One man’s dream can be another man’s nightmare: imagine a market where every producer knows his consumers perfectly or one with 100 percent demand and zero alternative to his product, a market with no competition where products fly off the shelves effortlessly?

The president of a distressed global car manufacturing corporation might daydream of possessing this kind of total supplier’s market before facing a hostile annual shareholders’ meeting. The same dream would be the mother of all nightmares for an advertising communications executive; in a world with no choice communication has neither place nor meaning.

To the good fortune of the advertising industry markets (as the seminal ‘Cluetrain Manifesto’ made clear at the beginning of this century) are conversations, and these conversations have been diversifying and intensifying in our era of the knowledge economy.

But this new world continues to grow ever newer layers: we no longer live in the information age; we live in an age of information management, as Eli Khoury, chief executive officer of M+C Saatchi, pointed to Executive.

At issue is a global cultural problem where people think they really know what they are doing when they claim to be experts because they had success with the Internet on one, limited occasion. “The digital age allowed anybody to be his own king, which so far is proving to have lowered the standard of available talents,” Khoury said. 

In this age more than ever, the distinction between marketing clutter and meaningful conversation is measurability. Advertising research, which measures the quantitative and qualitative rapport between the target audience and the originator of any commercial communication, has made strides in the Arab markets to the point that there are no underdeveloped markets anymore, said Edouard Monin, chairman and CEO of Ipsos Middle East and North Africa. [Ipsos MENA, the regional affiliate of France-based independent international research organization Ipsos, and Pan-Arab Research Company (PARC), are the two widely used providers of research in advertising and media in the region.]

The growth of research in the MENA region was boosted by the recession of 2008, said Ziad Skaff, group director of Integral Middle East and North Africa, a research company in the Omnicom Group. While other parts of the advertising business were hit, the economic downturn highlighted the importance of measurement and research to everyone’s benefit, he said, “The recession has given many companies a slap, telling them, for every penny you pay, there should be some return. If it is not a return moneywise, it should be a return in relation to Key Performance Indicators [KPI].”

According to Monin, research clients are no longer found only among multinational companies. “Local companies are also doing a lot of research. In some cases, they are even more professional than the big multinational companies,” he said, emphasizing local companies in competitive fields such as banking, finance and mobile communications.

Integral’s Skaff estimated that all global, and 70 percent of local, clients dealing with Omnicom Group agencies in the region employ some kind of measurements today.

However, as Monin remarked, the region accounts for the smallest share of financial expenditure into advertising research globally, at only about 1 percent of the world’s total. In absolute numbers, the region’s entire advertising research investments amounted to no more than an estimated $230 million in 2008.

That was up from $62 million in 2002 and $125 million in 2005, but despite annual average growth in the 20 percent range, “if you compare it with advertising expenditure or with research expenditure worldwide, $230 million is ridiculous,” said Monin.

According to Ipsos data Monin shared exclusively with Executive, Saudi Arabia is the region’s largest research market, at nearly 30 percent. The Gulf Cooperation Council, including Saudi Arabia, overall accounts for about half of regional research investment. Research expenditures in the Levant contribute no more than 10 percent to the total; Iran contributes 10 percent and Egypt and other markets in North Africa generate up to 25 percent. The rest comes mainly from Pakistan.

The execution of research is concentrated in the hands of four or five large organizations that have a combined market share of 60 to 65 percent, while another 20 to 25 small and midsized companies also provide research, Monin said.

Companies such as Integral do the bulk of their research in support of the group and its clients. “We are hopefully beneficial to our industry and mainly to our clients,” said Skaff.

Researchers’ hurdles

The effectiveness of research in the region is still facing challenges, including an expectation from clients of much lower rates here than they would have to pay elsewhere, even though overheads and expert staff costs in the MENA are on par with global levels, Monin said. 

Several leaders in the advertising industry said they are banking on new tools to achieve research insights faster. “We are in the process of creating live consumer panels in key markets, where we interact with consumers on a daily or weekly basis,” said Firas el-Zein, CEO of ZenithOptimedia MENA.

Others noted that dated research methodologies create obstacles in markets such as Saudi Arabia, where cultural sensitivities have obstructed automated measurement of television consumption in homes.

But beyond the technical challenge, media owners, advertising agencies and advertising clients have not been able to find a formula for operating audience measurements, said Elie Khoury, CEO of OMD Mena (not to be confused with Eli Khoury of Saatchi). “There is a lot of mistrust in the industry. Nobody can agree on who should be leading this,” he explained, adding the problem affected only TV audience measuring.

Samir Ayoub, CEO of media services company Mindshare in MENA, told Executive that for many years one problem with research in the region has been an unwillingness to admit mistakes. “When the research is out and it is not in my favor I will object and say the research is wrong. If we don’t admit [our faults], we can never progress and improve.”

Communication within the research industry appears to be a key factor. “We must be able to sit together as research companies and create an association to develop the business in the region,” Monin said.

An advertising communication force and connector of the region, Choueiri Group is a holding company that represents multiple categories of media through 18 entities. Pierre Choueiri, chief executive officer of the Choueiri Group, sat down with Executive to discuss model relationships in the regional ad industry.

• You have a very specific perspective of the advertising industry, sitting across the table from it. What is your impression of the industry?

First of all, our role as a media rep, previously with advertising agencies and today with the media buying units [MBUs] is 100 percent complementary. There is no conflict. My late father [Antoine Choueiri] who established the whole group believed in forming a kind of golden triangle between the MBUs and advertising agencies on the one side and the media on the other.

• Has the regional advertising sector evolved?

There has been a complete evolution from 30 years ago. Because we are a private company, we think purely in commercial terms to the benefit of the client. We need to offer a platform to be able to promote brands properly and to gain market share. By gaining market share [there will be] automatically more income [and] more advertising spending. It is the circle of life.

• How do you describe good media?

What I mean by good media is that it should have high readership if it is a newspaper or print, or high viewership if it is television. Private media means profit and loss

is important.

• How have changes in the advertising and media industry affected your business?

Nowadays, the big chunk of advertising spending is handled by five big groups. We now have fewer players that we can talk with and enhance our market on many fronts. For me, this is a plus.

• So you have more time to plan the strategy for the group?

Strategy for the group is never a solo decision. It is a decision by a group of people that sit around the table; we think, we debate, we shout and whatever. It usually is around a dinner and informal, at my place or at someone’s place. The big decisions are taken in a very casual manner. We are a big family.

• You are not holding the view that print is going to die? 

No, no. Print is not going to die but the format of print will definitely change. How it will be delivered to the consumer — this is changing.

• Do you have a specific set of criteria for which media you will represent or seek to enter into a representative relationship with?

The media that we love to represent should be either among the top players in their field or be able to potentially become top players.

• How much of the digital market do you think you will be able to represent?

My aim is 100 percent.

• You have achieved that scope with certain audiovisual media?

Not true. We handle close to 18 different TV channels out of 537.

• But in some of the markets, the channels represent 80 plus percent of market share?

This is the job and achievement of the media owner. Should I resign the contract because they are number one?

• Can a media rep impose?

Talk of muscle, imposing, monopoly, this is nonsense. It doesn’t exist. The media that I represent deserve whatever they deserve.

• What do you expect for 2011?

Spending in the market should today be double if not triple what it is. We have a long way [to go] for the clients to start spending more. Actually, it is not to spend more — it is to pay the right price for the medium, whatever the medium is.

Joseph Ghossoub is president of the Dubai-based Menacom Group. He talks to Executive about how social media has changed regional advertising.

• How did the social media explosion change the way you do business?

Social media changed a lot of things, mostly at the younger level. Part of our communication today is on social media. Every single client that we work for has a need to be in social media.

How can we make money out of social media? We make money [from] our ideas because it’s not just a matter of opening up a Facebook account. The idea is that this is what we get paid for. At the same time, publishing Facebook ads – we get paid. So this is another part where we also make money. But it is still about timing. You would think that this is a big part, but it’s not. It does not represent more than 7 percent of the total spend of the Middle East [and] 15 percent  worldwide.

• Has it been overestimated?

I think so, yes. We’re still a long way from being the United States. [Social Media] is growing in our part of the world, but you have to keep in mind the language barriers, the accessibility to networks, cultural barriers — many, many things. So, the spread of social media among youngsters is high but not as high as you would imagine.

• What is holding the region back in terms of social media?

The media as far as I can see today is not evolving as the business has evolved. They still do the same thing they used to do 100 years ago, in the same way. I am [urging] the media not to wait anymore only to play catch-up later, because it will be too late. They have to react immediately because readers are changing, customers are changing. Where do you find your customers? That is what they should be asking.

The agencies are always ready [to evolve] because if they were not ready, they would be out of business. We have complete departments now that work digital. We have complete departments now that work channel communications. The model has changed.

Today we have a bigger, wider screen to look at and each sector of the market is divided into shares. We have to attract the ‘share of mind’ of a consumer at the end of the day, and we have to participate in that share of mind in an immediate way.

• What is your opinion of the creative work over the last year?

I have seen a lot of good ideas and good creativity but I haven’t seen anything that blew me away. I think this is a result of what we saw over the last three years with the economic downturn. Everybody looked at how to work more efficiently and more tactfully, rather than more corporately.

We used to make the investment up front. If you found out that there was a good creative, or a good strategist, even if you [didn’t] need him at that point in time you used to take him, just because you knew that you might need him in the future.

In the last two years, this did not happen because everybody was on a budget. Everybody was trying to keep their expenses down. This is normal. But I think what you are going to see in the next year or two, with the hope that [the region] stabilizes, [will be] more investment coming into the agencies, into their core business [and] into strategy.

“The spread of social media among youngsters is high but not as high as you would imagine”

It is universal to love good stories, fun and triumphs and to tell everyone we know about them. No one is separated by more than six degrees.

These two statements, presented in SMS length (and just squeezing into a tweet), are theories of effective advertising. Advertising within these schools of thought works without having to shout a message 500 times from TV sets or impose in-your-face images from billboards. To say that people get annoyed by such proselytizing may sound banal, but it nonetheless has significant consequences for the everyday lives of countless consumers at a time when emerging technologies are on the verge of enabling advertising companies to translate this understanding into well-tuned action.

For the media agency, the art of advertising is in understanding human behavior and achieving the highest degree of acceptance for what the client, the advertiser, has to say. The mission is the same as when the invention of the rotary press kicked off mass communication in the 1840s, but the task advances in complexity with every invention of a new way in which people can interact.

Condensed into a single phrase, the activity of media agencies “in today’s age, is to ignite communities for our clients,” said Philip Jabbour, chief executive officer of Starcom MediaVest MENA, when asked to define ‘media buying’ in as few words as possible.

New terms for new times

In actuality, the term ‘media buying unit’, which was a hot new advertising definition a few years ago, is already on the way out, as media agency representatives informed Executive.

“We are not media buying. We design a message and we identify the route which can carry the message,” Mohan Nambiar, CEO of MEC Group MENA, told Executive. “It is message planning that is happening; it is communication planning that is happening.”

Elie Khouri, CEO of OMD Mena, explained: “Historically, media agencies used to concentrate on planning and buying. Today, they are into much more than this. They are into digital, consumer insights, analytics, even creative, on the media innovation side. The lines are blurred.”  From the perspective of someone working in media, whether traditional or digital, ‘communications planning’ sounds a far friendlier term than ‘media buying.’ For the companies engaged in the activity, it also seems to describe a more rewarding enterprise, as it is more demanding. 

“It is getting more complicated, luckily for us as an industry. Today, for once, we can do what the clients cannot do by themselves,” Khouri said. While advertisers in the past often found it easy to have a commercial spot produced or even to produce one on their own — approaching an outlet and saying “place this advert” — the planning of a communication now requires much more. “Today, you have media proliferation of digital, social media, tablets, what have you. It is very difficult to know how to reach the consumer and in which intensity. Precise planning is the name of the game.” 

The edge media agencies have in winning clients’ attention, and thus their accounts, is efficiency.  “Agencies have found that the way [forward] for the industry is to work smarter. They look for solutions that help generate a lot of value for clients but also create value internally,” said Eric Hanna, MENA CEO of Mediacom. Instead of “hiring bodies,” throwing human resources at a task and expanding headcounts, as was standard procedure in the years of fast revenue growth until 2008, management of agencies “is today about looking for solutions that will concentrate [human resources] and allow them to think as opposed to just do,” he said.

Expansion of business even in the economic crisis was possible for Firas el-Zein, CEO of ZenithOptimedia, and his team because, “The single focus in all our conversations was optimizing return on investment [ROI] in advertising by engaging consumers in conversations. The ROI, combined with digital and a focused approach is what worked.” It comes down to the returns, confirmed Nambiar. “Most important is that the money that is given to plan and employ the media has to do something for the client.”

With so many shared fundamentals, homogeneity of agencies across the region also appears to apply in terms of market share. Agencies “may say [they] are double the size of [their] nearest competitor, etc. But they know, and others know too, that the reality on the ground is completely different,” Samir Ayoub, CEO of Mindshare MENA, told Executive.

Because published research data on advertising expenditure is computed as the nominal price for displaying a commercial (the ‘rate card’ price) times the number of its showings, discounts are not reflected. “The real net spend is totally different. I don’t want to name names but there are some clients in this region that have preferential treatment. They spend perhaps $1 million but on the rate card the value spent is perhaps 10 million,” Ayoub said. According to Ayoub, the revenue differential between the billings by the top five media agencies in the Middle East and North Africa is about 15 percent. For the regional advertising industry, the (legal and common) business practice of taking advantage of very negotiable prices in positioning ads means that the actual size of markets is exaggerated in the published figures. Instead of $7 billion to $8 billion, the adspend in the Gulf Cooperation Council amounts to much less, he said. “If you want my opinion, the total market size in the GCC [was] between $3 [billion] and $3.2 billion in 2010.” The estimate includes most of the adspend that is identified as Pan-Arab, meaning media whose reach spans the entire region (primarily via satellite TV).

Cookin’ the books

Inflation of market sizes is ubiquitous throughout the MENA region, meaning that the total real adspend in the Arab world is probably in the range of $5 billion, of which the biggest agency controls a market share of around 10 percent at most. OMD’s Khouri estimated the real total to be even lower, at “around $3.5 billion, in real money,” he said. The reason why media agency leaders are, as a group, not wholly outraged at the discrepancy between the inflated gross and the much humbler net market sizes is that they understand the realities.

In devising a media strategy for a client, several agency leaders said it is sufficient for the expert planners in the advertising industry to be able to identify trends and ratios. “If I know the figures, why would they have to be public and published? I don’t care. For me, whether they are public or not public, I know the figures,” Ayoub explained.

Indifference to the amounts published does in no way imply that the communication planning business doesn’t value its numbers. Asked if media planning involves more art or science, Khouri responded, it is “good for us, because there is a little art and a lot of science. This is what is important in our business. You need ROI; you need accountability; you need measurability. So I would say, 90 percent accountability and numbers and 10 percent art. Art is needed for innovation, for ideas. But again, analytics is the way to go in the business and this is what will drive our industry moving forward.”

Dani Richa, the group chief executive officer of Impact BBDO in the MENA region, sat down with Executive to discuss numerous facets of transparency.

• What is the first step in advertising something responsibly or transparently?

The starting point always is consumer insight: digging into the fabric of the societies that we are working in, finding needs, aspirations and common values of the people and then trying to see if the brands that we represent and the services that we promote could really have an impact on their lives and help them improve their lives or their choices.

• Is this more ‘doable’ today than it was in the past?

For many, many years we have been shouting at people and telling them. The net and the mobile and all that, it has created a dialog. Now it is a dynamic process. We no longer wait — the next morning, we get comments. The next morning! It is live and immediate and we listen very carefully.

• How does an advertising agency make responsible use of its consumer insights?

Working regionally and locally, in any given market, we know the consumer. Our planners and creative people build on these insights by [developing] a meaningful proposition that touches people’s hearts. Once we have done that, we can engage with people with a lot more impact and in a more entertaining way. It is [about] finding the right time and right state of mind, finding the connections.

• Do you think that subliminal messages work?

It is a big question mark. If it is too subliminal you cannot even assess its impact. We don’t believe in a hard sell but we believe in transparency. Whatever we are trying to communicate is there, to the point that the consumer would want to reach out to the message but it is not embedded, it is not hidden. 

• But people are afraid of being manipulated through advertising and through subliminal messages…

It depends what you define as subliminal. We make people feel things as opposed to telling them things but [the message] is right there, it is not subliminal. It is presented in a way that you give them an experience, a feeling.

David Ogilvy, one of the 20th century’s big advertising men, is credited with having said one should not write an advertisement that one wouldn’t want one’s own family to read, suggesting perhaps not to advertise any product that you wouldn’t want your family to consume? This is why I speak of transparency and responsibility. We have big responsibilities. We have a responsibility toward the community that we are part of to be transparent, to be ethical. There is a lot of ethics that is needed. You cannot have a blog written by a company, pretending that it is being written by a consumer. We would not do things like this.

• You also carry responsibility toward your shareholders. Given the competition that you face, how do you amalgamate the mandate to your shareholders with your creative commitments?

In a simple way, if the work is good, if you put the right emphasis and focus on getting the work great everything else takes care of itself. We are a public company; just like we have a responsibility to our clients’ business and to grow their business, we have a responsibility to our business. The way we do that is by having very fair, profitable relationships with our clients where we become indispensable in adding value to their business, so when we ask them to remunerate us in a fair manner which will add value to our business, they happily do it.

JWT MENA works with powerhouse clients such as Nokia, HSBC, Unilever and Nestle. A founding father of the regional industry, JWT Chairman Roy Haddad sat down with Executive to tell us which sectors he will be looking to for future profits.

• Which sectors will be upping their spending in 2011?

It’s not about upping or downing. It’s about market dynamics. We all live by the market dynamics. Take the car industry, which was doing very badly in 2008, 2009 and 2010. If there is a recovery the car industry will go up again. There isn’t a formula for that. The financial services sector is growing because it was quite immature before and now it is reaching maturity. Telecoms will continue because it is still a competitive environment, but you can never predetermine.

• The spend per capita in the region is lower than in other markets. Why is that? Do you think there is any sign that this is changing?

Volatility might be one reason; it is still quite a volatile region. In the [Gulf Cooperation Council], the spend is at the right level. It is the rest [of the region] that brings it down. When you do the [Middle East and North Africa] average it goes down. But the [United Arab Emirates] spend is very high. Kuwait is very high per capita.

Marketing works best in the long-term. You invest to buy 10 years down the road. In the Arab world, very few will dare to have an outlook 10 years down the road, Egypt being a perfect example of that.

• Do you think that the idea of advertising and brand building as an investment is well understood?

It is picking up a lot. I think there is a belief in that more and more now and I think it will continue. Markets live through maturity stages. We all forget that the Middle East as we know it today came to be in the 1970s. We have 60 years of catching up to do. There is a lot of catching up to do [regarding] the maturity of people appreciating advertising and how they can use it for their own business interests and use it as an investment. From my point of view, we have caught up quite quickly.

• Do you think the Middle East is considered a growth market right now for multinational companies?

Let’s define the Middle East. If you talk about the MENA region, there are 350 million consumers in this region. There is no doubt that the [gross domestic product] growth is around 4 to 4.5 percent year-on-year, which means that these markets are growing. There are very few markets around the world that grow at this healthy rate. Europe is coming into the recovery, but very slowly, so the Middle East is of interest to anyone who is looking for growth — but, against that interest there is always this volatility factor.

• What happened to the local clientele in the UAE, many of whom dropped their entire advertising budgets at the onset of the crisis?

We didn’t witness this kind of phenomenon ourselves, even though I would say that our portfolio is split 60 percent local, 40 percent multinational. Any serious player will understand that it’s not a haphazard kind of activity. Successful marketing has to be sustainable. And serious players will sustain their presence.

• What reaction to the crisis did you see?

The whole investment level dropped between 80 and 90 percent, which started slowly but surely to pick up in 2010. 2011 looked good, until the Tunisian and the Egyptian crises came in. But I think in the long term we have a young population that is coming to the consumer market. [The region is] growing in wealth and there is no reason why the ad industry should not follow.

“The Middle East is of interest to anyone who is looking for growth”

There is a special bathtub in Dubai. You find it in a place that could compete for the honor of being the spiffiest office in the Arab world’s most posh business quarter — but this plain bathtub’s absolute simplicity is antithetical to any luxury. Its host is visibly proud of it, because it is, of course, a symbol.

Its belongs to Ramzi Raad, chairman and chief executive officer of the agency TBWA Raad. Being one of the Middle East’s advertising fathers and a steward for 43 years of the regional industry’s narrative, he fondly explains the bathtub’s raison d’être as a reminder that creativity, even when under monumental pressures, sometimes requires one to step out and relax. As a gift of TBWA Worldwide, the tub also has other implications. Here on the sixth floor of this Dubai advertising hub it is a reminder of how the regional advertising agencies are anchored to global corporations.

This question of ownership is on a lot of industry minds these days, following the onset of a global takeover through which the big multinational advertising groups are cementing control of regional agencies.

As Raad tells it, ownership of the regional agencies follows a straightforward logic. “Today, most of us have become majority-owned by the multinationals,” long-established agencies that command the rules of the game, he says. “They allow you the privilege of having majority at the beginning but then the roles are reversed because it is part of their global policy. They own the work that they want you to develop. It is their brand that you are operating under and so on. It’s a fair deal at the end of the day.”

Fair as it may be, Raad has misgivings regarding multinationals’ record in the slow delivering of, and low investment in, nurturing local talent. For the future, however, he and other heads of regional agencies share much optimism on the rise of regional talent, as evidenced by the industry accolades won in recent years outside the region.  

As Chuck Brymer, president and CEO of DDB Worldwide Communications, tells Executive, “the creative product here in the Middle East is good but I think it’s going to get a lot better. We’re investing in our people, in cross-pollination and in training.”

The global aspirations of Middle East and North African firms, while in deference to the obligations toward the holding companies, actually seem to exceed what is easily granted by the multinationals.

“I want this whole network to feel as part of one family, and I’d like to build collaboration between our agency and [our international partner] agencies,” exclaims Tarek Miknas, CEO of creative agency Fortune Promoseven. In his perception of the work in the Middle East, “I think that the state of the entire industry right now is a level playing field and we could come up with the greatest innovation, greatest work, and we could challenge the rest of the globe by doing greater things than they can do.”

One area in which the presence of the multinationals has contributed to improvements in the region is in transparency.

Many industry representatives (off the record, naturally) have told Executive that “grey” areas of financial misconduct — read ‘forgetting’ to tell clients about discounts the agencies received from media as volume rebates, faking invoices, fraudulent accounting, illicit kickbacks and bribery, etc. — persisted in the darker annals of MENA advertising. Several agency leaders who sat down with Executive openly compared the industry with prostitution, if only in jest.  

But this wickedness is on the way out, they say, in large part due to the global stakeholders who are pushing transparency into the system because of financial and reputational risk.

Still, transparency is a term that a high number of industry leaders tell Executive is overused and has been abused. “I had to smile when you used this word,” was the comment of more than one agency manager during our research.

In terms of the perception of the industry, transparency is required in any agency-client relationship and profits the enterprise in its interaction with market partners. You cannot own 100 percent of the market, says Pierre Choueiri, CEO of Choueiri Group. “That doesn’t exist. You gain whatever you deserve by how serious you are, how transparent you are and how devoted to your media. This is how you gain your market share.”

Given that these monumental improvements were made essentially under pressure from the parent companies, it begs the question of whether such reforms and progress could be made on a local level. For this to occur, strong and disciplined leadership is a must. Especially so in an industry that values its own integrity, sophistication and creativity as its prime assets — but whose reputation is at the same time tarnished by perceptions of being a primal trade of cheap favors.

Mohan Nambiar, CEO of MEC MENA, says, “We should not be blaming the industry if we cannot add any value into it. The only way you can blame it is if you don’t want to lead it. People who want to lead it have to make it change.”

Executive talked with Ramzi Raad, group chairman and chief executive officer of TBWA Raad, about stake holding by multinational groups, succession and new creative hubs.

• What does the acquisition by global agencies mean for Lebanese advertising entrepreneurs in this region?

When I went into partnership with TBWA in 2000 they were very clear and said ‘we want to run agencies that we have majority stake in. If we don’t agree to that at this stage, it has to be gradual.’ [Eventually], Omnicom [majority owners of TBWA] wants full ownership wherever they go.

They allow you the privilege of having majority at the beginning but then the roles are reversed because it is part of their global policy. They own the work that they want you to develop. It is their brand that you are operating under and so on. It’s a fair deal at the end of the day.

• What is the trade-off for you? What is the down and upside of giving up ownership?

It is a global game and these are the rules… Multinationals now own the whole communications industry. It is not only advertising — it is PR, relationship marketing, everything. You have options to remain independent. Independents are brilliant and growing but even the independents are catching a price and they are happy to sell.

• What is in it for you?

It all depends on your age and what your aspirations in life are. From the beginning I said, even if I sell, by the totality of my stay I would like to have reached an active role in the management of TBWA Global and I keep striving toward that goal. If I don’t [achieve] it myself, I hope that one of my people will be able to do that. Because I know that we have enough talent, I know that we can play a valuable, active role.

• As multinationals are increasing their stakes in the Middle East’s advertising industry, what will happen to its founders?

We did not see any of the multinationals send in an expat to manage a Middle Eastern group in the top position yet. Sooner or later this might happen. I answer the question in relation to myself. I know that I sooner or later will have to retire to let the younger generation take over. They need to do that. [However,] I don’t want to rest at this stage.

• Does it keep you young to be in the fast-changing industry of advertising?

Surely. My wealth is not the success story; it is the campaigns that I have done. I love to talk about them and overhear the clients talking about all the successes and the campaigns that [I] have done. 

• [The company’s new motto is ‘Disruption’.] How good is disruption and how disruptive is good?

It has worked. We adapted that concept here and tried to make a difference in the Middle East. We are being successful in that. You can’t say that all you need is disruption but we are very convinced that disruption is helping. You can’t be rigid in a world of communication like ours, where everything is changing, you have to continue changing.

• How will your new creative hub in Abu Dhabi fit with this?

Four years ago, the government of Abu Dhabi made a commitment that it wanted to modernize and started launching a lot of projects. Those projects needed support. We had Etihad [Airlines] as a client; they were a door opener to the government departments and we picked up a lot of business. With a surge in business in Abu Dhabi, we felt that [it] deserves to have high-caliber creative talent. The fact that we had super-creative directors managing the Etihad business for the past four or five years, proved that it is worth the investment.

“My wealth is not the success story; it is the campaigns that I have done”

Edmond Moutran is chairman and chief executive officer of Memac Ogilvy for the Middle East and North Africa. Considered one of the godfathers of the regional advertising industry, he sat down with Executive to discuss its future.

• Are there any drawbacks to falling under the jurisdiction of international conglomerates such as WPP?

One example would be the situation where the international agency wants to run a world-wide campaign for a brand that will not be coherent with our market. It hasn’t happened with Ogilvy, but it has happened before with other agencies I have worked with; somebody in London or New York says ‘this is a worldwide campaign,’ you look at it and know that this is not going to work in the Arab world. I would not allow my client to waste money on a campaign that is not designed to succeed in this region because it’s not going to work. I have had some very heated arguments with some of the biggest, toughest agencies in the world because they tried to impose campaigns on the Middle East.

So yes, there are disadvantages. If you’re looking after a client and you have a great relationship and they take on a similar client somewhere else in the world — a big one — and you have to drop this small client because your head office has taken on a client with similar interests and they require exclusivity, that is a drawback.

But, to have an international name is vital for two reasons. First, clients like it. Second, young people like it. Young people coming out of universities want to work for the Leo Burnetts, the JWTs, the BBDOs. They don’t want to work for a small agency that’s not associated with an international one — it’s not sexy.

• In the last 10 years we have seen an increased financial stake from the international names in the regional agencies. What do you say to people who don’t want to see you sell your shares?

This is a very interesting conversation — especially [given] the timing. I am on the verge of selling majority. It’s how you sell and it’s how involved you remain [that matters]. Today you have four giants in the world. Luckily for us, WPP is the biggest. That gives us clout. These companies will probably, within the next 10 years, own 90 percent of the [advertising] business in the world. These are huge companies that look after huge clients, which demand that these conglomerates have control. Why? The laws are changing. You have all sorts of regulations that these companies have to commit to the client that we will abide by worldwide. And then you come to a very important and vibrant place like the Middle East and these companies do not control the local companies. That is no longer acceptable to the international clients.

• So now is the right time?

It’s not a matter of selling at the right time. [The international agencies] are under tremendous pressure. It is my understanding of that that made me accept to discuss giving Ogilvy the majority… I must allow my friends that I have served for 37 years to benefit from our success because without them I wouldn’t have had the success. Life is give and take. You can’t just take, take, take and then when your international friends need you you’re not there to give. This is not the Arab way of doing things.

This is why all of us — my generation — have discussed and agreed to sell majority.

There will be a lot more control. A lot more changes [will be] coming up, because all of a sudden it will be exactly the way [the international agencies] would like it, whether I like it or not… I honestly don’t think a network without an international name can survive, not against all the internationals.

“[Four] companies will probably, within the next 10 years, own 90 percent of the [advertising] business in the world”

The global advertising industry had what public relations writers might call a “stellar year.”  Nothing astral or astrophysical was involved, but the industry leaders’ 2010 results broadly outperformed expectations, validating the ad sector’s recovery from the tough year of 2009, which saw global ad spend contract by about $50 billion.

WPP, Omnicom, Publicis and Interpublic, the quartet of holding companies with the leading stakes in advertising both globally and in the Middle East and North Africa, have all gained according to key performance parameters (see results box) as the global advertising market last year increased 4.9 percent to an adspend of $450 billion, according to estimates by media agency ZenithOptimedia.

ZenithOptimedia, which is part of the Publicis Group, predicts in its current Advertising Expenditures Forecast that global advertising will reach $470 billion this year and exceed $520 billion in 2013. A similar research report by WPP-member company, GroupM, predicted in December that measured advertising expenditure worldwide will break the $500 billion mark in 2011. Advertisers in the Middle East confirm that the sector has rebounded across the region from the beating it took following the economic crisis of 2008 — which came at a time when the regional advertising industry was actually at the tail end of an overheating phase of nearly three years, during which expanding client demand had been driving agencies to fill staff positions with minimal considerations of long-term viability.

“When you grow that fast, you tend to stumble a little bit and make a few mistakes,” explained Tarek Miknas, chief executive officer of agency Fortune Promoseven. “You hire very quickly, you fill gaps very quickly, you need to run off to the next big thing.”

Cleansed by the crisis

The pendulum swung the other way in 2009, as the fallout of the economic crisis was reflected in global and regional advertisers’ slashed budgets. adspend took a dive across the Gulf Cooperation Council as things deteriorated to the point of wiping out the spending power of some real estate developers in Dubai. Sources in the industry told Executive that several agencies are still waiting for settlement of their accounts by certain developers.

Agencies had to restructure, said Dani Richa, CEO of Impact BBDO MENA, and agencies shifted staff to offices with growth, making 2009 “the rationalization and restructuring year.” During separate interviews at the MENA Cristal Festival in Lebanon in February, Richa and Miknas both confirmed that the industry saw layoffs and cost-cutting in 2009.

As Miknas described it, rationalization was a positive transformational step for the advertising sector. “You start thinking, how can I stretch my dollar the furthest? What is available for me to exploit and keep my margins healthy?” he said. Hiring decisions are today taken under less pressure, he added, “but we retain our best talent and are constantly trolling for the best you can get. Probably all agencies are.” According to Richa, the turnaround was swift, noting 2010 was a “good year.”

“We have gained new business and Dubai is bouncing back beautifully,” he said.

Dubai-based decision makers in the regional advertising industry share the view that the industry has experienced an important learning curve. Mohan Nambiar, CEO of MEC MENA, told Executive that managerial prudence suffered during the boom years but has returned. “I think we have all learned bitter lessons,” he said. “A lot of checks that were supposed to have been done were not done because we were all busy accumulating volume. There won’t be a repeat performance because we all learned from it.”

According to agency leaders and media rep companies, the rebound of 2010 has shown that advertising in the Middle East has become a resilient industry. 

However, the bottom line performance of the ad companies across the region cannot be easily gauged, at least not directly. Any local firm affiliated with one of the global advertising communications groups — and that is almost any firm of regional weight — is firmly committed to a “don’t-ask don’t-tell” approach with the public when it comes to actual advertising spend and industry performance in the region.

Global advertising industry growth projections by ZenithOptimedia say that the adspend in the Middle East over a five-year span will be part of a 24 percent increase across a collection of advertising markets. This respectable total increase, according to the research publication, will outperform increases of adspend in developed markets over the same period by between 14 and 19 percentage points.

Murky figures

One should note, however, that the adspend in the Middle East is based on gross estimates and not adjusted for inflation. Rather than being a Middle East and North Africa projection, the forecasted 24 percent spend increase is, moreover, for a potpourri of markets that include, beyond Arab MENA, Israel and 22 countries as socially diverse and as geographically distant as Luxembourg, Zimbabwe, Iceland and Myanmar.

From a local forecasting perspective for the MENA region, this grouping does not lend itself to what can be considered a meaningful frame of projections.

Regional forecasts for the Middle East — aside from having to be considered in light of economic and security risks related to the region’s latest experiences with popular political demands — are not as strong as ZenithOptimedia’s advertising growth forecasts for Latin America (26 percent), Central and Eastern Europe (31 percent) and Asia (36 percent — excluding Japan). By this projection, all regions other than developed markets are expected to best Middle Eastern growth in the next three years. 

But this does not mean the growth in Arab markets will be something to scoff at if companies here make things happen. Philip Jabbour, Starcom MediaVest MENA CEO, told Executive: “We are a service industry. Apart from always trying to invest in improving quality and getting more measurability, if we collectively focus on being able to drive value — offering a service and being remunerated for that — rather than making this a commodities business, then the industry will flourish.”