Outdoor ban hits KSA agencies

Outdoor advertising agencies in Jeddah claim they will be forced out of business after the city’s municipality ordered that billboards on rooftops, shopping malls and petrol stations be pulled down.

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By  Tim Addington Published  October 16, 2005

Outdoor advertising agencies in Jeddah claim they will be forced out of business after the city’s municipality ordered that billboards on rooftops, shopping malls and petrol stations be pulled down. The shock decision, announced last week, means that leases on billboards not regulated by the government cannot be renewed, forcing agencies to compete head on for expensive municipality controlled sites. The affected companies say revenues will be slashed, staff will be laid-off and the cost of outdoor advertising will rocket as a result of the decision. Many privately claim that the three largest outdoor companies working in Jeddah — Al Arabia, owned by the Choueiri Group, Tihama Outdoor, and Kassab, which it is claimed control around 80% of the market — are trying to push out the smaller operators who share the remaining 20% of the business. The agencies say they were forced into positioning billboards on private property after being priced out of municipality-controlled sites by the bigger firms. One agency head, who asked not to be named, told Campaign that annual rents on government controlled mupi sites had reached US$14,500. The yearly charge for billboards on private premises such as shopping malls and car parks, start from just US$800 a year. He claimed that pressure had been placed on the municipality to take action against smaller outdoor firms who were taking revenue away from the main players. The ruling comes as Saudi Arabia is about to join the World Trade Organisation, with many firms saying the decision prevents fair competition in the marketplace. Commenting on the municipality’s decision, Abdul Rahman Al Thferi, general manager at Messan Advertising, which owns 20 of the affected sites, said: “We will be losing 50 to 60% of our signs, which means that half of our income will go. It will affect the number of people we can employ. It will affect the spending on outdoor advertising next year as clients who are paying US$26,000 a year today will be paying US$130,000. It will really kill the business.” Samieh Hajo, executive director at Al Fun Advertising, which has around 55 of the sites, said: “The problem is that the big guys don’t want the small guys to survive. They want to kick them out, they want to monopolise the market. “I have paid three years in advance for most of the sites that I have, so I have got another two or three years before they can be removed, but it is still not a long time.” Hatem Degheady, managing director at Media-Exposure, said: “The ones that are not creative and cannot find other areas to use, will definitely go out of business.” An urgent meeting between the agencies and the Jeddah Municipality and Chamber of Commerce, which was unavailable to comment, is being sought.

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