This report first appeared in Gulf Marketing Review's May 2009 issue.

Background

About a year ago, the household products industry was described as stable, mature and saturated. Multinational companies controlled the majority of the market share, while local producers fought for an insignificant piece of the pie.

Despite the economic climate changing considerably for most sectors in light of the economic crisis, very little seems to have changed for this sector from the previous year. Saturation may be the only changing variable, as competition stiffens and fewer remain, whether merited by their success in price competition or by brand recognition advantage.

Ad Spend

According to Ayaz Salim, Client Services Director at Publinet, the FMCG sector will continue to spend on advertising unlike other sectors, such as real estate. FMCG has more highly qualified marketing experts, rather than sales specialists, and this makes a big difference.

According to an Emirates Business 24/7 article on January 13, 2009, outdoor advertising will see a drop of 10 to 15% in Dubai this year, while retail, FMCG and media are gradually replacing real estate as the top outdoor advertisers for 2009. The drop in outdoor advertising might be aided by the RTA’s contribution to price inflation as outdoor media experts feel.

Aldrin Fernandes, Chairman and Group CEO of Stroer Concept Shoof, believes that the prices of outdoor advertising will come down due to the real estate downturn, which will enable other sectors such as the FMCG to utilize outdoor to their benefit at better prices.

According to a report by Booz & Company, regional spending on online advertising is expected to grow by 25 to 35% as a result of the downturn. The region will witness a greater shift from print to online advertising as budgets are slashed.

Media Coverage

Three soap brands (Dove, Lux and Camay) and three detergent brands (Omo, Comfort and Downy) were monitored in the UAE and KSA markets’ print media in March 2009.

Evident from March 2009’s coverage along with February 2008’s media coverage, the soap and detergent industries are heavily reliant on advertisement. PR activities are little to non-existent.

In March 2009, only Dove had media coverage. The first from an Arabic KSA magazine, which was in the form of an advertorial. The second was from an English UAE newspaper, which contained the message that Dove leads in skincare and Unilever has about 50% of the soap market share.

In February 2008, where while media coverage was little, it was significantly more than in March of 2009. All six companies had media coverage ranging from 1-3 clippings in February 2008’s coverage.

Interestingly, despite February 2008’s media coverage being relatively more than in March 2009, including for Dove, it was in March that Dove’s coverage scored higher impressions with 173K, compared to 91K of February 2008. Dove also scored a higher AVE in March 2009; $15.8K, relative to February 2008’s $10.2K.

As was the case in 2008, the reason why the soap and detergent industries relay on advertising than PR is because advertising mediums like TV are the best tools for mass marketing, specially as women are the most likely targeted audience. However, while this may be true in the KSA market, it may not be as strong a case for the UAE market.

Conclusion

Soaps and detergents are not products we can easily live without even when budgets are tight. Aside from the risk of losing customers to cheaper alternatives, the sector is relatively safe.

The sector’s challenge is for companies to continue to put their names out there in more affordable ways. While outdoor advertising is becoming cheaper, and online advertising is a tempting alternative, PR stands out as a viable affordable medium to reach the masses. However, that does not seem to be a current strategy. While February 2008 featured a total of 9 clippings for the six respective brands, March 2009 had two clippings only. With marketing budgets shrinking, it would be interesting to see how each brand’s marketing strategy plays out.