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.”
