A starving artist is a good artist. That romantic but ludicrous notion has been retired in the last century, but the view that harsh times bring more creativity in business may still ring true. The Middle East advertising industry, which has experienced a range of economic challenges since 2008, has started 2012 on quite humble footing.
In February 2011, regional advertising leaders told Executive that they were expecting a growth year in 2011 despite sharing their uncertainty over how the Egyptian uprising would play out, yet the voices this year are very solemn when it comes to business performance.
Hard knocks in 2011
“Some of us hate to admit it but the reality is that the business is facing challenges. Our memories tend to be short but the reality is that the Middle East advertising industry went through one exodus after the other,” said Ramzi Raad, chairman and chief executive of TBWA/Raad, an affiliate of New York-based Omnicom Group, which in 2011 reported almost $14 billion in global revenue, one of highest turnovers in the world of marketing communications conglomerates. “In 2011, the [so called] Arab Spring brought a new reality to the Arab world which people tend to underplay but whenever the brand product was affected, so was the business.”
Joe Ghossoub, the chairman and chief executive of Menacom Group, which is affiliated with WPP, agreed. “This thing [the Arab uprisings] has not settled yet and my prediction for 2012 is that there will also be extra pressures on revenues and at the same time on performance.”
Others take a graver view of the year to come. “There was no growth in 2011 — if we take the MENA region as a whole, drops were more acute in some markets than in others but there was an overall drop,” said Raja Trad, chief executive for Leo Burnett’s MENA branch. “All the projections for 2012 also suggest that there will be no growth,” he added, citing reports by regional firm Pan Arab Research Center (PARC) and by Zenith Optimedia, an international reference on advertising industry performance and projection. Leo Burnett and Zenith Optimedia are both members of Paris-based Publicis Group, the world’s third largest advertising conglomerate by 2011 turnover, reported at $7.6 billion.
The tenor of the regional industry leaders carries over at DDB Gulf, an agency formed in February 2011 in Dubai with a lot of fanfare in an internal consolidation under the DDB network, which is also part of Omnicom. Business wise, the agency’s road last year was “financially very challenging” even as the internal integration of the merged units was smooth, conceded DDB’s chief executive Ajay Shrikhande. Pointing to regional factors, he said, “2011 was challenging for all in the industry and the events of the [so called] Arab Spring impacted marketing budgets and marketing expenditures.”
A different Dubai
Dubai, of course, is not quite what it used to be a few years ago for the regional advertising industry. In a few gold rush years from about 2005 to 2008, business growth for marketing communications groups in the Gulf Cooperation Council, and especially in Dubai, was so heated that headcounts grew much faster than what was good for quality.
That expansion stopped cold when marketing budgets of property developers were hit by the implosion of the United Arab Emirates real estate bubble. In 2009-10, signs stood on regrouping, weeding out the overgrown departments, and building new enthusiasm. Then came 2011 and new business woes, mixing regional and international uncertainties into a year where, according to Trad, advertising companies “are still living in turbulence and need to pass through the difficult times… to see how things are going to settle.”
However, industry leaders express enthusiastic remarks rather than grave concerns when it comes to describing the quality of their industry’s labors in 2011. And they are even more hopeful for 2012, as they show praise for creative teams instead of looking bleakly on the dark projections for this year.
Speaking on the sidelines of the MENA Cristal advertising awards, Tarek Miknas, chief executive of Promoseven Group, which is affiliated with the fourth-largest global advertising conglomerate by turnover, Interpublic, said: “Year after year, the work coming from our region is getting better. And that’s great for all of us in the industry.”
Christian Crappe, chief executive of the Cristal Festival Network and organizer of the MENA Cristal, concurred. “Over the last years, creativity has been improving every year. If you review the last five years, you can be sure that the creativity has improved a lot,” he said.
Menacom Chairman Ghossoub argued that the economic pressures, as much as they press down on the industry, are good for discerning the most creative people. “Definitely the pressure is on the ‘creatives’ today to deliver immediate or short-term results. This is where you can pick out the good creatives, because from my point of view a creative has to be able to work in any environment,” he said.
The crisis could thus facilitate more positive growth in the region’s advertising and communication industry, creating something more impressive than ever. According to what advertising leaders told Executive, the rise in quality is going to continue on the strength of two factors.
The first is that the Arab uprisings, while accounting for a big part of the industry’s economic worries in 2011 and 2012, has liberated creative flows, and the second is the growth of digital advertising, the use of online space that has finally started happening in the MENA region.
The latter expectation has been voiced at every advertising conference in the past few years, only to be followed until now by embarrassingly low actual allocations of advertising budgets to digital in each of the past five years. While online marketing options were compelling, for example, in Europe, they accounted still for less than five percent of budgets in MENA last year.
This time, the industry members talk as if they are convinced that digital growth is happening, especially if they say, as Shrikhande did, that the shift to online will not necessarily increase industry revenues. “I expect that the initial part of the shift into digital media will be reducing the total marketing expenditure,” he told Executive.
According to Trad, Ghossoub, Miknas, and Raad, the combined experiences of economic hardship and the outpouring of the Arab uprisings are guarantors of a more creative future in the region’s advertising industry.
In Raad’s view, the creativity is now in the hands of a new generation of advertisers and what is needed most at this time is for decision makers and their clients, the advertisers, to catch the new spirit. As creativity has been liberated, he said, “Nothing is going to stop it except the disappointments when you develop great campaigns and clients do not buy them.”