Al Arabia holds biggest market share in local outdoor advertising sector; eyes expansions: CEO

Muhammed Alkhereiji, CEO of Arabian Contracting Services Co.

Arabian Contracting Services Co. (Al Arabia) took the 12th place among the world’s top outdoor advertising companies in 2019. It also held the biggest market share in the Saudi advertising sector, at 62%, in the same year, Chief Executive Officer (CEO) Muhammed Abdelellah Alkhereiji told Argaam in an exclusive interview.

Alkhereiji unveiled the company’s expansion plans for local and overseas markets over the next three years, noting that Al Arabia plans to upgrade its billboards to digital billboards. It also plans to increase advertising aspects and space, and win new contracts.

“Al Arabia did not ever incur any losses. Even during the COVID-19 crisis, the company was able to quickly adapt to the pandemic, reporting a net profit of SAR 25 million,” the CEO said.

Alkhereiji also spoke about the company’s contracts, the Saudi outdoor advertising industry and the number of Al Arabia’s locations, etc.

Here’s the full interview with Alkhereiji:

Q: What is the size of the outdoor advertising sector in Saudi Arabia and what are the factors that impact this industry?

A: The outdoor advertising sector is one of the important and main sectors of advertising agencies and all companies that are looking to promote their products, despite the presence of other media, including the TV, internet, etc. However, outdoor advertisements remain the most important medium, at a time when advertisements cannot be made on other channels or videos. Moreover, outdoor advertising remains the optimum and first choice in the market, as it offers a full-fledged set of interactive digital solutions to the public, the matter that ensures access to a large number of viewers in a much shorter time, when compared to other advertising medium.

Additionally, the outdoor advertising – the oldest outdoor advertising medium – proved resilient, as it was not affected by the onslaught of digital technology. Instead, it has thrived and still has a bright future. Through the principle of ‘adapt or perish’, outdoor advertising has been able to continually adapt to changing circumstances. Outdoor advertising is experiencing a wave of prominence by incorporating digital sophistication into digital outdoor advertising media options. Some outdoor media sites can display changing videos and images in a loop with a mechanism that enables consumers to express opinions and make automated purchases without human intervention.

Spending on outdoor advertisements accounted for 32% of total advertising expenditure in the Kingdom. Advertising is expected to grow by 10%-15% annually over the next three years.

It is worth noting that the sector is affected by advertiser evaluation of the medium performance. The sector is also impacted by seasonal factors and infrastructure works, which affect the operations of billboards, especially the outdoor ones.

Q: What about the company’s rank and market share in the Kingdom’s outdoor advertising sector?

A: Al Arabia took the 12th place among the world’s top outdoor advertising companies in 2019. It also held the biggest market share in the Saudi advertising sector with 62% in the same year.

Q: How many advertising sites operated by the company by the end of Q3 2021? And how are they divided?

A: The company owns 5,376 sites, of which 472 indoor locations. It also owns 19,245 advertising billboards, of which 388 are indoor billboards.

Q: In a company report, you mentioned that Al Arabia maintained its profit even during recession stages in economic cycles, adding that no losses were incurred in the past years. How did Al Arabia achieve profit sustainability?

A: Al Arabia has not ever sustained losses for the past more than 28 years. It quickly adapted to the COVID-19 challenges, reporting a net profit of SAR 25 million, despite a four-month slowdown during 2020. This in turn strengthens the company’s ability to manage crisis and affirms its solid ties with its permanent advertisers.

Q: What are the sectors that contribute to Al Arabia’s outdoor and indoor advertising revenue?

A: All commercial sectors, especially communications, e-commerce sites, and banks. Moreover, the government sector, entertainment and tourism industries have recently joined the list.

Q: What about your future plans in terms of increasing the number of the company’s sites, contracts and digital billboard upgrade?

A: Al Arabia seeks to finalize the digital transformation of billboard, raise the number of advertising aspects and space. It also plans to venture into new projects. Geographical expansion inside and outside the Kingdom is one of Al Arabia’s top priorities in the coming three years.