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Network Communication Group

Expanding online and across the region

by Maya Sioufi

The big guns are fighting hard to survive and people are wondering what are we doing [competing] with these big guns,” says Saad el-Zein, chief executive of the Network Communication Group, a Dubai-based holding company made up of four distinct communication companies.

With seven offices in the Middle East and more than 150 employees, the group’s total revenues amounted to $24 million last year, the majority coming from AGA ADK, the group’s marketing arm established in 1997 by Roger Sahyoun, chairman of the holding group. Starting off in Beirut in 1997 then moving the head offices to Dubai, Sahyoun established Arabian Gulf Advertising (AGA) to cover the advertising industry in the Middle East. After securing the regional accounts of Siemens mobile phones and Movenpick Hotels and Resorts in 1999, he rushed to open two additional offices, one in Jeddah and one in Jordan. “From then on, we started growing the network,” says Sahyoun.

Three years later, Sahyoun turned the public relations department of AGA into a separate company called Pencell, the second company in the holding. By 2007, on AGA’s 10th anniversary, a strategic partnership was established with Japan’s third largest advertising company Asatsu-DK (ADK). Twenty percent owned by British multinational agency WPP, ADK bought a minority stake in AGA, with Sahyoun unwilling to disclose the exact percentage.

This year, the group has bigger plans with the launching of the third and fourth companies of the holding. Wet Paint, a web design and online brand activation company, had a soft launch last year and is a key focus for revenue growth for the group going forward. Equation Media, the media planning and buying unit of the network, was launched in February this year in Beirut, Dubai and Riyadh. With these new companies on board, Sahyoun projects revenues to reach $37 million in 2013, solidly up on 2012. It has not been all rosy for the holding though. When the 2008 financial crisis arrived in Dubai, it hit Network Communication Group hard too. Between 2008 and 2011, the holding saw revenues dive from $28 million to $12 million, a staggering 60 percent drop. While revenues have started picking up in 2012, they are still below the pre-crisis peak.

Going forward, the network plans to increase hiring whether through recruitment or by acquiring home-grown agencies — a cheaper way to grow than pitching for new accounts according to Sahyoun. To continue expanding the key area that the network is focusing on is digital, and it aims to acquire different digital companies offering diverse services and to place them under the umbrella of Wet Paint. Zenith Optimedia, a research firm specialized in the advertising and media industry, expects advertising spending on the Internet to grow by 15 percent this year versus 2 percent growth for traditional media. It also expects Internet ad spending to amount to 20 percent of total ad spend this year and outgrow ad spending on newspapers, forecast to account for 18 percent of the total. “We cannot neglect the power and growth of digital,” says Zein.

In the coming three to five years, the holding company is set to add disciplines to its network and expand geographically. An office in Egypt is scheduled for April this year to cover the North African region and Sahyoun is in advanced talks with a local advertising agency in South Africa for a partnership to cover the east and west coast of Africa. [In Africa], “Even if you know the advertising business, you need the know-how and the client relationships,” says Sahyoun, as he explains why he decided to go for a partnership as opposed to venturing alone. “Most of our clients, especially in Dubai are not [covering just] MENA [Middle East and North Africa] anymore, they are becoming MEA [Middle East and Africa] and you have to capture those budgets and grow accordingly,” adds Zein. In the long term, the holding plans to expand to the Commonwealth of Independent States (CIS) markets — the former Soviet countries — as that is where most of their clients are turning to for growth of their businesses.

As the advertising industry sets itself for another testing year with clients’ budgets affected by the ongoing global economic conditions and accentuated by instability in the Arab world, competition is set to be fierce between the ad agencies operating in the region. The Network Communication Group, according to Zein, is unfazed by the challenge: “We want to stand out, grow and prove to the world that there is still room for local networks to rise again.”

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Maya Sioufi

Maya is a research consultant on Arab youth entrepreneurship and employment. She headed Executive's banking, finance and entrepreneurship sections from 2011 to 2013. Previously, she worked at JP Morgan in London in equity sales for three years. She holds an MSc in Accounting and Finance from the London School of Economics (LSE) and a BA in Economics from the American University of Beirut (AUB).   

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