The UAE‘s KOL Industry Is Brisk but Its Negative Risks Loom Large

A recent survey showed that one-in-six UAE companies said they had lost about $100, 000 to $250, 000 as a result of negative news about their KOL partnership.

Kroll, a subsidiary of risk control consultancy Dao Heng (Duff &Phelps) that released the report, surveyed more than 900 marketing / brand managers in the FMCG industry to explore the actual value of KOL marketing and the impact of KOL negative news on the brand.

According to the report, KOL marketing was accompanied by certain risks. Among the respondents, 85% of FMCG companies had been adversely affected by KOL’s reputation. Almost a quarter of companies claimed that their brands had been affected many times by KOL negative news.

A quarter of companies in the UAE were in the attempt to eschew any news relevant with KOL. These respondents said conservative marketing strategies helped to further improve brand performance.

Nevertheless, despite the risks of KOL marketing, the report also showed that the UAE was one of the most active markets in the global KOL marketing industry during the epidemic.

Globally, FMCG companies spend an average of $22, 151 a year on individual KOL. While the UAE's KOL marketing investment is higher than the global average, the UAE's KOL marketing budget, like the UK and the US, is the lowest in the overall marketing budget.

According to the report, two-thirds of the UAE's FMCG companies maintained or slightly increased their KOL marketing budgets during the outbreak, and nearly one-fifth (19%) of the companies significantly increased their marketing budgets.

The report also shows that 46 percent of FMCG companies will invest 31 to 50 percent of their marketing budget in KOL marketing in 2021, a fifth higher than the average marketing spending in 2018-2020, and nearly 10 percent of the companies will spend more than 70 percent of their budget.