The relative calm and secure political environment that prevailed in Lebanon in 2009, coupled with record tourist arrivals and the parliamentary elections, saw the country’s advertising sector record an estimated increase of some 20 percent after a relatively modest 2008.
Politicians poured millions of dollars into public relations campaigns in the run up to the June polls, which — to a large extent — compensated for a drop in multinationals’ advertising campaigns. As a consequence, the outdoor advertising sector did particularly well.
A comparative analysis of the ad industry should start with a brief return to 2008, which was defined as a “tough year” across the board, witnessing less than projected growth of some 5 to 10 percent.
The main cause for the relative malaise was not so much the global financial crisis — which started with the downfall of Lehman Brothers in September 2008 and caused mayhem in the Gulf region — but the period of political instability triggered by the sectarian violence in Beirut and around the country in May 2008. Advertisers placed campaigns (temporarily) on hold, while the number of tourist arrivals were a fraction of the record number expected.
Unlike regional advertising capital Dubai (see box on next page), Lebanon was not directly hit by the 2008 global financial meltdown. The indirect consequences of the crisis — a lack of consumer confidence and shrinking advertising budgets — were expected to be felt over the course of 2009 and 2010, but this predicted downturn has yet to materialize.
According to market research firm Ipsos, total advertisement expenditure (based on official “rack rates,” which are likely higher than the final agreed price) amounted to $809.3 million by the end of October; slightly more than the $808 million spent on advertising in the whole of 2008. It is expected that this year’s total will amount to some $960 million, which would represent an increase of 20 percent compared to 2008.
As in previous years, television saw the highest spending, with 74 percent of the total, followed by outdoor advertising (10 percent), newspapers (6 percent), radio (5 percent) and magazines (4 percent).
The top advertising sectors in 2009 remained hygiene and beauty care (19 percent), entertainment and leisure (14 percent), banking and finance (7 percent), non-alcoholic drinks (7 percent) and automotive (6 percent).
It should be stressed however, that these are figures based on official ‘rack rates.’ In real terms, the total ad spend is significantly lower. It is widely acknowledged that official rack rates are not a given, but rather “the starting point of bargaining.” Sponsorship deals, advertisement exchanges, client incentives and promotions further obscure the true volume of the market.
“The market in real terms is not worth more than some $125 million annually,” said Georges Abdel Malek, president of the Advertising Agencies Association (AAA) in Lebanon.
Founded in 1959, the AAA defends the interests of the industry and its individual members: 42 active and 30 non-active agencies, employing some 4,000 to 5,000 people.
A reflection of the global market, the Lebanese advertising industry is dominated by international brand names such as Impact BBDO, Leo Burnett, Grey and Fortune Promoseven, which are part of the four giant groups that dominate the advertising world.
Known as the “Big Four,” Omnicom, Interpublic, WPP and Publicis had a combined global turnover of some $35 billion in 2007, and employed some 157,000 people in more than 100 countries.
“They indirectly control some 80 percent of the Lebanese market, while the remainder is in the hands of smaller local agencies,” said Abdel Malek.
Advertising spending share by market sector
Lebanon (January to October 2009)
Distorted truth
“2009 was an exceptional year,” said Joe Ayache, managing director of Impact BBDO, Lebanon’s biggest advertising firm in terms of annual turnover. “The main event [of the year] was, of course, the parliamentary elections, while the country remained calm and witnessed a record number of tourist arrivals.”
In addition, the elections and summer holidays were followed by Ramadan, while the Christmas peak is still to come. Other main events included Beirut hosting the Francophone Games and being the 2009 World Book Capital.
“The elections pumped millions of dollars into the advertisement market, which essentially covered the ‘black hole’ caused by the decrease in the advertising budgets and campaigns of multinational firms,” said Paul Boulos, regional director of business development at Drive Communication.
A member of the Japanese Dentsu network — one of the world’s largest advertisement brands — Drive was long known as “the automotive agency,” because its sole big client for many years was Toyota. However, in recent years Drive has expanded its client base. In Lebanon, it won contracts with many new clients and expanded its staff.
“Lebanon is not a volume market compared to the rest of the region, which is dominated by Saudi Arabia, Egypt and Turkey,” said Boulos. “But I think it is good for an ad agency to have a presence in Lebanon, as here is where it all began in the 1970s.”
“The Lebanese started it and they are still omnipresent in the regional market, even though the [center] has moved to Dubai,” Boulos added
Abdel Malek was careful, however, not to perpetuate a “hallelujah” atmosphere, warning that the election injection had brightened an otherwise bleak outlook.
“The elections may have produced a good 2009, yet they are a one-time event and cannot make up for the structural decline the sector has witnessed since the 1980s onward, when Dubai started to take over Beirut’s role as the center of regional advertising,” he said.
Outlook
Should the socio-political situation in Lebanon remain calm, most industry insiders are confident the coming year will be a positive one. The banking sector is expected to remain strong with a huge cash flow and tourists will continue to come.
The distribution of annual ad spend over different types of media is unlikely to change much, with the lion’s share going to TV, followed by the outdoor sector. As elsewhere in the world, print media may suffer on the hands of digital and other new types of media.
There is still much growth potential in developing publicity content for new media, such as the Internet. Lebanon has so far been lackluster here, certainly when compared to the United States and Europe, where the Internet is a main pillar of the media mix.
Beirut is likely to keep growing as a regional production center of commercials and music videos, while it is highly unlikely that the country will reach a solution regarding the existing billboard jungle, no matter how illegal a large part of it may be.
