITIES FOR EXPANSION: At the moment significant potential exists for the extension of Algerian advertising services beyond national borders. Many Algerian firms are becoming increasingly interested in the prospect of expanding their clientele base, and creating and managing advertising products for foreign clients in other countries. Coupled with a reputation for creative campaigns, low labour costs provide Algerian publicity companies with an advantage over many of their external competitors. Indeed, Algeria’s Med&Com has already expressed interest in extending its services throughout the Maghreb region rather than developing through product expansion.
NEW REGULATIONS: Algeria hosted the sixth Euro-Maghrebian Days of Advertising and Communication to contribute to discussions concerning new regulatory initiatives in advertising. During this conference, the ninth version of the International Chamber of Commerce’s Code of Advertising and Marketing Communication Practice was approved, with the code asking attendants commit to “honest and truthful advertising, consumer protection” and “creative advertising”, according to online publication North Africa United. If the code were to be successfully adopted, it would be Algeria’s first effort at self-policing in advertising. However, while such efforts would be welcome among certain segments, critics argue that regulatory efforts will not likely be implemented in the absence of a widespread demand for new measures. “There is no demand for an independent regulator because the advertising sector is mainly made up of private sector firms,” said Arslan. The lack of private interest in a regulator was highlighted by the poor attendance of private firms at the conference. However, Arslan asserts that there is interest in creating a “harmonised” reference card for certain services that enables agencies to blacklist “bad” clients, for example those who do not pay their debts. Therefore, the government still has a key role to play to provide a regulatory framework conducive to future development.
POTENTIAL FOR FURTHER DEVELOPMENT: Though actors in Algeria’s advertising industry encounter the generic barriers impeding all businesses in the country, such as a lack of credit and administrative barriers, “there is a lot of hope for the future of the sector,” according to Arslan. Specifically, he identified improvements in purchasing power, the development of mass-market industries reliant on advertising, the opening of the audio-visual sector and an increase in foreign interest in Algeria as factors inspiring optimism for continued growth. However, there is a dearth of skilled labour that prevents firms, both foreign and local, from expanding operations. “In Algeria, there are no schools that specialise in fields like publicity, design, graphic arts and public relations, so there is a lack of know-how in the advertising sector,” said Arslan.
OUTLOOK: Though the advertising industry is somewhat underdeveloped given the size of the Algerian market, important gains are expected over the next several years. The growing role of Algeria’s youth in campaigns and the participation of international companies will continue to enhance the capabilities of advertising agencies, while the development of the internet and audio-visual markets are expected to increase the share of outlets such as television and the web. Continued growth in purchasing power and the expansion of mass-market industries will provide a further boost as well as sustained growth to the advertising sector. The role the advertising industry plays will continue to have a greater impact on Algeria’s economic development in the future.
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