UAE marketing: the first budget cut and the slower question behind it

“In this type of situation, the first things that get cut are marketing and advertising budgets,” Dany Aouad, the managing director of TBWA\RAAD in Saudi Arabia, told AGBI in July. He added that “smaller companies, local agencies, had to reduce their staff, if not close shop completely.” WARC, which tracks advertising investment, had expected spending in the Gulf to grow by almost 12% in 2026 from $5.1 billion the year before. After the conflict with Iran began on February 28, it lowered that forecast to about 7%, “but only if the war ends soon,” and modeled a severe scenario in which Gulf advertising in 2027 would come in almost $1 billion below its pre-war estimate. In the same article, WARC’s head of content, Alex Brownsell, made a point that matters just as much for the people working in the industry: “If you ask CEOs of most big advertising companies, AI probably keeps them awake more than what’s happening in the strait.” [1]

Marketing in the UAE has spent 2026 absorbing both of those pressures at once. The war reduced budgets quickly and visibly. AI has been changing how marketing work is produced more slowly, and it will continue to do so long after the budgets return.

The damage to the sectors that drive much of the UAE’s marketing spend has been severe. According to CBRE, Dubai’s hotel occupancy in the first half of the year fell to 56.4% from 81% a year earlier, and revenue per available room dropped 35.2%. Abu Dhabi held up better, at 66.8% occupancy, supported by its events calendar. [2] Passenger numbers at Dubai International fell 31.7% to 26.6 million over the same period, according to Cavendish Maxwell. [3] M&C Saatchi warned in April that its sport and entertainment business would be hit by canceled Formula 1 and tennis events in the region. [4] When tourism, events and travel slow down this sharply, destination marketing, event activations and the agencies that deliver them feel it within weeks.

The response from brands has been to demand faster proof that their spending is working. Sonal Chiber, a communications and marketing consultant, described “a clear short-term shift toward performance-led marketing driven by immediate ROI pressures.” [5] WPP Media’s mid-year forecast for the Middle East and North Africa reflected the same shift. It still expected the regional market to grow 7% this year to $8.4 billion, but the growth sat in channels where results can be measured closely: commerce media up 22.2% to $636 million, streaming up 38.3% and gaming up 20%, while television was expected to fall 1.9% and outdoor advertising 5.2%. The forecast anticipated “a challenging first half” followed by a stronger second half. [6]

Agencies entered this period already under strain. When Omnicom’s acquisition of Interpublic was announced, regional industry press estimated that around 750 roles in the Gulf could be affected, and Omnicom has since retired the DDB, FCB and MullenLowe agency brands globally, although Horizon Holdings said its regional FCB affiliate would continue as before. [7][8] WPP reported in August that it had reduced its global headcount by 1,267 in the first half of the year, as revenue less pass-through costs fell 5.6% to £4.75 billion. [9] Agency leaders in the region are also adjusting to what AI does to creative production. Mohammed Ajawi, chief client officer at Viola Communications, told Campaign Middle East that “‘good enough’ is no longer exceptional. It is becoming the default.” [10]

Gartner’s research shows what this looks like from the client side. Its 2026 CMO Spend Survey, published in May, found that marketing budgets averaged 7.8% of company revenue and that AI now accounted for 15.3% of marketing budgets, but only 30% of marketing teams felt ready to scale their AI capabilities, and 56% of CMOs said their budget was too small for their strategy. Ewan McIntyre, a vice president analyst, warned that “the risk is that CMOs invest in AI tools faster than they build the data foundations, processes, governance and talent required to scale them.” [11] A separate Gartner survey found that CMOs expected AI to automate 16% of marketing work in 2026 and 36% by 2028. [12] In February, Gartner reported that 65% of CMOs expected AI to change their role dramatically within two years, but only 32% believed their own skills needed to change significantly, a gap Lizzy Foo Kune, a distinguished vice president analyst, described bluntly: “CMOs can’t treat AI as something the team ‘uses’ while leadership stays on the sidelines.” [13] Gartner’s samples were drawn from North America and Europe, but the multinational and regional brands that dominate UAE advertising work to the same budgets and the same expectations.

The UAE has also changed the rules for anyone promoting a product online. From January 31, an advertiser permit under Federal Decree-Law 55 of 2023 became mandatory for paid and unpaid promotion on social media, with fines of up to AED 10,000 for operating without one and up to AED 1 million for content breaches. Martin Hayward, a partner at Pinsent Masons, called it “a watershed moment for digital marketing.” [14] For brands that rely on creators and influencers, compliance has become part of the marketing team’s job.

Hiring data from the spring shows how these forces combined. Cooper Fitch’s Gulf Employment Index for the second quarter, published in July, recorded a 4% fall in UAE hiring, the sharpest since August 2020, with sales and marketing among the functions that declined while data and AI hiring rose 4%. Its chief executive, Trefor Murphy, described companies “recruiting right up until the final stage, but not making the final hire.” [15] There are early signs that the pause is easing. S&P Global’s survey for July, published on August 5, showed the UAE’s private sector index rising to 52.7 from 50.8 and hiring resuming, although David Owen of S&P Global Market Intelligence cautioned that “the volatile situation in the Strait of Hormuz continues to make the future uncertain.” [16] Dubai’s tourism authorities have kept investing in demand. Issam Kazim, chief executive of Dubai’s Corporation for Tourism and Commerce Marketing, said in June that the emirate remained “focused on our D33 goals,” and the resident-led “A Dubai Invite” campaign drew more than 10,000 applications in its first 48 hours in July. [17][18]

Taken together, the evidence points to a market that will rehire, but not for the same roles. The marketing jobs most exposed are those built around producing large volumes of content and assets, and those tied to channels and sectors that have lost budget, such as traditional media buying and event activations for tourism. The roles in demand are those that connect spending to results: performance marketing, CRM and lifecycle marketing, commerce and retail media, marketing analytics, and leaders who can introduce AI into a team’s processes without losing quality or control. Agencies are likely to emerge leaner and more specialized, and in-house teams are likely to keep more of the strategic and analytical work themselves.

Looking to the fourth quarter, I expect hiring for UAE marketing roles to recover gradually if the July improvement in business activity holds, led by tourism, hospitality and real estate brands rebuilding demand for the winter season and by retailers investing in commerce media. Employers will remain cautious about permanent headcount while the situation in the Strait of Hormuz remains unsettled, and some will use contract and interim marketers to restart campaigns before committing to permanent roles. Agencies will continue to restructure around AI regardless of the conflict, so demand for traditional production and account management roles is likely to stay weaker than demand for data, performance and AI-literate creative talent.

For employers, the practical consequence is that the marketers who can show clearly what their work returned are scarce, and many of them have stayed in their roles through an uncertain spring rather than test the market. Securing them will take a clear case for why the new role offers more scope, more budget or more influence than the one they have.

Marketing budgets were the first thing cut when the war began, as Dany Aouad predicted. When they return, they will go to the marketers who can prove what the money achieved, and to teams that have already worked out how AI fits into their work. Brownsell’s observation about agency chief executives applies to every marketing leader in the UAE this year: the conflict has dominated the headlines, but AI is the change that will still be shaping their teams once it is over.

Sources

1. AGBI, Job cuts for Gulf ad agencies as clients slash marketing budgets, July 2026.
2. Skift, UAE’s hotel divide: Abu Dhabi holds up while Dubai sinks, August 11, 2026.
3. Khaleej Times, Dubai hotel occupancy to recover in H2 2026 after sharp first-half decline, August 18, 2026.
4. MarketScreener, reporting Reuters, UK’s M&C Saatchi warns Mideast war could hit sport and entertainment business, April 20, 2026.
5. Communicate Online, FMCG marketers adopt on-off ads as instability hits spending, March 30, 2026.
6. Communicate Online, MENA advertising market to grow 7% to $8.4 billion in 2026 despite regional challenges, June 27, 2026.
7. Communicate Online, Omnicom-IPG merger sparks consolidation and potential job cut fears across GCC agencies, November 13, 2025.
8. Campaign Middle East, MENA agencies remain strong despite major global Omnicom-IPG shakeup, December 3, 2025.
9. London Loves Business, WPP shrinks workforce as clients rein in marketing budgets, August 6, 2026.
10. Campaign Middle East, AI didn’t kill creativity in the Gulf, June 5, 2026.
11. Gartner, Gartner 2026 CMO Spend Survey Finds CMOs Allocate 15.3% of Marketing Budgets to AI, but Only 30% Are Ready to Scale AI Capabilities, May 11, 2026.
12. Gartner, Gartner Survey Reveals Marketing Leaders Expect AI Automation of Marketing Work to Double to 36% by 2028, May 11, 2026.
13. Gartner, Gartner Survey Reveals CMO AI Blind Spot, February 23, 2026.
14. Pinsent Masons, UAE influencer licence deadline looms, January 29, 2026.
15. Khaleej Times, GCC hiring falls 3% in Q2 as Strait of Hormuz disruption bites, July 14, 2026.
16. Gulf News, UAE PMI rises to four-month high after June slump, hiring resumes, August 5, 2026.
17. Gulf News, Dubai tourism pushes ahead with mega-events, global campaigns after war disruption, June 3, 2026.
18. IBTimes UK, Dubai resident-led tourism campaign, July 24, 2026.