It is impossible to ignore the Arab segment. The whole Arabs advertising pie, now estimated at $10 million, is expected to double when the Arabic cable television channel starts broadcasting. The Economic Committee of the Knesset will soon decide about the tender for the channel, which will be financed by commercials. 12 organizations purchased the tender prospectus; two groups are thought to be very serious, and they include Sano and Tnuva, which are urgently pushing the matter.
The Arab segment in this context includes the Golan, Galilee, Carmel, Triangle, Negev and the cities with mixed populations, but not the Arab populations on the other side of the green line and
in the Palestinian Authority.
In the last year, there was a revival in budgets for marketing and advertising in the Arab segment. Leading companies understood that neglect of this population, numbering 1.1 million people, 20% of the country’s population, is not working out to their benefit. Pele-phone, Cellcom, Golden Lines, Strauss and the General and Maccabi Health Fund joined other leading companies that came before them like Coca Cola, Tnuva, and Osem, and started intensive advertising and marketing campaigns aimed at the Arab segment which has 15% of the purchasing power in Israel.
Many marketing managers, engaged in exhausting marketing battles, and focused upon their fellow Jews, did not pay attention to this gradually growing market. Surveys began to show that, despite demographic growth, per capita income was also growing. Only NIS 1,300 separates per capita expenditure in the Jewish segment from that in the Arab segment, whose standard of living is constantly rising.
Marketing managers wake up
Recognition of the situation, and preparations for the Arab cable television station, have started the wheels turning at the big advertising agencies. They have formed ties with Arab advertising agencies already operating in the field. Thus, there were negotiations recently over the entry of Gitam and Kesher-Barel as partners in the Al-Bustani office owned by Arieli. The deal fell through after Publicis Group International purchased control of Arieli. Kesher-Barel pursued other connections in the Arab sector, as did Gitam.
Until lately, most Israeli companies were basically satisfied with stocking the shelves, even indirectly, through wholesalers. Now there are strategic shifts. The pressure of the economic slowdown and intense competition, which make it almost impossible to increase market share in the general sector, remind marketing managers that marketing efforts in a virgin segment, which has not reached advertising and marketing saturation, could yield a gain in sales. We are talking about a separate marketing country. Politics, it appears, even percolates through to marketing terminology.
About half of the marketing oriented companies have already appointed marketing and sales managers to the Arab sector, among them: Tnuva, Elite, Osem, Aminach, Jaf-Ora-Tabori, Tami (Israel Edible Products), and Amcor. By 1998, almost all consumer product companies will make a career appointment that focuses on the Arab sector.
b>Changing consumption patterns
The pantry in the Arab household has changed its appearance beyond recognition. The jars of olive oil and sour cream have been replaced with crates of soft drinks and refrigerators stacked with dairy products. The consumption patterns of the Arab population are becoming more like western ones. 22% of the consuming public shops in retail chains all over Israel. Most purchases take place in local mini-markets.
Most customers search for goods with a pedigree and so in the area of consumer goods, they have a preference for Israeli products which have a prestigious image. A few prefer Palestinian goods or Arab products. Furthermore, Arab consumers are suspicious of special packaging meant only for them.
Consumption of food, clothing and footwear make up 40% of spending in the Arab
sector, as against 23% in the general sector, because of the large number of people in the Arab household in comparison to its Jewish counterpart.
Tnuva uses special brand names and packaging for the Arab sector. The company markets yogurt to this sector in a five liter package. It is for cooking and for making sour cream. It also markets triangular cheeses under the brand name "Min Isfeer" (From the Tales), embossed with illustrations in the style of "A Thousand and One Nights". The latter, like other products, is backed by advertising. In total, Tnuva’s expenditures for advertising in Arab media are only $700,000. This is from a general advertising budget of $18 million.
Osem invests about $400,000 in advertising in the Arab sector. Three months ago, Strauss started advertising in this sector and so far has invested $250,000. The budget will shortly grow to $600,000. Tami (CPC) has invested about $500,000.
In ’96, Cellcom commenced operations in this sector with a low profile. In the last year it has raised its marketing efforts, recruiting authorized outlets, and establishing centers in the Galilee, in the triangle and in the south. The company recently handed its advertising account to "Arabesque".
Pele-phone has operated in the Arab sector since it was set up in April ’86. The penetration of cellular communication in this sector is estimated at 10%, with Pele-phone claiming 70% of this market. Since the beginning of ‘97 Pele-phone has conducted 5 campaigns in Arabic for company products, most of them designed especially for the Arab sector.
Congratualtions in Arab "Silicon Valley"
Weddings are among the biggest money machines in this population. In the area between the Acco-Safed road and the Nazareth-Haifa road a new branch of industry is growing - banqueting halls.
" The Arab Silicon Valley" is what it’s called. The feverish wedding season lasts from July until the end of September. 70 to 80 halls have been established over the last few years and there is still a shortage of space.
A young couple buys everything to equip a home. Refrigerator, television, washing machine, video, microwave oven and mixer. Everything is brand new. A matter of tradition. Now try and work out what 9000 weddings a year means for sales in the electronic appliance and furniture sectors.
Three main agencies
Half of the advertising in the Arab segment begins with consumer goods companies. The advertising agency Al-Bustani owned by Arieli has accounts totalling $4 million.
Alongside Al-Bustani, Arabesque has been operating since ’95. It is part of the Marketing House Group, established by Roni Arieli, formerly general manager of Arieli. It reports total accounts of
$2.5 million.
There is also the Nazeret agency owned by Lotfi Mishor, who also owns the newspaper Al-Sannarra.
Another five small offices specialize in the Arab sector. Bauman Bar-Ribani, has an internal unit - dedicated to the Arab sector named Hamsah. The major agencies look wide-eyed at those firms.
Exposure to Israeli media
The Arab-Israeli population is simultaneously exposed to Israeli media and channels of Arab countries, in addition to Arab-Israeli media. Therefore, media planning takes all of these media channels into account. Research shows that the Arab sector will soon be 30 to 50% exposed to Hebrew media (mainly Channel 2 and "Yediot Aharonot"). The implication is familiarity with Israeli media advertising campaigns and exposure to the consuming habits of Israelis. The media of Arab countries have an exposure rate of 30%.
Eight newspapers are published in the Arab sector. Four of them are weekend papers. Two appear daily. There are also women’s monthly magazines.
The radio station "Voice of Israel in Arabic" is considered the most important and dominant station in the media mix.
Two of the communications media are owned by advertising agencies. The newspaper "Cal El Erev" is owned by Arieli, the owner of Al-Bustani. The newspaper Al-Sinnara and Radio 2000 - are owned by Lotfi Mishor, owner of the Nazereth agency. These two groups are also bidding for the Arabic cable channel.
Despite the growing awareness of the power of the Arab sector, and the increasing professionalism in marketing and targeted advertising, there are still companies that have yet to discover the Arab market. In this category are car importers, electrical appliance companies, and pharmaceutical and cosmetics companies. On the other hand, others do not have the patience to wait for the Arab cable channel. Soon we will be able to see commercials for Huggies and Titulim diapers that Hogla broadcasts on Jordanian and Lebanese stations. Hogla is taking off its gloves. Best, it thinks, to get in first.
207,000 households
The Arab sector numbers 1.1 million people. 80% of the population are under the age of 35, a young
population relatively speaking. The sector numbers 207,000 households. Arab Israelis are concentrated in two main areas: the Galilee (45%) and the triangle (22%). 17% live in east Jerusalem and 8% in other cities. Most residents of the Arab sector are Muslims (75%) while 15% are Christian; the rest are Druze (10%).
Among the trends that characterize the Arab sector: The increase in average family income from NIS 3,100 in ’89 to NIS 4,500 in ’94. At the same time the number of people per family has fallen, from 7.2 people in 1970 to 5.3 in 1990. Likewise, there is a big increase in the percentage of women participating in the workforce - according to estimates, 30% of all women. There is constant growth in the percentage of educated people in the population. Statistics from ’93 show that 12% of the population have more than 12 years of study, whereas twenty years ago the percentage of university educated people was only 2%.