The economic fallout from regional conflicts and geopolitical friction is starkly reflected in the IMF’s April 2026 forecasts, which project GCC GDP growth slowing to 1.8% year-on-year, down from a previous estimate of 4.4%. Aggregate GCC fiscal balances are projected at -1.4% of GDP, indicating that regional governments face combined budget deficits.
Every sector reacts to these conditions with heightened caution, most notably retail, an industry that requires economic stability and consumer confidence to thrive. Addressing regional turbulence last May, Richard Boxshall, Partner and Chief Economist at PwC Middle East, noted: “Resilience has become an economic priority across the GCC. Governments and businesses have responded quickly to preserve stability, maintain continuity and strengthen resilience across critical sectors.”
On the global front, WARC revised its 2026 ad spend outlook upward by 11.5%, bringing total market projections to $1.39 trillion. However, this growth carries a severe caveat: up to $94 billion in anticipated spending remains at risk due to supply chain disruptions and broader macroeconomic fallout.
The new consumer dynamics
Beyond peripheral economic pressures, fundamental consumer behavior is undergoing a structural shift. While price sensitivity remains vital during periods of inflation, research from Deloitte indicates that up to 40% of consumer brand perception hinges on non-price factors, including customer support, checkout friction, loyalty rewards, and frontline employee interactions.
Tatiana Laudati, Senior Marketing and Growth Strategist at the Middle East Social Media and Digital Association (MESMDA), highlights this shift: “People increasingly engage with brands that feel real, relatable and trustworthy. The brands winning today are building communities, partnerships and experiences that create genuine value, not just visibility.”
The operating landscape in 2026 is defined by constant transformation across converging disruptions: geopolitical tensions, economic volatility, changing expectations, and the rapid rise of agentic AI. Data from McKinsey’s State of Grocery Retail MENA 2026 reveals that consumers willingly spend when they perceive clear value or relevance. Simultaneously, trust dynamics are reshaping how products are discovered and vetted.
Alexia Nakad, General Manager, Western Europe and the Middle East at AppsFlyer, points out: “There’s also a trust shift as synthetic and AI-generated content becomes common, with audiences across the region engaging with it at scale, often without knowing it. Brands haven’t worked out what that does to credibility once it’s discovered.”
This evaluation process now happens well before initial brand contact. Ritesh Lamba, Marketing Director at Dugasta Properties, notes: “Property seekers now compare locations, developers, financing options, online reviews, and market trends long before making contact. Increasingly, they are also using AI-powered platforms and search tools to summarize information, compare options, and narrow down decisions faster.”
Authenticity and human expertise have overtaken traditional corporate messaging. Aparnaa Sharrma, Founder of Sprout Media, explains: “Trust has shifted from brands to people. Consumers increasingly buy based on expertise, authenticity, and recommendations from founders, creators, and employees before they engage with a brand itself.”
Demographic shifts further accelerate this fragmentation. McKinsey estimates that 23% of Gen Z consumers discover new brands directly on social platforms—prioritizing immediate digital relevance and convenience over traditional product ownership—while 28% utilize generative AI tools for shopping (compared to 16% of Baby Boomers). However, brand-owned websites account for only 1% of the sources cited by Large Language Models (LLMs) in consumer goods searches.
Vaishali Shah, Founder and Creative Director at Creative ID, emphasizes the importance of contextual awareness over sheer content volume: “Customers now notice the moments that matter most. What replaced volume is coherence across those moments. AI can generate content. It cannot notice which moment matters.”
Across the GCC, consumers move fluidly across physical retail, e-commerce, social platforms, and streaming networks. Navigating this requires heightened cultural intelligence. Stephanie Farah, Founder and Managing Director of Empyre Communications, observes: “Another important capability will be cultural intelligence. Trends move quickly, especially in markets like the UAE and wider GCC.
Brands need teams and agency partners who understand what people are talking about, what they care about, and how to enter conversations in a way that feels authentic.” Looking ahead, Gartner predicts that by 2028, 60% of brands will utilize agentic AI to deliver autonomous, contextual, one-to-one interactions. Furthermore, a 2026 WARC report indicates that tightening privacy laws and the deprecation of third-party cookies are driving major retailers to build localized “identity graphs” and expand proprietary loyalty ecosystems to protect their customer base.
The new CMO mandate
Chief Marketing Officers in 2026 are tasked with driving top-line growth despite flat budgets. Immediate ROI, customer acquisition, and retention have superseded passive brand awareness metrics. Addressing the false dichotomy between performance and brand equity, Laudati explains:
“The best CMOs have stopped treating performance and brand as competing priorities. A brand creates future demand; performance captures existing demand. The challenge is designing measurement frameworks that recognize both.”
This commercial mandate is crucial across the GCC, where governments are driving an estimated $169 billion technology spending surge across the MENA region—including $93 billion to $121 billion across 174 data center projects, according to legal firm Crowell.
Discussing measurement evolution, Nakad states: “Growth playbooks built on last-touch attribution and broad reach are breaking down. Privacy changes and platform walls make data increasingly partial. What’s replacing it is owning your measurement infrastructure: first-party data strategies, probabilistic modeling, and understanding signal strength. This shift is especially visible in the GCC’s retail media and super-apps.”
While Deloitte’s 2026 State of AI in the Enterprise report notes that 66% of Middle East organizations achieve efficiency gains through AI, only 20% report top-line revenue growth. The study adds: “One-third (34%) of surveyed organizations are starting to use AI to deeply transform—creating new products and services or reinventing core processes or business models.”
Modern CMOs must connect AI initiatives directly to financial accountability and enterprise value. As Farah notes: “The skill CMOs need most is the ability to explain brand value in commercial language. Brand building cannot be presented as something soft or intangible. It needs to be connected to trust, recall, market share, pricing power, and long-term customer preference.”
According to Gartner’s 2026 CMO Spend Survey, marketing budgets remain constrained at 7.8% of company revenue, with CMOs allocating an average of 15.3% of their budgets to AI. Yet, 70% of marketing organizations lack the operational maturity required to scale these tools. Ewan McIntyre, VP Analyst and Chief of Research at Gartner Marketing, states: “CMOs recognize AI’s potential as a force multiplier for growth, efficiency and transformation, but most marketing organizations are not yet built to capture that value.”
By contrast, AI-mature organizations allocate over 21% of their marketing spend to AI initiatives and command higher overall budgets averaging 8.9% of company revenue. Meanwhile, dentsu projects that algorithm-driven advertising will account for 71.6% of global ad spend in 2026, forcing marketers to rely on machine learning for campaign targeting and execution.
The AI inflection point
Artificial intelligence has evolved from an efficiency tool into a primary transaction channel. Nakad observes: “Real AI value is showing up in demand forecasting, personalization at scale, and now increasingly in commerce itself. Carrefour recently became the first major global retailer to let shoppers complete a purchase directly inside a ChatGPT conversation. Brands assume AI’s value stops at optimization, when it’s already reshaping where transactions happen.”
Deloitte reports that AI conversational tools currently generate 15 to 20% of retail referral traffic, with AI agents projected to influence up to 25% of global e-commerce sales by 2030. However, technology alone is insufficient. Sam Grogan, Founder of Meteor Marketing, stresses: “AI can generate content in seconds, but it can’t decide the right message, audience or positioning. Businesses that combine AI with human judgement will always outperform those relying on automation alone.”
Yogesh Khanchandani, Co-Founder and Chief Business Strategy Officer at Pivoroots, adds: “The real value of AI shows up in demand forecasting, dynamic pricing, and media and content optimization. The misconception is treating AI as a bolt-on tool for isolated tasks rather than as a layer across the entire workflow.” Enterprise commitment is reflected in major strategic moves: in January 2026, WPP Enterprise Solutions formed a multi-year Strategic Collaboration Agreement with AWS, followed by an expanded partnership with Adobe in February to scale agentic workflows across global enterprise clients.
Retail and financial media networks (RMNs and FMNs)
To enhance customer retention and lifetime value, Deloitte’s survey of 330 global retail executives reveals that 46% are prioritizing omnichannel integration, 36% are strengthening loyalty programs, 26% are actively deploying AI personalization, and an additional 35% plan to deploy personalized AI recommendations within the next year.
Retail Media Networks (RMNs) represent the fastest-growing digital advertising sector, with eMarketer projecting global spend to exceed $174 billion. According to Martech.org, building a custom proprietary retail media build requires $2 million to $5 million and 12–18 months, whereas utilizing existing RMN infrastructure costs between $100,000 and $500,000 with a three-to-six month go-to-market timeline.
Simultaneously, Financial Media Networks (FMNs)—operated by banks, card networks, and payment apps like PayPal—are transforming targeting by utilizing verified transaction histories across all consumer purchases.
For example, Mastercard Commerce Media (processing over 160 billion transactions across 500 million enrolled consumers) claims “up to a 22-times return on ad spend.” Evaluating the shift toward closed-loop channels, Khanchandani notes: “In a climate where every dollar has to be justified, that level of accountability is winning out over broad brand exposure, even if the two aren’t really substitutes.”
Shruti Solanki, Founder and CEO at Nucleus Marketing Management LLC, adds: “These platforms know what people are actually buying, not just what they’re interested in. For advertisers, that’s incredibly valuable. Instead of paying for awareness and hoping it turns into sales, they’re putting money into platforms where they can connect advertising directly to revenue.”
Navigating the attention crisis
Consumer attention across streaming, social media, creator networks, podcasts, and CTV/OTT platforms is more dispersed than ever. David Quaife, Managing Director MENA at Pattern, highlights this complexity: “Today’s consumers expect to discover, compare and purchase products wherever it’s most convenient, from marketplaces to social commerce to quick delivery apps. They also have high expectations for accurate product information, competitive pricing and reliable availability. Many brands still underestimate how quickly shoppers move between channels and how consistently they expect the same experience wherever they choose to buy.”
WARC’s The Future of Media 2026 report notes that paid search, social media, and retail media collectively capture nearly 80% of global ad spend.
Commenting on this shift, former Mastercard CMCO Raja Rajamannar stated: “We have taken permanently 70% of our advertising dollars out.” Mastercard redirected those funds into experiential marketing, sponsorships, and direct engagement. Similarly, regional brands are shifting dollars toward community-driven approaches. Lamba notes: “In real estate, brands are seeing better outcomes through hyper-localized content, community storytelling, customer advocacy, and data-led personalization that addresses specific buyer needs and stages of the property journey.”
The agency reset
As generative AI automates routine asset production, media planning, and reporting, agencies are undergoing structural transformation. Grogan notes: “The agencies that will thrive are those offering expertise, judgement and measurable commercial value rather than simply delivering creative assets.”
Farah outlines the evolving agency-client relationship: “AI can help produce captions, ideas, visuals, reports, and drafts very quickly. Clients need agencies that can tell them what matters, what does not, what will resonate, and what could damage the brand. They need strategic thinking, senior counsel, cultural understanding, media relationships, crisis management, and creative direction. The agency role is shifting from execution partner to business partner.”
Shah concurs, emphasizing the enduring necessity of human relationships and strategic intuition: “AI can produce a campaign in minutes, and increasingly for free. (But), what it cannot do is replace an agency’s black book, built through years of relationships: the supplier who turns a job around overnight, or the judgement to push back on a brief before it becomes an expensive mistake.”
This structural realignment is evident across global networks. In February 2026 restructuring program to simplify operations, consolidate agency brands, accelerate AI adoption, and deliver £500 million ($660 million) in annual savings by 2028. Consequently, talent acquisition has shifted restructuring program to simplify operations, consolidate agency brands, accelerate AI adoption, and deliver £500 million ($660 million) in annual savings by 2028. Consequently, talent acquisition has shifted toward data scientists, AI specialists, customer journey architects, and commerce strategists.
Emerging growth engines
New growth models are replacing traditional ad structures:
Retail Media Networks: RMNs deliver operating margins between 50% and 70% (McKinsey), allowing brands to tie ad spend directly to closed-loop point-of-sale data.
Creator Ecosystems: The IAB projects creator economy ad spend at $37 billion (a 26% YoY increase) in 2025, and expects it to hit $44bn in 2026, driven by long-term ambassador partnerships and custom AI influencer personas.
Programmatic and OTT Expansion: According to Mordor Intelligence, the Middle East and Africa programmatic advertising market will expand from $20 billion in 2025 to $21.6 billion in 2026, reaching $31.6 billion by 2031 (7.9% CAGR), boosted by regional mobile adoption and CTV growth.
Winners, losers, and the human element
Succeeding in this era depends on clean data structures and agile execution rather than basic tech adoption. Darius LaBelle, Managing Director, Middle East at November Five, explains: “Data layer readiness, not AI-readiness, separates the winners whose data can serve a real decision at the right moment a customer needs it. MIT’s 2025 study of enterprise AI found 95% of AI pilots delivered no measurable impact, and the failure was not the model but that systems could not integrate or learn.”
Solanki adds regarding the modern buyer journey: “Customers don’t buy the way they used to. Someone might first see you on Instagram, Google your business, ask ChatGPT if you’re any good, check your reviews, watch a YouTube video, and only then decide whether to contact you. Most brands are still thinking channel by channel. Operational discipline separates market leaders from stragglers.
Khanchandani notes: “AI fluency will matter less than actually operationalizing it. Teams that build it into everyday output, briefs, creative, media plans, and reporting will simply outrun those still piloting it.”
Regional leadership in advanced technology is strong: Confluent’s 2026 Data Streaming Report finds that 38% of organizations in the UAE and Saudi Arabia have agentic AI deployed in production—among the highest rates globally. However, technology must be balanced with human connection.
Edwina Salvatori, Managing Director – Middle East and India at Hopscotch Season, notes: “What will separate winners from losers will first be AI fluency and knowing how to work with LLMs. The second is the ability to create genuine human connection as AI becomes part of everyday life. Forrester predicts that in 2026, one-third of consumers will deliberately choose offline brand experiences over online ones, while brands that over-rely on AI risk eroding customer trust.”
Salvatori continues: “Brands that will win won’t choose between technology and people but know how to combine both. AI optimizes the journey, but EQ creates the reason people choose, connect with, and remember a brand.” Laudati agrees: “Every brand will have similar technology. Few will have the strategic discipline to ask better questions, interpret data, build distinctive brands and make decisions quickly.”
Infrastructure remains a critical hurdle, with nearly three in four regional IT leaders citing real-time data-processing bottlenecks, data quality concerns, and skills shortages. Karim Azar, AVP and GM at Confluent Middle East, observes: “The focus on data streaming as a strategic priority reflects an understanding that sustaining AI performance at scale requires the right data infrastructure underneath it. I see the Middle East as well positioned to lead that next phase.”
Addressing data fundamentals, Shaun Clowes, Chief Product Officer at Confluent, notes: “Most organizations do not have an AI investment problem; they have a data problem. Too many AI systems are still being built on fragmented data, batch processes, and infrastructure that was not designed for continuous intelligence.”
Ultimately, sustainable growth requires moving past vanity metrics to focus on peak customer experiences. Salesforce data indicates that 73% of consumers state one exceptional experience raises their expectations across all industries. Concluding on customer value, LaBelle emphasizes: “Brands still benchmark within their sector and measure satisfaction as an average. But people don’t remember average, they remember the peak and the ending.”
Citing Harvard Business Review research showing that emotionally connected customers are 52% more valuable than merely satisfied ones, LaBelle notes: “As an industry, we are still chasing tactical metrics, an old problem.
This article appeared in the October 2026 print issue of Communicate, which has more insightful analyses, interviews and articles. Read the full issue here
