Market Insight

Lebanese ad industry aims to tap into pharmaceuticals

February 28, 2014

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Lebanon’s economy and its advertising market continue to suffer from political deadlock over the electoral law and control of the internal security forces which led to the collapse of the cabinet in March 2013. The current situation has been weighing heavily on the economy, and most affected sectors are tourism and manufacturing. The tourism industry which generated revenue of €3 billion in 2012 - a contribution of 9.3 per cent to GDP - has been a major source of income for the advertising market. Loss of advertising business in the tourism industry has been driving the market to focus on other sectors to make up for the losses.

Our take:

The Lebanese advertising market is endeavouring to make up the losses by tapping into the pharmaceutical market. However, currently there is a ban in place on advertising for over-the-counter pharmaceutical products which is hindering this initiative. Lebanon is the only country in the Middle East which imposes such a ban. The Lebanese Advertising Agencies Association (AAA) is lobbying to lift this ban, but removing such a ban is complicated by the current absence of functioning political institutions. We expect the AAA to actually exploit the political vacuum and get the lift of the ban approved through lobbying influential individuals.  As a consequence, a gateway will open for the advertising market to an industry which has achieved high growth rates over the past few years, reaching a sales-to-GDP ratio of 3 per cent in 2012. Currently medical companies advertise their products only through pharmacies. The advertising agencies are anticipating that removal of the law will divert at least 50 per cent of the industry’s advertising budget towards agencies, provided no glitches will arise from syndicate of private pharmacists who dominates the Lebanese pharmaceutical market. We expect that pushing into the pharmaceutical industry will drive Lebanon’s advertising  market by 11 per cent in 2014.

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