Lebanon

Art – Creativity’s capital

by Executive Staff
written by Executive Staff

Beirut explodes every now and then, often with tragic consequences. This past year, though, Lebanon witnessed a different and welcome kind of explosion: that of its contemporary arts scene. The opening of the Beirut Art Center, along with several smaller galleries such as The Running Horse – Contemporary Art Space and the Maqam Art Gallery, signals the development of Lebanon’s historically vibrant art market into a regional cultural center different from, but no less important than, the commerce-heavy hub of the United Arab Emirates.

“It’s a completely different new market here,” said Joy Mardini, the manager at Naila Kunigk’s Espace Kettaneh Kunigk, the Beirut sister gallery of Munich’s Galerie Tanit. “It’s booming, in parallel with Dubai, Abu Dhabi, and Qatar,” Mardini said, referencing the major arts institutions and fairs that have opened, or are planning to open, in the Gulf.

The international auction house Christie’s opened a salesroom in Dubai in 2006, kicking off with an inaugural sale in May of that year. The opening was significant because it was the first auction in the Middle East of international and contemporary art in Christie’s history, and the first time the auction house featured a modern and contemporary Arab and Iranian art section. The auction pulled in over $2.2 million, and subsequent auctions set records for artists including the Lebanese painter Paul Guiragossian, whose “Le Grand Marché” sold for $230,500 in October 2008, a world auction record for him. In March of this year, rival auction house Sotheby’s held its first Middle East auction at its new Doha office.

Art Dubai, a fair that now features 70 galleries, more than a quarter of which are based in the Middle East, launched in March 2006. The Sharjah Biennial also held its ninth edition in March, and several museums including a Louvre and a Guggenheim are scheduled to open in the region within the next decade.

Although the recently constructed infrastructure in the Gulf has had ripple effects in Lebanon, local Lebanese art brokers distinguish between the bubble that, by most accounts, has burst in the Gulf, and Lebanon’s steadily evolving art market.

Creativity’s costs
Natalie Khoury, director of the Beirut branch of Hamburg’s Galerie Sfeir-Semler for the past four years, said this is reflected in retail prices, which have grown at an even pace, in contrast to some of the record-setting prices achieved at recent auctions in the Gulf.

“[Now]they’re almost the same, and have been growing with the reputation of the artists,” she said in reference to Beirut’s prices vis-à-vis the Gulf. “We never had speculation like with the Iranians. The Lebanese artists established their careers very slowly and in a very balanced way.”

“Prices have increased, but not drastically. The prices have evolved with the careers of the artists,” she said.

Fadi Mogabgab, of the Fadi Mogabgab Gallery in Gemmayze, has been selling art in Lebanon for over 15 years, first alongside his sister Alice Mogabgab’s namesake gallery, and later on his own. He attributes the relative stability of the market to the distinct nature of his mostly local clientele.

“Because here in Lebanon we have culture and taste, people are very demanding,” he explained. “They are not necessarily following the trends of the big auction houses.”

Lebanese artist and collector Elias Maamari agrees.

“Today anyone with two pennies to rub together is buying and calling themselves an art collector. As soon as you have more paintings than walls, you’re a collector,” he noted.

Maamari, who trained as an architect, has also entered the art market through the other side of the looking glass, as an artist. His first publicly displayed piece, a cold cathode and rusting steel sculpture called “You are here for now,” was shown at the Scope Art Fair during Art Basel this year in Switzerland. It was priced at $78,290, but price, he said, can and should be irrelevant.

“You can buy art for $5,” said Maamari. “And sometimes that’s the most interesting stuff.”
More interesting to note, he said, is the relationship between the financial industry and the art market.

“They’re in bed together. They have to be. Look at the people collecting art today. The big collectors in Turkey, Russia — they’re a very small minority of individuals, and they’re the wealthy captains of industry, as they were historically,” Maamari said, citing the Frick Collection, which is housed in a museum in New York.

In Lebanon, though, there is an emerging group of young collectors, who, along with major Western arts institutions, are prying the market wide open.

Khoury of Sfeir-Semler gallery sells pieces to museums such as the Museum of Modern Art in New York, and the Hamburger Bahnhof in Berlin. As far as private collectors are concerned, she said most of them live outside Lebanon, but are Lebanese. While corporate collections are still not a major factor in their business, they are reaching new regional buyers through fairs like Art Dubai.

The art appeal
A 29-year-old New York-based Palestinian-American collector who often purchases art from Sfeir-Semler gallery on her trips to Lebanon told Executive that despite the frenzy in the Gulf, she has observed the prices of her favorite Lebanese artists, such as Walid Raad, remaining fairly reasonable.

“You’ve seen maybe a 20 percent increase in value over the past few years,” she said. “It’s not like it’s doubled in value. There have been fluctuations in Dubai, excitement and hope, but none of those galleries represent the famous Lebanese artists.”

Saleh Barakat, who says his Agial Gallery in Hamra was the first to open in Beirut after the civil war, remembers that when he started, “Only old rich people and relatively established collectors came to this gallery.”

“Now it’s much younger people [who are buying],” he said. “I think it has to do with the evolution of the economy; with the e-economy, and telecoms, these industries make young people richer.”

“The market evolves, collectors evolve, and I am evolving,” he continued. In addition to promoting young, emerging artists at Agial, his newest project, Maqam Art Gallery, is exclusively focused on Lebanese modern art. It opened in early 2009 with a show of Lebanese landscape paintings.

“The international light is only on contemporary art” from the region, said Barakat. “They are completely neglecting Lebanese modern art.”
Jim Quilty, a journalist for The Daily Star who has covered the regional art scene for the last decade, says the art market is a “fickle thing.”

“It’s about trends, what’s new, what’s sexy,” he said. “People become aware of an artist or two artists that hail from a certain region, and PR takes over, and it becomes ‘a thing.’ Artists can be working unrecognized for years and years, and then the PR people take over and decide that something exists.”

Local flourish
Although it may be a passing fad, the international appetite for Middle Eastern art, as manifested by shows like the Saatchi Gallery’s “Unveiled” in London, is nonetheless encouraging local arts initiatives to flourish.

Sandra Dagher, a co-founder along with artist Lamia Joreige of the Beirut Art Center, a non-profit gallery that opened this year in the city’s Karantina district, acknowledges the link between her institution and the commercial galleries that operate nearby.

“Even though the space is totally non-commercial, it’s an advantage for artists to make exhibitions in a center like this, and could raise their prices,” Dagher said. Dagher, who ran the avant-garde gallery Espace SD from 2000 until 2007, found the non-profit model more workable for her vision of promoting contemporary art.

“I realized that to be able to help with production of less commercial art, I didn’t want to depend on commercial issues,” she said. “When you want to be sustainable and dependable, you shouldn’t be a private company.”

The center is funded by private individual donations, a few corporate sponsors, and organizations like the Prince Claus Fund of the Netherlands. A bookshop and café produce additional revenue, and as Dagher said, the massive, airy space is also available to rent for events.

Her disappointment with the commercialism of the Lebanese art market was echoed by some gallerists, who complain that it is often difficult to sell some of the newer media, such as installations and video, in the local market.

Twenty-three-year-old Lea Sednaoui, who opened the Running Horse gallery in Karantina, said that often buyers are reluctant to spend big on an unknown name.

“They need to know what they’re buying,” she said. Nonetheless, she has had relative success with her two first shows, one of the Swedish painter Sigrid Glöerselt, and another of Lebanese photographer Karim Joreige. Joreige’s show was already more than halfway sold out as Executive went to print.

Sfeir-Semler’s Khoury agreed that pedigree plays a role, citing one popular conceptual artist whose work is part of major museum collections.
“A lot of people are asking about established Lebanese artists, i.e. Walid Raad. We sell a lot of Walid Raad. When people want to buy contemporary art from Middle East, he’s one of the artists they want to buy.”

She also cited medium as a factor, which in an era of large-scale installation and video work, may be problematic.

“Generally, videos are really hard to sell,” Khoury said. “It’s much easier to sell photography and painting.”

Barakat agrees that the big names are the easiest to sell, but this phenomenon is normal.
“Of course in every part of the world you have super stars and less established artists. Here it’s [conceptual artist] Walid Raad, [painter] Nabil Nahas, [painter] Ayman Baalbecki,” he says. The works of the latter two are both available through his galleries.

Fadi Mogabgab, though, insists that Lebanese have an open mind when it comes to art.
“I have sold things here I couldn’t sell to the French public,” he said. “Here they are more curious. They want something artistic, not just to match the carpets.”

As Elias Maamari points out, art has “a lot to do with money and very little to do with good taste… Money is the universal currency and good taste is very subjective.”

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Lebanon

Rest & recreation – The beach life

by Executive Staff
written by Executive Staff

It’s an obvious business proposition: buy beach front property, wait for the sun to come out, and charge $20 a day for entry. And from mid-July through September, as long as there is heat to beat, Lebanon’s beach clubs are packed with tanned, oily bodies frying themselves to golden perfection.

As competition for customers intensifies, beach club owners are offering new, innovative incentives and programs to lure clients to their particular strip of sand. Furthermore, some are adding facilities to make their clubs year-round destinations, maximizing profit on some of Lebanon’s most expensive beach front property.

Club Senses in Kaslik sits near the coastal highway, 20 minutes from Beirut, drawing customers from the capital and nearby towns who want a quick escape from the urban heat. It’s a massive black building, with several floors of gym equipment, 40 exercise classes per week, an indoor pool with panoramic view and a large spa. While there is no beach access, it has two swimming pools, one of them for children. Last year, the pools were only for members of the gym, who pay a monthly ($165), quarterly ($462), half-yearly ($890) or yearly ($1,788) membership fee to use the equipment and take classes.

This year, the club’s management opened up the pool area for non-members. Although open for only a year, according to Shyrine Yaghi, Communication Manager at Club Senses, the laid-back, somewhat New Age feel proved extremely popular, especially with local Lebanese.

“Tourists are more likely to go to touristic cities,” she said. “But at Club Senses, it’s more like a resort. We’re not promoting it as the city of Kaslik. Last year we had a good experience with the beach club, so this year we’ve developed more space and a certain strategy to contain the 600 to 700 people who come on the weekends.”

In Byblos, Eddé Sands, one of Lebanon’s favorite beach resorts, is upping the ante, faced with increasing competition from places like Club Senses. In addition to their tropical outdoor spa, Eddé Sands opened an Ayurvedic spa this past year, the first of its kind in the country. Two Indian doctors trained in Ayurveda, an Indian science of healing, offer treatments, massages and consultations for specific ailments.

Eddé Sands is also looking to capitalize on the exclusivity angle, offering for the first time a silver “Presidential” tier membership, which for $1,430 comes with a host of benefits, such as free massages, free meals for two at all of the resort’s dining outlets, and a 15 percent discount at the spas. The regular purple ($411) and gold ($847) memberships are also now offered for families, rather than just individuals. And instead of one entrance for everyone, Eddé Sands also split the experience in two, with a VIP entrance that goes directly to the cabanas, bungalows and circular VIP pool, and a separate entrance for families and day-pass beach goers.

Like Club Senses, Eddé Sands is looking to make the resort a year-round destination. The memberships, which used to be valid until the end of September, are now valid through the end of the year. A massive new ballroom, over 700 square meters and seating up to 640 people, will host weddings and parties all year long. The resort’s traditional Lebanese restaurant, Layal al-Zaman, was the scene of New Year’s and Valentine’s Day parties last year, and can be kept open for winter dining.

Then there’s the beach club that’s opening this winter. Hotel Byblos-sur-Mer, owned by Alexy Karim, is set to re-open around Christmas this year, so he can catch some holiday tourists or Lebanese on a trip back home who are looking to spend a few days by the sea and explore Byblos’ old town. Located at the edge of the port and built in 1964, it ironically had its heyday during the civil war years, when many Beirut residents left for the relative peace of Byblos. But then the capital came back to life, with its new downtown and fancy hotels, and Byblos was, as Karim puts it, “forgotten.” He is looking to bring the hotel back to its former glory minus, of course, the circumstances that made it so popular.

Karim is also the owner of Dar l’Azrak, a seafood restaurant perched on a cliff in the town of Amchit, south of Batroun. With seven years in the seasonal food and beverage industry, he is keen to move onto a project with a slightly longer window of opportunity.

“We work all year just to make these three months,” he says, referring to the high summer season. Karim shudders to think of the summer of 2006, and calls 2008, when Lebanon’s government was pieced together just a month before the season began, “sort of a miracle.”

The four-story hotel will have 22 suites, eight rooms and a massive rooftop presidential suite with a 400 square meter terrace. Room rates will begin at around $200 for a 30 square meter deluxe room, and will climb into the thousands for the 160 square meter presidential suite. With high-speed Internet and two conference rooms, as well as a small spa on the third floor, Karim hopes to make it a corporate destination during the low season.

“There are two hard months, February and March. We have a low season like everyone else, when we will focus on corporate things, seminars,” he says. “But after February and March, you have Easter, and then springtime comes,” at which point he expects business to take off.

For summer 2010, he’s planning a beach club and pool just across the road from the hotel. Comprising 2,000 square meters, the U-shaped outdoor area sits just adjacent to the port. A finger of land that juts into the Mediterranean will house a seafood restaurant, also called Dar l’Azrak, and the rest of the little strip of coast will have a lounge pool, deck and snack bar.

“I’d rather give my guests nice clean water to swim in the sea than focus on a big pool,” says Karim, referring to a plan to pipe the hotel’s wastewater back into the municipal system for treatment, rather than letting it run into the sea. At the other side of the U is a raised wooden deck; this area will turn into a bar and lounge once the sun sets.

“It’s not wild like Eddé Sands, more of a chill out place, with jazz, blues, Cuban music. You can moor your boat and come spend the day, and then continue your evening after dinner at the lounge,” he explained. Guests will also be able to catch music from the Byblos Festival, whose stage is on the other side of the port.

“We’re targeting not teenagers but executives. Young executives,” said Karim, who is in his late 40s, “like me.”

The phased opening will help him iron out any kinks in what is his largest project to date, while not missing any of the seasons.

“I could have opened the beach this year,” he said, “but the hotel would not be done. I like to fix one thing at a time.”

“When you open it, that’s the hardest thing,” Karim continued. “It takes you two or three years to adapt, upgrading everything yourself. This way, we can fix any problems during the low season stages.”

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Lebanon

Telecom – Dialed with good intentions

by Executive Staff
written by Executive Staff

Lebanon’s telecommunications industry has seen some progress in the last year, mainly due to efforts aimed at reforming the sector. One of the most positive developments is that Law 431 has actually begun to be applied. The law, in theory, lays out a roadmap for how the telecommunications sector should be reformed by giving it a corporate style structure, the goal of which is to prepare the sector for possible privatization.

Law 431 also created an entity responsible for carrying out and overseeing the reforms, called the Telecom Regulatory Authority (TRA). Recently the TRA’s mandate has put it in conflict with the Ministry of Telecommunications, with both sides struggling to assert their authority over the regulation of the telecom industry. It doesn’t help that the ministry and the authority appear to be backed by parties from opposing sides of the country’s political divide.

The conflict came to a head earlier this year when the TRA made two decisions that the ministry perceived as overstepping its mandate.

Simply called “Decision Number 1,” the TRA ordered that all mobile numbers for MTC start with the prefix “71” and all numbers for Alfa would start with “72.” The point of the decision was to shed light on the actual cost of calls between networks, since it’s more expensive to call an Alfa number from an MTC Touch phone, or vice versa, than to call a number on the same network.

“Decision Number 1 gives transparency to the end-users and makes it easier to know whether they are calling a subscriber who is on the same network or on a different network, because there is a difference in terms of tariffs,” said Kamal Shehadi, chairman of the TRA.

Also included in “Decision Number 1” was a TRA order to issue one million mobile numbers to each of the two mobile network operators. The decision went directly against the ministry’s policy of approving and handing out numbers for MTC and Alfa in batches of 100,000, thus giving the ministry control over the amount of mobile numbers in the market and keeping the operators on a tight leash. The Ministry of Telecommunications contested both parts of “Decision Number 1” on grounds that the TRA was overstepping its authority, and Alfa went ahead and started issuing 71 numbers. The Ministry of Telecommunication and Alfa declined to comment for this article.

The dispute was brought before Lebanon’s highest court, the Shura council, and in mid-July the court issued a ruling backing the TRA decision. The court said that under Law 431 the TRA was within its legal mandate to issue “Decision Number 1.”

The allocation of the numbers is part of the implementation of a “National Numbering Plan (NNP).” The numbering plan would, in theory, allow for better management of the mobile networks, and is part of the planned reforms of the sector. But the numbering plan’s budget comes from government coffers, and is called the “numbering fee.”

The second decision made by the Shura council was to suspend the implementation of the numbering fee that would be paid to the TRA to implement the national numbering plan. In May, the current care-taker Telecommunications Minister Gebran Bassil issued a policy paper for the plan, where he envisioned the TRA to be “guided to work on an NNP,” thus outlining his support for the plan but not allocating the task to the TRA.

If Bassil’s policy paper is anything to go by it seems that these decisions won’t be the last points of contention between the minister  and the TRA. The section of the paper that deals with the TRA uses language that asserts the ministry’s authority over the TRA. The paper then states that the “TRA is bound to fulfill all its duties and responsibilities under the minister’s supervision, following all ‘general rules for the Regulation of Telecommunications Services in Lebanon’ set out by the minister.”

While all this may seem like the TRA and the ministry are in a state of perpetual tug-of-war, Shehadi insists that this is not the case.

“This is not a turf war,” he said. “The TRA’s position is based on its desire to have a full partnership between the TRA and the Ministry of Telecommunications… based on the law and the respect of the TRA’s independence.”

Liban Telecom
Liban Telecom is intended to be a government-owned body with a corporate framework that eventually replaces the telecommunications ministry. According to Bassil’s policy paper, when launched, 40 percent of Liban Telecom shares will be offered to the Lebanese public (33 percent minimum) through an initial public offering in the Beirut Stock Exchange.

“The delay in establishing Liban Telecom is creating a delay for the overall package of reforms that is called for in law 431,” Shehadi said.

For this to happen, however, a new cabinet will first have to ratify the decision — and this cabinet has yet to be formed.

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Comment

The bubble’s jagged edge

by Paul Cochrane
written by Paul Cochrane

Reporters have to watch where they point their cameras as the UAE cracks down on media

For business journalists, writing about the Gulf from 2004 to 2008 was often a repetitive process. Regardless of the sector being covered, the opening paragraph would invariably have a growth figure in the double digits, and the projection for the next year would also be a very healthy one. Every year was a record year, or so it seemed.

The global financial crisis in the autumn of 2008 dimmed the Gulf Cooperation Council’s business fortunes, flipping that opening paragraph to negative double digits or growth in the low single digits, depending on the sector. This change was welcomed by many business journalists, if only to spice up their writing, but of course not by the business community.

The reasons behind strong growth can be easily explained, but a downturn and a serious contraction in revenues requires a different explanation, and it was time for journalists to start asking hard questions — at least it should have been time to play hardball.

However, just as the crisis was beginning to bite, the government of the United Arab Emirates introduced a draft media law in January to update the archaic 1980 law. Media outlets quickly understood the ramifications of the proposed rules, which include article 32, whereby journalists can be fined up to $1.3 million for “disparaging” government officials, members of the royal family or Islam, and article 33, which fines journalists up to $136,000 for harming the nation’s image and reporting “misleading” information on the economy.

Given such fines, way beyond the financial means of most journalists and media outlets, how could hacks ask hard questions? And how could journalists report on companies and firms that were in trouble but directly linked to royal families? It is a clear Catch-22 situation: journalists want to do their job, and the public and investors have the right to know about financial shenanigans, but to do so could come with a hefty price tag, and if you can’t cough it up, it’s a stint behind bars in the debtors’ jail.

The whole notion of transparency became a mockery, and the depth of the financial crisis’ impact was barely debated in the media, at least not in the UAE and the other GCC countries, where media laws are similarly draconian.

How ingrained such self-censorship is among Gulf journalists was evident in the headlines and articles in the aftermath of the bomb Dubai World dropped on global markets by announcing a standstill in billions of dollars of debt repayments. The Gulf News gushed across its front page: “Government intervention to ensure commercial success,” the Abu Dhabi-owned The National downplayed the impact with the headline: “A silver lining in Dubai World,” and the Khaleej Times espoused optimism with: “Restructuring ‘A Sensible Business Decision.’” Elsewhere, papers’ headlines were of “castles in the sand,” “Dubai in turmoil,” and “Bombshell decision has severely damaged Dubai’s reputation.”

But while papers outside the region can tell it as it is, reporting on what has already been reported can even be a risky business in the rest of the Middle East.

In one case, a UAE-based journalist wrote an article on the new media law for the American University of Cairo’s (AUC) Arab Media & Society (AMS) website. In it, she referred to a case in May where British daily The Independent ran a story about a case of fraud in which a Dubai developer showed investors photographs of buildings under construction, but were in fact photos of another project. The investors demanded a refund, but until now they have not been reimbursed.

The developer is the Al Fajer Group, run by Sheikh Maktoum bin Hasher Al Maktoum, who is the nephew of Dubai’s ruler. For citing — not breaking — this story, the Maktoum’s threatened to sue AUC.

What this case highlights is the lengths to which the UAE will go to try and rein in negative media coverage. Furthermore, the case has warded off necessary reporting on dubious tactics by developers, which damage the reputation of the real estate sector at the very time when the sector is suffering, with real estate prices down 50 percent in Dubai from their 2008 peak, and investment bank Union de Banques Suisses projecting in November that it could take up to 10 years for the sector to bounce back.

The last thing the sector should want in such a tenuous climate is jittery investors. As an Al Fajer investor told The Independent, “This is going to define my faith in the country. If I’m dealt with correctly, great. But at the moment, it’s not going that way. We’re in the witching hour now.”

That witching hour extends to media coverage, transparency in economic data and whether firms connected to the royal family are being unfairly assisted and bailed out at the expense of ‘ordinary’ companies trying to compete in a supposedly free market. As for us business journalists, reporting on the Gulf is certainly keeping us on our toes as we cover, or indeed cover up, the Gulf’s (mis)fortunes, and try to avoid getting fined a lifetime’s salary in the process.

PAUL COCHRANE is the Middle East correspondent for the International News Service

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Lebanon

Architecture – Lest we forget

by Executive Staff
written by Executive Staff

On the corner of Beirut’s Sodeco crossing stands one of the city’s most emblematic buildings, one that epitomizes both the city’s history and the ravages of the Lebanese Civil War.

The Barakat building is one of the last standing war-torn structures around the center of Beirut, a symbol of the city’s progress and architectural heritage. The building’s construction began in 1924 under the watchful eye of Youssef Aftimos, one of Lebanon’s most famous architects, who also designed Beirut’s municipal building. The first two stories of the four-story building were built out of stone because concrete had yet to be widely used in construction. By 1932, concrete was all the rage, and two more floors were built, making the building one of the first, and last, remaining structures in the city built in this fashion.

Barakat is actually two buildings conjoined together, with much of the space between them consisting of a wide void that gives almost every room a view onto the street — including the rear rooms. This architectural peculiarity gained the building much acclaim as a piece of avante-garde architecture, blending Art Deco and Ottoman styles. But because the building commanded a strategic position on one of the major fault lines of the Lebanese Civil War, the Green Line, it became a premier fighting position in 1975. Christian militiamen built reinforced sniper positions in the rear of the house, away from the windows, and the building’s architecture gave them a near 180 degree view of Sodeco square and beyond. Sitting in their concrete and sandbagged sniper nests, militiamen had a line of fire to  Basta, Ras al-Nabaa, the French Embassy on Damascus road, and nearly to the Hippodrome and the Beirut Museum of Antiquities.

Saving the past
After the civil war ended, the building’s owners, the Barakat family, decided to tear it down in order to sell the land that by then had become prime real estate. In 1997, as the building was being demolished to make room for a new real estate project, one activist decided to try to save the building.

“By a stroke of luck I saw it,” says Mona Hallak, an architect and preservation activist who spearheaded the campaign to save the Barakat building. “After five days of a heavy press campaign, it made such a fuss that the minister of culture became embarrassed and suspended [the destruction] verbally.”

The verbal suspension took a total of nine years to materialize into an official government decree to renovate the Barakat building to house the “Museum of Memory.” The building was purchased by the Beirut municipality for some $3 million from the Barakat family.
Since then the building has stood idle and may well have remained as such if it were not for Lebanon’s former colonial rulers.

“The French are agreeing with us preservation activists and pushing this project along,” says Hallak, who is also on the scientific committee that is coordinating between the various stakeholders of the project. The municipality of Paris has assigned a delegation comprised of a restorer, an architect and a museum curator to provide “technical assistance” to the Beirut municipality.

The delegation was scheduled to make its first trip to Lebanon in 2006 but had to cancel that, and several subsequent visits, because of  armed conflict and political turmoil in the country. They finally made it in November 2008, helping Beirut municipality to choose an architect to devise a program for the project.

“We pushed for an architectural competition [but] we didn’t get it,” says Hallak. “[The Beirut municipality] listed an architect and it’s now in the process of being approved.”
The French embassy in Beirut was not available to comment on the issue.

So far, it’s not clear what “memories” the Museum of Memory will house. Some want the bullet-riddled building to be cleaned up and restored, like in Beirut’s central district, and the museum to focus on the capital’s ancient history. Other say the building should be left as it is, with bullet holes and blown out walls incorporated into a museum that would document the history of the civil war.

Without a solid program and vision in place, the museum’s content cannot be finalized because restoration efforts will need to take the contextual elements on display into consideration. Nonetheless, the municipality insists that things are on the right track.

 Ralph Eid, head of the committee at the municipality that is overseeing the project, says an architect has not been announced due to an “administrative procedure” and the announcement should be made “in about a month.” According to Eid, the project, which he estimated to cost around $6 million, was open to public submission to which “only six people submitted proposals.”

Today the building is wrapped in a massive plastic banner that serves as advertising space to promote everything from instant coffee to the ruling March 14 coalition’s recent election victory. Eid says the decision to post ads was made in order to “save money” through a deal with an advertising firm — he declined to name the company — whereby they would erect the scaffolding in exchange for “25 to 35 percent of the space to be used for advertising.” He says the advertising will be removed soon.

When reconstruction comes
As for the actual construction of the project, Eid believes that the first cornerstone could be laid in six months and it would be “fair to say” that the project will be completed by 2012. But this may be “too optimistic,” says Hallak. Supposing the architect that has been chosen is commissioned and comes up with a program that satisfies all the stakeholders, the contracts must then be put out to tender and only when a contractor has been chosen can work begin. Moreover, the clock is ticking: any government decree that is not implemented within eight years of it being issued can be overturned, meaning the original owners can lobby to get it back, still a real possibility given the project is expected to be completed one year after the eight year grace period.

It seems that the constant delays are once again threatening the project’s implementation. Hallak says without a place to recall the horrors of the civil war, the Lebanese risk returning to the bloodletting of darker days.

“This city has not attempted on a public level to deal with the issue or do any kind of reconciliation,” says Hallak. “This building will initiate a process that, if not initiated, means my sons or your sons will fall back into war. If you don’t deal with it, it is going to come back.”

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Finance

Bank BEMO – Samih Saadeh (Q&A)

by Soraya Darghous
written by Soraya Darghous

Samih Saadeh is general manager of Lebanon’s 18th largest bank, Banque BEMO, and has been with the bank since 2003. He started working in the banking industry in 1978 and has been a senior executive at American Express Bank-Beirut, Bank of Beirut and ABN AMRO Bank.
Bank BEMO has total assets of $1.05 billion, and if the bank’s Syrian affiliate is included, some $3 billion. In the first half of 2009, the bank’s total assets grew by 15.6 percent.  Executive sat down with Saadeh to talk about his bank’s success and gain insight into the role smaller banks play in Lebanon today.

Samih Saadeh

E As a medium sized “beta” bank, how does your strategy differ from an alpha bank? What are the top priorities on your agenda?

This is a board decision, it’s the oversight of the bank. We compare our private banking to Bank Audi Saradar sometimes, yes, [but] on a smaller case though, because they have larger capital and client base. Certainly when you have a universal bank you have a larger client base, which allows you to make more money and to be more exposed.

What we’re trying to do on a smaller scale is have a boutique bank, instead of having a universal bank. I respect everybody’s strategy, I probably agree with other’s strategy sometimes — because it’s faster to make money and grow — and you come to BEMO and you see it’s very little and a bit slower.

If you want to be a private bank in this country, you really have to have political stability. If people want to believe in putting money with you, you don’t have to rely on the locals. I hope one day the political stability arrives, but this is one of the missing links in the chain to complete the services of Lebanon as a financial center. All of the potential that Lebanon has is not prospering because of the political instability. People want to trust this bank in 10 or 20 years, and this is what we are betting on. We want to build this; we want to complete this closed chain in Lebanon.

E Now, how to survive? Bank Audi, for example, has built a lot of things around their vision and one of them is private banking.
Corporate banking and retail banking need a lot of capital. You need to either open capital or get other investors. Private banking, in reality, doesn’t need a lot of capital. It needs a lot of know-how, conservatism and trust.

E What kind of customers do you cater to?
We as BEMO have a different strategy than Lebanese banks. We don’t want to play volume. We would like to grow, certainly, but if you want to grow you have to have large capital and to possibly go into retail banking. You also have to have a strategic vision for the bank, which allows you to be like any other bank. In Beirut, we’re very specialized. Our motto is ‘corporate and private banking.’ We don’t do retail banking — we do to an extent though.

Recently we started to buy some Lebanese government sovereign paper. If you want to collect deposits and you don’t put it in a sovereign bank, you have to lend it. You are bound by ratios as well, on how much you lend. There is a limitation to how large we can grow in volume. So we always look at how much we can grow in fee income, not how much we can grow in volume. Even if I get a large deposit today, I lose a lot of money. Either you put it in the government, outside, or with the central bank. Even if the central bank pays for you half a point — you lose a lot of money.

Originally Lebanese banks collected deposits — they lent around 50 percent and placed with the government and the central bank up to 55 percent. We, on the contrary, have 25 percent with the central bank, and with the government we have 3 percent to 5 percent, not more. This is why growth is a limitation to us. If you compare us to the rest, we are a beta bank in volume, but our strategy forbids us from being an alpha bank, even if we wanted to.

E How has the bank’s strategy changed since the global financial crisis struck and now after?
Banque BEMO has always had the strategy to grow to be a private bank whereby we would be acting as a financial advisor for every high net worth individual throughout their life — no matter what stage they are in. If you want to act as a financial advisor, you need to build the reputation. Building this reputation takes decades actually. We’re building on the heritage the Obegi family has, for the last 50 years. Now we have another decade to work on, to earn this trust from the people. Also, we use a business model of relationships. That means every client has his own financial advisor or relationship manager.

When the financial crisis came — and this is an approach to private banking — people stopped dealing and we make a lot of money on people making deals. So part of our income was hurt… Now, it’s catching up, thank God, the trust is starting to be rebuilt. People are getting into the market.

On the corporate side, we didn’t suffer at all. We had a certain amount of money lent, and we had lent it. In percentage, we are the highest lent bank to corporates in the country. We are lending around 45 percent of our total assets to corporates. We don’t go into the government too much.

Private banking income was a little bit on a standstill. We hope that it will catch up again.
We didn’t change our strategy, it stayed the same… we just weren’t aggressive in pursuing it in the last year. But the board decided that strategically this is what they want. They want to stay as a private, corporate bank.

E Since the financial crisis, how has your advice to your clients changed? What are the most common investments you tell them to make?
Frankly it’s not easy to let them come back. Everybody lost, depending on the extent of the loss — nobody can claim they didn’t lose… If they bought their portfolios five, 10 years ago or two years ago they probably didn’t lose — the starting point is most important [factor]. We are inviting them to come back because the markets are starting to pick up, there’s a lot of opportunity. But, be prudent at least. You have the safe investments, if you go into medical and commodities. There are aggressive and risky investments like financials. Depends on your profile. We always split our client base into categories.

E Recently, the International Monetary Fund said Lebanon’s economy could grow much faster than their previous projection of 4 percent. But, the IMF emphasized that the top priority for Lebanese banks should be dealing with the public debt. What is your take on this?
This is quite a thorny issue. Who is right? Imagine if the banks didn’t give money; what would have happened? Also, imagine that we didn’t have this flagship of the economy — the banking sector — nobody would have heard of it. The economy is built on the financial sector.

Certainly, the financial sector is benefitting from lending to the government, but it’s also to the benefit of all stakeholders. We were saved from the financial crisis because our debt was local. Lebanese banks cannot stop financing the government; it’s in their interest now.
For me, the public debt is the least thing we should worry about. If we spent the same time talking about the debt on increasing productivity, the GDP of the country would soar.

Recently, Lebanon’s GDP increased to $33 billion; it could be $50 billion! This year we have a growth of 6 percent, when everyone else around the world is suffering negative growth. Imagine if there was political stability; the growth could be far higher.
Debt is not a problem as long as you generate productivity!

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Lebanon

Forestry – Firefighting reinforcements

by Executive Staff
written by Executive Staff

The first week of July saw an unprecedented number of wild fires rage across the country: 185 in three days. The Lebanese authorities struggled to contain the unexpected fires; the three firefighting Sirkosky helicopters, acquired this year, still weren’t ready to be used so early in the dry summer season.

From Beirut, smoke from two fires could be seen billowing off the Chouf and Metn, leaving black scars in its wake. From Zgharta to Tebnin, the fires burnt fruit groves, olive trees, grassland and pine forest. The damage costs farmers and others millions of dollars per year — up to $10 million to replant 2,000 hectares of land. The fires are suspected of being started by farmers, charcoal collectors, trash burners or campers, despite a law that comes into effect every summer banning fires in rural areas.

It was the same in 2007, when fires destroyed 4,031 hectares of forest and agricultural land, or more than triple the annual average of 1,200 hectares. To the Lebanese government, this number symbolized far more than just the immense physical and fiscal damage that the fires caused. This time, change needed to happen.

“The fires of 2007 following the damages caused by the summer war of 2006 brought to light not only to the Lebanese citizens, but also to the government, the rapid decrease of forestry in Lebanon,” said Dr. George Mitri, research and development program coordinator at the Association for Forests, Development and Conservation (AFDC), a Lebanon-based non-governmental organization collaborating with the government to find a more effective long-term solution to Lebanon’s forest fire problem.

“In 1965, the percentage of forestry in Lebanon, and we’re talking about mostly pine trees, was at 35 percent of the country. Today, 34 years later, it’s at only 13 percent,” continued Mitri. According to an AFDC report, 5.6 percent of Lebanon is at high risk of fires and 25 percent at medium to high risk.

When forests are lost, ecosystems are destroyed. Certain species of plants, animals and different kinds of wildlife continue to be classified as endangered in Lebanon. Forests act as somewhat of a ‘filter’ for air. With less forests, the effects of pollution are more severe. Additionally, forests serve economic benefits, with the average hectare of forest in Lebanon generating gross benefits of $381 per year according to the AFDC. This figure rises when fruit trees are included. For instance, one hectare of oilve trees generates an estimated $13,300, according to the World Bank. Overall, the total gross losses of the October to November 2007 fires were estimated at $31.1 million.

So when the smoke cleared, plans were put in place to develop a new strategy to better manage and combat forest fires in Lebanon. ‘Lebanon’s National Strategy for Forest Fire Management’ was introduced this spring as the new official tool to combat forest fires in the future. The most important aspect of the strategy, according to Mitri, was that it signified the first time the Ministries of Interior, Environment and Agriculture were to collaborate jointly, alongside the Civil Defense and a number of local and international NGOs.

The working plan
Lara Samaha, head of the Department of Ecosystems at the Ministry of Environment, believes that the strategy is a positive first step and can succeed in effectively bringing down the annual damage caused by fires in the long term.

She says the strategy specifies what needs to be done to combat forest fires in Lebanon, as well as “determines for each national action, on all levels, the concerned and appropriate administration for its implementation.”

The strategy emphasizes the three important steps of forest fire management: prevention, combating the fires, and restoration and rehabilitation of the land. Within the strategy are the detailed responsibilities of each ministry, and the best method for each to execute its role.

The hurdles that the new strategy must overcome, however, remain immense. The Lebanese climate is often compared to that of California, where pine tree forest fires prove to be a consistent and difficult problem. In California, the average loss of forest has been 105,000 hectares per year over the last five years.

“When the committee was put together to come up with the new national strategy, we went to California to speak to experts in the field, knowing that we were going to need to learn more,” said Samaha.

Year after year
Thousands of fires threaten Lebanon’s forests every year, and the Civil Defense’s fire fighters — up to 4,000 of them unpaid volunteers — struggle to contain the destruction  during the dry summer months, between late May through September. Among the most difficult factors in combating forest fires is their unpredictability once the flames are out of control.

“Some of the factors contributing to spreading forest fires are wind speeds and distances from the nearest Civil Defense stations,” explained Mitri. “As long as the Civil Defense can make it to the area of the fire within the first 20 minutes, they can probably contain it before it grows.”

George Abi Musa, the head of operations at the Department of Civil Defense, agreed that getting to the fire early is key to properly managing and combating it, but adds that this is often difficult.

“When you have 15 or 20 fires which are burning at the same time, it’s nearly impossible to get to all of them in proper time,” explained Abi Musa. “In late June, did you know that there were 683 fires in a span of five days, with 45 of them coming in a two-hour span?”

Abi Musa believes that the Civil Defense has one of the largest, if not the largest role to play in managing forest fires in Lebanon, and is excited about the three new Sirkosky helicopters purchased by the Ministry of Interior to be used by the Civil Defense. The helicopters, which can carry up to 3,500 liters of water per trip, are estimated to have cost a total of $13 million, according to The Daily Star, and are the first such helicopters to be owned and used by Lebanon.

“I’ve been with the Civil Defense for 25 years now, and up until this point, owning such helicopters was just a dream,” said Abi Musa. “Now we can reach the fires which were previously nearly impossible to reach.”

Armed with the new strategy, confidence within the Lebanese government is high in regards to managing forest fires, but Mitri, Samaha, and Abi Musa all insist that none of what is to be accomplished can be done without the help of every Lebanese citizen in aiding the government to protect the forests of Lebanon.

“When you have a single fire, then that could have been started by natural causes. But when you have 50 or 60, it means that these are started by people, whether harm is intended or not,” said Abi Musa.
All three spoke of the need for citizens to contact the Civil Defense in cases where they see a fire, or anyone about to start one.

Additionally, finances are an important part of any effective fire-management system, with some $1.4 million spent firefighting in 2007. Replanting is a further cost, estimated at $6,300 per hectare. Sufficient funds are a luxury the Lebanese Civil Defense does not have. Support has trickled in more consistently since the fires of 2007, the year when the problem was recognized globally. Much of what can be accomplished with the new strategy will depend on the continued support of other countries, as well as local and international contributions.

Ultimately, time will tell whether or not Lebanon’s new national strategy will effectively counter the forest fire problem, but for once, there’s optimism in the government that they are one step closer to finally snuffing out the flames.

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Companies & Strategies

Samsung – Sunny Hwang (Q&A)

by Executive Staff
written by Executive Staff

Samsung, the South Korea-based electronics manufacturing giant, announced the official launch of its regional Levant office this summer, to be based in Amman, Jordan. Executive was invited to attend the opening of the office on an all-expenses-paid trip, and had the opportunity to speak with Sunny Hwang, the President of Samsung’s new Levant Operation Office.  

E Why did you decide on a regional office?
The Samsung brand in the global market is at this moment pretty much enjoying its status. So we are doing very well in the TV businesses and the cell phone businesses and all other business areas. For example, in the TV business we have been in the number one position since 2006 and our position is getting stronger. But in the Levant area, Samsung’s business compared to our global standard is very weak. Lebanon is a little bit stronger than any other Levant area. We are devoted to our weakest point and we want to attack it, and actually at this moment this is just the beginning. We put our head office here and by next month we will open an office in Damascus, and in the first quarter of next year we will also open an office in Beirut. That is our target. 

E How can you evaluate the regional market given the current circumstances?
Before I came, I worked in Sweden, in the Nordic area. And it was the first region hit by the recession. So I know what the global recession is and I know what can be influenced by the global recession in our operations. But I feel that the Levant area is the least affected. If I want to divide by country, I think that Jordan is hit the most.

E What about internationally? How are you affected as Samsung?
In the last quarter last year, we made a big loss. The important thing is that we also expected the first quarter to be terrible. But when the results came, it proved that we had already recovered. It didn’t show a strong profit, but in the first quarter we turned the direction to profit. The market is recovering at a very slow pace. Nobody is expecting the market to recover within this year — it will very slowly recover until the end of next year. When the Korean-Asian financial crisis came in 1999, we restructured everything, and Samsung stood very tall at the time. So thanks to that we could make this very strong foundation. During most of this time we did restructuring and all the changes helped. So we did a lot of changes since the second half of last year. We restructured ourselves and strengthened our organization.

E Now in the region, what challenges are you facing to keep clients?
What I found in the last four months when I came here is that the only problem is that we did not communicate successfully with the consumers, so they do not know what Samsung is, and what Samsung products can give them. So the lack of knowledge about Samsung products is why there is so much of a gap between the global level and the level in the Levant.

E What is your strategy? What are the steps that you are planning to take in the near future?
We had great difficulty to communicate because we did not have our organization here. So what we could do before is to rely on our partners. But by nature, their interest is to sell and make profit. They do not [want] to put money [into] the Samsung brand [to see benefits] over the next 10 years, so it is a short-term profit. Only Samsung as an owner of the brand can work for 10 or 20 years later. That is why we have not done the right marketing communication or investment in the last 10 years.  This is the first time we are marketing and public relations will be managed by Samsung ourselves. So we can carry our investment for the long term.

E What is your current share of the market in the Levant region, compared to Nokia?
When we are talking about mobiles, Nokia is about 70 percent, and Samsung is about 20 percent. And Sony-Ericsson is getting weaker and weaker.

E What about other regions?
In some countries, Samsung’s share can be less. But in most countries it is about 25 percent.

E Are you focusing on certain products here in the region?
We have many groups, and we cannot neglect any part of it. We have audio, video, flat screen TV, and the LSA TV is the most important one. And as you might know, we had a very good launching a week ago in Beirut in Skybar, so that is the new field of the flat screen TV market. We are creating the market at the moment. LCD flat panel TV is the strongest point and we should push that, and we should utilize it, air conditioning also. In cell phones we are number two in the world after Nokia, but we should be a stronger number two. Already in France, Samsung has been number one for the last four years. We beat Nokia in France. Benelux states are to lead, Russia also and many other countries, so why not here in the Levant?

E Last quarter demand decreased and you ended up in the red. Has this affected your pricing structure and what have you changed since?
We cannot change the pricing, because then we will be out of the market. I do not think we increased the price, but we did a lot in cost cutting, like all the executives of Samsung had to decrease their salaries by 30 percent — every executive. Instead of firing people, we chose to decrease the benefits. Today we can only travel by [economy] class.

E What are the products that were the most affected… TVs or mobiles?
It is not a certain product that is affected. We have to [differentiate between the] consumer section and business-to-business section. The global crisis immediately attacked the [latter] section, because every company is holding its purchases. So in our products there are a lot of business-to-business products like monitors and printers. They are also selling to consumers but we are talking about corporate. Consumer sales have not been affected that much, like TV sales.
People are cutting their traveling costs. So, because they are staying at home, they need a TV!

E How many people are you going to hire for this office?
That totally depends on the performance and the sales results. There will be no fixed amount of people. It will depend on the operation size. When I was in Sweden, our turnover was $1 billion, and I had 300 people. 

E Here, what do you expect the turnover to be?
In three to four years our target is to reach $1 billion. [Today], for the Levant, it is around $200 million. Next year our target is $500 million.

E What are your expectations for the Levant market?
Well, my dream and my mission in the Levant is to be first in one year’s time from today, to reach the global average in TV sales and all sales, and also brand. Our branding in the Levant is quite low because we haven’t invested that much, but we will do our best to reposition ourselves. That means bringing brand preferences. Sales wise, next year will be about two times growth. And every year two times growth. That is a possibility in this market, because it is a virgin market.

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Lebanon

Reconstruction – Rebirth begins

by Executive Staff
written by Executive Staff

The rehabilitation of downtown Beirut’s Magen Avraham synagogue will begin this summer, according to sources in the Jewish community. Once the largest synagogue in the Middle East, the Lebanese Civil War and the Israeli invasion of 1982 left the synagogue in ruins, a state it’s remained in for more than 20 years; but, funds have now been raised for its reconstruction.

The architect in charge of the Magen Avraham synagogue’s renovation confirmed to Executive that reconstruction is imminent. With work expected to begin in August, the site will be cleared of the trees and weeds that have grown in the partially destroyed structure.

The architect, who spoke on condition of anonymity, stated that the money for reconstruction has been raised by expatriate Lebanese Jews and private donations and will cost a total of $2 million to complete.

“The synagogue will eventually be restored to exactly how it was,” the architect said. “I will be reconstructing the synagogue using old techniques, hand-cutting the stone and so on. Currently all the ceiling, woodwork and iron work needs to be replaced. The original façade will remain but we will have to check if we need to re-do the structure.”

The Magen Avraham Synagogue Facebook group also posted an announcement that reconstruction of the synagogue would occur. This announcement was accompanied by a chorus of “Mazel tovs” and “Mabrouks” (congratulations). However, not all on the group were celebratory. David Avraham Daoud, a member of Facebook’s Israel network, wrote that the reconstruction issue is still delicate.

“I just hope it doesn’t become a death trap for the Jewish community in Lebanon,” he wrote.

Others were more positive about the synagogue’s re-development. “Let’s enjoy the integration and multi-ethnicities in our beautiful Middle East,” wrote Zainab Khalil, while Lebanese Boudi Saleh was “excited to hear that it will be renovated.” The plans for the synagogue include a museum documenting the history of the Lebanese Jewish community.

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Companies & Strategies

Ogilvy Group – Ralph Clementson (Q&A)

by Executive Staff
written by Executive Staff

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.”

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