Joseph Ghossoub is chairman and CEO of the MENACOM group and a pioneer in the advertising and communications industry. The former chairman and world president of the International Advertising Association, Ghossoub is also a Knight of the Order of the Cedar, Lebanon’s highest civilian honor. Last month, Ghoussob sat down with Executive for a candid and insightful talk about his group and the regional advertising industry.
E Most estimates say that the advertising market in the region is down around 30 to 35 percent. Do you agree with this figure?
Yes I do. Definitely there has been a decrease in spending and there has been a lot of turmoil this year. As we stand today, if you compare figure-to-figure with last year, there is at least a 35 percent decrease in advertising expenditures.
E Does this apply across the board or more so in places that have been hit harder, like Dubai?
It applies most particularly in Dubai and is marginally more or less the same in other areas. However, the Gulf area has been hit by no less than 30 to 35 percent as a whole. We can hardly tell where we will be at the end of the year, but from what we see, things have started to progress and it’s coming back again. It all depends on the results that are going to be posted in November by multinationals, banks and public companies. If they meet or are near expectations, there will be some confidence. If they are below expectations, we will hit a bump in the road that will result in the recovery phase coming in much later than it should.
E So which industry budgets have you seen most affected by the downturn?
By the end of September and the beginning of October 2008, it was like you were in a room and somebody walked in and switched off the light. You had around 40 percent of the market based on real estate, around $400 million, that completely vanished. Everybody across the board reduced their spending and I mean everybody, including the automotive industry and most luxury items. In January and February, you hardly saw an ad in a newspaper. At that point things were on hold.
The first nine months of the year passed with a lot of hesitation, restructuring and overhaul. The past three months, however, have shown some good signs. In a month and a half, at the end of 2009, it will probably be the happiest moment of my life.
E WPP Group bought into MENACOM with a majority share, so it looks like it is taking over. What we’ve heard about the Lebanese losing their foothold is in fact materializing…
Today, when these companies are contractually bound by a client worldwide, they have to service this client worldwide. A few years ago, affiliation was acceptable to the international client. Affiliations are no longer acceptable because after Enron, and everything that happened in the international markets, there are new compliance standards that all multinationals have to adhere to. So actually they are bound to be available in markets with a majority share, to be able to consolidate their figures and post them on the stock exchange.
At the same time, clients were asking them to become much more transparent in their dealings. It’s not taking over. If they wanted to take over they would have acquired 100 percent. If you look at what has taken place, they did not acquire 100 percent.
E How much of MENACOM does it own?
WPP today owns 60 percent of the group, I own 20 percent and Talal Makdessi owns the rest.
E So who is the chairman now?
I am.
E But WPP can control the decision-making?
Of course. Bottom line is that today WPP has 60 percent and can decide whatever they want.
E But you are still making the decisions?
As an appointed CEO, of course.
E So WPP just has veto power if it ever needs it?
Actually they don’t. They don’t interfere at all. As long as you are running the show and you are doing the right thing and keeping them informed there is quite little interference.
E So how was your one-on-one meeting to sit and talk openly with Talal Makdessi about the issues circulating in the press?
We met to discuss differences of opinion and points of views that were just swirling around and prompted by gossip. I have always said one thing: ‘If there is a problem between me and Talal, I will solve it between me and Talal.’ As far as I am concerned, there is no problem between me and Talal. We had a meeting, most of the things were cleared up and things are fine.
E But he was relieved of his executive duties?
Nobody relieved anybody. We signed the agreement with WPP on February 28, 2008, even though they came in as partners on January 1, 2007. When we signed [the agreement], I was appointed CEO and Talal signed a contract with the title of non-executive director. And I am underlining non-executive.
E There have been statements that say the problem was mostly financial in light of the delayed payments from clients in the region. Was any of that part of it?
There is no financial problem. It was some misunderstanding that happened so that we don’t simplify things and say all this is nothing. It was like a game of Chinese whispers. It happened without us even having the chance to talk and not because we didn’t want to talk. It went from the first person to the next until it got to a point where all of a sudden people were shouting at each other. The issue got bigger and it reached a stage where at the end of the day I said: ‘What the hell is going on? Let’s sit down and see if there is a real problem.’ And when we sat there was no problem. Nobody wanted Talal to do anything he didn’t want to do and he did what he wanted.
E So why did you change the name of the Group from THG to MENACOM last year?
Earlier this year I was sitting in my office and I received the first pamphlet of the Formula One race taking place in Abu Dhabi. [The pamphlet had another company’s logo on it with the name THG.] Then I asked myself, looking at another THG with a different pamphlet and different logo: ‘Who the hell is this? I don’t have this logo. Where is it coming from?’ And then you realize that this is not a small company. This is a company that runs sports and promotions worldwide and it wakes you up. These guys are next door! They are there in the market!
Then we started doing some research and found out that there are many companies that have the name THG. You have THG holidays, THG telecommunications, THG libraries, THG steroids. THG steroids! In fact, THG does not really hold any equity or any assets in any of the companies [of the group].
We didn’t want to end up having to deal with litigation or in court for something we don’t hold as a registered trademark. So, after checking with WPP and with our lawyers about what can be done, we found that the best way around this was to forget about this name and register a trademark. Now MENACOM is a trademark for our company and if you look on Google you will only find one company.
E Managing clients’ accounts during good days is different from managing them during a crisis. What kind of change is needed to accommodate for this?
Two things are diverging here because 10 or 15 years ago when it all started, it was about networks. Then networks became distributed and then after that came specialization of services. We used to call it integrated services, meaning all these companies work together.
Suddenly these companies were no longer integrated. They had client lists, interests and bottom lines that were not the same. We are going to see a shift back to reintegration, but what kind of reintegration? This is where the real question is. And you’re not going to get it from me for free.
E So when are you going to apply your new strategy?
At the beginning of next year. Probably in the first six months, the industry is going to see a lot of pitches because clients have different mindsets; clients have different needs, different requirements and different approaches to things.
If you look at the changes that have taken place over the past three to five years and the speed of transition that took place; just think that this is going to multiply by a factor of 10 if not 100 in the next year. It’s over. Things have been let loose. So what is going to happen in the future? Nobody knows and anyone who tells you that he does must be the most valuable person in the world.
