ArabAd

Cover Story The advertisin­g cold war

- By Iain Akerman

Surrounded by political instabilit­y and financial crisis and shaken by technologi­cal innovation, Lebanon’s advertisin­g industry is struggling to come to terms with the new market dynamic $SDUW IURP WKH ÀQDQFLDO SUHVVXUH RXU LQGXVWU\ DQG QRW MXVW LQ /HEDQRQ LV VXIIHULQJ IURP D PRUH IXQGDPHQWD­O SUREOHP Its DNA Adel Kanaan COO M&C Saatchi

Lebanon, once the cradle of Middle East advertisin­g, remains a deeply frustratin­g market, and its problems are both political and economic.

The continuing crisis in Syria has caused advertiser­s to make big cuts in spending across the Levant, while low oil prices and increased regional instabilit­y have added to the anguish felt by the Lebanese advertisin­g market, said media agency Zenith earlier this year. The market shrank 15.3 per cent in 2016 and is expected to decline by a further 17.8 per cent in 2017, according to the agency’s advertisin­g spend forecasts. Further drops are expected in 2018 and 2019.

Added to this is the country’s massive public debt, while the Lebanese have to endure an increasing­ly inadequate national infrastruc­ture, despite the country’s promise, talent and creativity.

“Like we all know, Lebanon’s wellbeing and stability are very much dependent on its surroundin­gs,” says Adel Kanaan, chief operating officer at M&C Saatchi. “Between wars and oil prices, things are not rosy.”

“The Lebanese market is witnessing a cold war, where few are daring to make huge expenses and the clients are spending their budgets very wisely and very carefully,” adds Ghada Chehaibar, managing and creative director at Purple Advertisin­g. “Priorities only. Survival mode on.”

Survival mode indeed, although the eternal optimism of the Lebanese remains.

“Regional stability is key to our industry,” says Fadi Mroue, founder and managing director of République. “Lebanon is a perfect example of this. Whenever we have a few stable months politicall­y, you see clients encouraged and ready to spend money and advertisin­g, but one security threat and you have budgets frozen for a few months. This creates a situation where you can’t forecast forward.

“The situation is pretty much stagnant, but what has changed is that we can no longer rely on big budgets coming from outside of Lebanon.”

He adds: “The bulk of our client list still comes from the Gulf which keeps us unaffected by local situations. Lebanon in recent years has become the ‘call centre’ of the Middle East, with agencies setting up their creative kitchen here for cheaper labour costs. With that said, there is a cut-down of budgets in the Gulf and this is trickling down to Lebanon and we can clearly see that with the recent closure of several agencies in Lebanon.”

Those closures included the Beirut office of Drive Dentsu, although there has been a correspond­ing increase in the number of boutique agencies springing up. This, despite budget cuts, increased direct interactio­n between clients and media, and the migration of local creative talent.

“Apart from the financial pressure, our industry (and not just in Lebanon) is suffering from a more fundamenta­l problem. Its DNA,” says Kanaan. “Everyone is wondering what’s next. Can traditiona­l agencies deliver digital work? Digital developers are acting as agencies. Financial consultant­s are creating campaigns, media houses are producing campaigns. Web banners became as important as a TV commercial. Is TV dead? Makes us wonder what’s next.

“One thing’s for sure, ideas will remain at the core, and this is what we are known for and will always be known for. We have managed to reduce our operating costs without touching the well-being of our people in order to maintain our standards, even if it meant [we had] to let go of a certain type of client. Now one of the biggest challenges we’re facing is to still deliver the same quality with lesser means in lesser time.”

7KH /HEDQHVH PDUNHW LV ZLWQHVVLQJ D FROG ZDU ZKHUH IHZ DUH GDULQJ WR PDNH KXJH H[SHQVHV« Ghada Chehaibar Managing and Creative Director Purple Advertisin­g 7KH VLWXDWLRQ LV SUHWW\ PXFK VWDJQDQW EXW ZKDW KDV FKDQJHG LV WKDW ZH FDQ QR ORQJHU UHO\ RQ ELJ EXGJHWV FRPLQJ IURP RXWVLGH RI /HEDQRQ Fadi Mroue Founder / Creative Director Republique

Karim Nader, managing director of Grey Beirut, agrees with Kanaan when it comes to agencies being forced to do everything cheaply and quickly. “Lately, more than ever before, we are stuck responding to emails, going through spreadshee­ts, and worrying about revenues and how to cut cost,” he says. “Unfortunat­ely, (or fortunatel­y), the concerns are the same everywhere.”

Nader says clients require everything “fast and cheap”, as opposed to judging creativity and brand building capabiliti­es. Current global, regional and local economic turmoil has also necessitat­ed creating new business leads to compensate for the shortfall in organic growth and client budget cuts. This is combined with ongoing struggles to find and retain quality talent.

“One of the biggest problems we are faced with on a local level is agencies undervalui­ng their work and clients not being able to differenti­ate between what’s good and bad,” says Mroue. “Out of 10 RFPS, you win one because decisions are based on financials and not long term brand interests.”

For Kanaan, much of this is deeply frustratin­g. “For how long will agencies continue to accept to lower their standards and to let go of great talent because their mother companies are squeezing their bottom lines?” he asks. “For how long will they accept to play the role of Jack of all trades? For how long will our industry accept a situation with no rules? You have so-called agencies that are ruining the little we have of reputation because we lack a proper body to protect the craftsmen.”

As with elsewhere, advertisin­g investment­s are increasing­ly moving towards digital, although not as quickly as some would like. Estimates of the increase in digital spend vary, but somewhere between 20 and 40 per cent is likely.

“Demand for digital advertisin­g has been increasing and the shift from traditiona­l to digital media is gaining a foothold,” says Nader. “This is normal when considerin­g the many advantages online advertisin­g holds over traditiona­l advertisin­g. Accordingl­y, agencies need to be more and more equipped with digital knowledge, tools and talents to go along with this evolution… to eventually offer more integrated and digitally led services. Hence Grey Group’s acquisitio­n of a majority stake in hug digital, the leading independen­t, regional digital marketing agency based in the Middle East.

“Moreover, we are trying more and more to differenti­ate ourselves from other agencies, by offering creative, powerful ideas and integrated services, in addition to growing the office and our capabiliti­es in the context of Lebanon’s current situation.”

Differenti­ation is key. As with much of the rest of the communicat­ions world, Lebanon’s advertisin­g industry is being transforme­d by new technologi­es, social media and big data, with some agencies struggling to adapt to the new market dynamic.

“The whole advertisin­g era is being modified throughout the world,” says Chehaibar. “The golden era of TV and

:H DUH D PDUNHW WKDW·V VWLOO LQ WUDQVLWLRQ \HW WKLV QHHGV WR KDSSHQ TXLFNO\ DQG VZLIWO\ Emile Atallah Managing Director FP7 Lebanon and Iraq 0RUH WKDQ HYHU EHIRUH ZH DUH VWXFN UHVSRQGLQJ WR HPDLOV JRLQJ WKURXJK VSUHDGVKHH­WV DQG ZRUU\LQJ DERXW UHYHQXHV DQG KRZ WR FXW FRVW Karim Nader Managing Director Grey Beirut

cinema is long gone, and the power has shifted from brands to people. Today, brands need people more than people need brands. The target audience can be reached directly and immediatel­y, through guerrilla advertisin­g, events planning and organisati­on, and brand ambassador­s on social media. Indeed, social media is taking over and the challenge for brands is to deliver real benefits in real time, every day, bit by bit.”

Yet, despite the inevitable preeminenc­e of digital, Emile Atallah, FP7’S managing director for Lebanon and Iraq, believes digital is still viewed as a secondary source of revenue by big agencies and clients alike. “People still see digital as a support medium,” he says. “Today, digital is mainstream, period. If we don’t look at digital as a mainstream channel, we risk becoming irrelevant. Marketing dollars may not increase, but they can adjust and adapt to these everchangi­ng dynamics.”

He adds: “In Lebanon, we still don’t have the luxury of big [data]. We’re still fiddling with small. But we’re still using data, and very efficientl­y to say the least. We’re placing ads right in front of people, anytime and on any screen, abundantly. David Ogilvy once wrote, ‘An advertisem­ent is like a radar sweep, constantly hunting new prospects as they come into the market. Get a good radar, and keep it sweeping’. In Lebanon, we’re all fighting along with our media partners to buy or build that kick ass radar, hoping it will transport us into the future.

“There is ample room for data. With the developmen­t of digital infrastruc­tures and eco-systems, it will undoubtedl­y play a bigger and more important role. And this may vary from enhancing products and services, to better and more efficient media buying, to connecting with people on different platforms like never before. Agencies and clients alike need to start investing and build these into their systems. And it’s not because it’s the future, but because its importance on business is no longer something to question.

“My biggest concern is that we’re not all on the same page. Multinatio­nal brand and media agencies can’t do it on their own. Everyone needs to roll up their sleeves and get dirty. Marketers should be pushing the institutio­ns and the brands they work for to invest and be more vigilant when it comes to data. We are a market that’s still in transition yet this needs to happen quickly and swiftly.”

Despite all of the above, Beirut remains one of the most vibrant and creative cities in the region. It dreams, perhaps, of reclaiming its crown as the hub of Middle East advertisin­g, with the country’s trilingual students forming a national reservoir of talent. Maybe one day it will. For now, it will have to weather the many storms that circle it.

“There is no doubt that Lebanon has the talent,” says Mroue. “In the past year a lot of Lebanese have come back to Beirut from the Gulf and brought experience with them. Since the big budgets are not here, we need to solidify our position as the creative kitchen of the Middle East. If this is successful, it is fair to say Lebanon can return to it’s golden age of advertisin­g.”

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