Digital has dominated the discussion in the world’s advertising industry recently, but in the Middle East, the economic adoption of cyber marketing has occured haltingly: spending on electronic advertising in 2011 still thrashed about in low percentages of marketing budgets. However, this did not void the region entirely of success stories in the digital marketing sphere. The acquisition of a Dubai-based specialist digital communications agency, Flip Media, by French communications company Publicis, shows that digital marketing in the Middle East could finally be catching fire.
Flipping through crisis
Although it does not give out financial performance numbers, Flip boasts clear indicators of success: after some eight years of operation, the company numbers more than 100 employees in the United Arab Emirates and India, and its UAE client base includes some of the biggest local brands. “We have worked with big UAE real estate brands such as Dubai Properties, Emaar, Nakheel, and Sorouh,” CEO Yousef Tuqan told Executive. The Abu Dhabi-based media zone ‘Twofour54’ was another high-profile account and Emirates Air was the company’s largest client for three years. Moreover, a substantial total number of projects testified to Flip’s broad appeal in the market. “I believe we worked with 109 individual clients last year,” Tuqan said.
The fact that Flip, despite depending on real estate developers for a very significant portion of its business, survived the 2009 crash of UAE real estate advertising budgets with only moderate downsizing — which Tuqan said was a reduction from 160 to about 150 employees — also speaks for the company’s acumen. An even weightier indicator of Flip’s potential is the process by which the regional leadership of Leo Burnett, core advertising agency in Publicis, developed an interest in the company.
After taking the first initiative to transform Leo Burnett into a digital agency five years ago, Chief Executive Raja Trad sought to progress the agency even further: “I wanted to strengthen this offering even more and so I came to the [Publicis] group and suggested that we would like to buy Flip Media. The group took our recommendation and we have Flip as part of Leo Burnett today. We did it first of all because we believe in digital and secondly we believe in Flip Media.” Trad explained that the group approached Flip “under an initiative of the management of Leo Burnett in the MENA region because we understand the market very well.” The initiative was further based on good experiences with the digital agency’s performance in some assignments which Leo Burnett had farmed out to them. “There are common beliefs between us and them. The culture is there, the chemistry is there,” he said. Flip had geared itself pretty much from inception toward teaming up with a big player. “What we knew very early on when we started our business was that agencies have a trajectory where they grow very quickly in the first few years and then, if they don’t make a significant leap between six and eight years of age, they go stale,” Tuqan said. “We have grown very rapidly in the last few years but we have always known that to take the agency to the next level, we need to be integrated into a larger communications company.”
How that next level will be shaped in operational detail is still “quite an open-ended requirement,” he added. “Right now, there is a lot we need to do in terms of aligning our people and aligning our businesses before we can put a very clear and definite answer on how that is going to go.”
According to Trad, the next steps in hammering out collaboration with Leo Burnett are now being sorted out in intense strategic communications, mainly between Trad and Tuqan, but the new relationship is already economically productive. “Flip is already engaging in serious engagements with clients of ours in Saudi Arabia because we have extended the services of Flip to our clients in Saudi Arabia and to one of our major multinational accounts,” Trad said.
“We have a very clear strategic thinking planned with Flip,” Trad said, elaborating that this thinking entails learning from each other and progressive integration between the two organizations, with Leo Burnett taking the creative lead. Trad and Tuqan both emphasized that Flip will remain a standalone digital brand agency for the moment, but Tuqan signaled expectations that this duality of names could last for some period. “I think we got a few years,” said Tuqan. “The thing for us is that the Flip brand is very strong and well known; we worked very hard to build a very good reputation for ourselves over the last eight years. It would be foolish for us to throw that away in order to be swallowed up by another advertising agency.”
He also pointed out that continued separation would help avoid conflict of client interests. Dilemmas regarding contradicting client interests are a common factor behind the multiplicity of agencies and units with similar operating profiles in the big communications conglomerates. However, the trend currently seems to point in the general direction of some simplification and streamlining of the convoluted global networks. For example, the Havas Group last month simplified its structure and dropped the Euro RSCG name, with chief executive David Jones giving as a reason that the group wanted to demonstrate that it was better integrated than its larger rivals. In Trad’s description, potential conflicts of client interests in the Leo Burnett-Flip setting are not likely and there is presently only one scenario of competing clients, as Flip works for Sony and Leo Burnett handles Samsung.
One enticing sideline aspect of Flip’s beginning as a Dubai-based startup is that it did not involve a UAE or Gulf-based financial investor’s eminence in the background. The founders were Indian and German, focused on tech and business, respectively, who hit the market before they were 30. Together with Tuqan, who joined Flip as CEO in 2005, the company builders combined three distinct skill sets and meshed strengths of three diverse cultures, merging successfully into a high-growth venture in the Dubai business laboratory under the economic benefits of the emirate’s Free Zone formula.
According to Tuqan, the cultural mix of the founding period crucially helped the company in combining Indian tech ingenuity and rigorous German business processes with his market understanding as an Arab, as well as with the company’s uncommon success operating on bi-local terms, with currently 40 employees in the UAE and about 75 in India.
Spreading the business
The founders of the company, included in the new structure as non-executive directors, have already reduced their direct involvement in managing Flip over the past few years. The current core management team, however, has maintained a strong multicultural character and achieved notable gender diversity, with two women in Flip’s five-person management team.
Neither Tuqan nor Trad would volunteer even the slightest information on the financial side of the acquisition deal, depriving entrepreneurs in the online communications space of another clear benchmark.
However, as Trad sees it, the addition of the digital agency and investment in Flip by the Publicis Group comes as a winning formula and at a winning time. “In my opinion, there is natural growth [in digital advertising] and I would agree that in two to three years, one third of advertising will be in digital,” he said. If that pans out, the founders of Flip will have realized significant returns in flipping the venture.