Ralph Clementson is the general manager for the advertising agency Ogilvy and Mather, in Europe, Africa, and the Middle East. He is also on the board of Memac Ogilvy, the company’s Middle Eastern partner. Clementson was in Beirut last month for the Memac Ogilvy management meeting, and he spoke with Executive about the opportunities and challenges of new technologies and why the future lies in Iraq.
E It seems like the mood at Memac Ogilvy has been pretty upbeat. I’m surprised to hear that.
It is upbeat! The environment is tough, but this is a high growth region compared to France or Germany, or even the States.
E Why is that? Because there’s so much untapped potential?
It’s because of a number of things. The first thing is there are a number of markets which are still about to open up, which as yet are untapped potential. If you think of North Africa, Algeria is opening up for marketing very fast, and Libya is going to be the next market which opens up. And then if you think about the Middle East itself, Syria is opening up fast, and the next one will be Iraq. Think of the untapped potential that will be out there. It’s huge.
E Iraq, really? Are there any ad agencies there now?
They’re starting up. There are now several ad agencies in Iraq, and they’re supporting clients who are beginning to think what they can do to market their products over there. Cigarettes are still sold over there, and beers, and so on, so there’s plenty of potential there. It’s just everybody is getting onto the map, it’s still a little bit early, but give it another three years, that’s a huge potential.
So, if you look at this region, there’s a potential for development through opening up the markets, but it’s not just that. We’ve also got reasonable levels of inflation. Inflation is running at five to eight percent in quite a bit of the region, and inflation actually means growth if you think about it. The difficulty is delivering profit, for the revenues will grow as well as the costs.
E In other words, you think longt-erm.
Right. You think long-term.
The third reason is we’ve not got great penetration in various disciplines. If you just take the technology aspect, the Gulf is hugely interested in technology. I mean the number of people with two mobile phones here is enormous.
E Is technology the answer? Is that what everybody in advertising is talking about?
Yes. Every discipline of communications is interested in the impact of the digital world on their businesses. It’s changing the medium. And so, given that you’ve got a high level of technology, particularly in the mobile environment, it represents some really exciting opportunities. And in fact, probably, this Middle East world is more sophisticated in terms of its technological understanding, and particularly the youth population, than in quite a few of our western European markets.
The real problem, though, is that it’s a new technology, and it’s safe to say that to date the commercial model supporting the mobile environment is not fully worked out. So when you’re talking about communications in this space, it’s still got to be developed in a significant way, but this’ll be one of the regions in the world where it is developed.
E What do you mean that the commercial model isn’t worked out yet?
If the kids are watching their little iPhones and they’re watching their films on the iPhones, you no longer have commercial breaks necessarily. They’re no longer watching TV.
So what you’ve got is change in viewing habits, and the quest then is how do people make their money in pushing content out into this environment?
E Not a lot of people realize that YouTube doesn’t turn a profit, for instance.
People have got to get the commercial model worked out. They still haven’t. But what’s interesting is that the Gulf is going to be at the forefront of this, and it’s going to make for an exciting environment in the next five years.
E Are you saying, though, that the advertising world hasn’t figured out what to do with the Internet at all?
No, not at all. What I’m talking about is mobile TV. In the very specific area of mobile TV, I think the commercial model is still being developed. And that’s really the only area of technology that’s not been developed. And because in the Gulf there’s a lot of mobile telephones, this is actually quite important. But the digital, the interactive world, is very well developed, and we’re leading in that.
Obviously, with iPhones and the like, as the Internet and the mobile become one and the same, we’ll be partnering all our clients as they evolve into that new space. But it is a new space and it’s going to be very important here, and exciting.
E Who are the big losers in all this?
Well if we talk about the disciplines of marketing, I think what’s quite clear is traditional advertising is on its way down, because spending is shifting. The traditional advertising and offline direct mail is losing out, and interactive activity is going up. Now it’s all part of the same discipline: instead of doing an offline direct mail to someone’s house, you’re putting things online which previously would have gone in the mail.
And also, especially in the current economic environment, it’s evident that what’s going to be seen is a move towards promotional activity, where people are making cost offers on their products. So it’s those sort of moves — slightly less on advertising and direct mail, and more online and more informational type activity.
E Sometimes I wonder, with all this talk about technologies and delivery-methods, isn’t there nothing better than a clever 30-second spot? Isn’t that still the pinnacle of advertising?
The pinnacle of advertising remains the ad that sells, rather than the one that makes you laugh. It may be that one is the other, but actually the pinnacle remains the ad that sells. Particularly with clients today. They’re more and more focused on the return they’re getting from the money they’re spending. No marketing director today can go to his board and claim loads of money unless he’s able to go back and say, “Here’s the return on what you’re investing in.”
