Cover Story The ad­ver­tis­ing cold war

ArabAd - - CONTENTS - 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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