Growing the pie, with an eye on the future

Geographic expansion is on the cards, explains OMG MENA CEO Elie Khouri. But that isn’t all. With media’s share of the marketing spend shrinking, he’s incubating other drivers. Edited excerpts from an interview with Gokul Krishnamoorthy

Geographic expansion is on the cards, explains OMG’s Elie Khouri. But that isn’t all. With media’s share of the marketing spend shrinking, he’s incubating other drivers.

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here are varying figures on ad spend in MENA. What are your estimates?

The best way to get numbers is to analyse media owners’ investments, and look at it market by market, medium by medium. We did that exercise recently and we’re actually doing an update on that. The number we’re looking at for the MENA region is $4.5bn.

Of this, how much is TV, print, outdoor, etc. varies by market. TV is about $ 1bn in the Gulf, $300mn in Egypt, and another $200mn for North Africa. So we’re looking at around $1.5bn dollars, or about 33 per cent of the total, which is pretty much in line with the global trends. Digital is grossly underestimated in this part of the world. We see it as closer to $650mn. We see it growing by around 18 per cent next year, which will take it to around $800mn.

Last year, you had revised your earlier growth projection downwards to about 5 per cent...

It’s been a tough year. The problems include the economic issues in Europe that have affected the large multinationals. But the biggest problem for us has been the political instability in the region. As you know, the biggest market is Saudi Arabia, which accounts for 60 to 65 per cent of investments. With instability, clients are reluctant to invest. An environment that is not promoting investments, which is laden with family businesses and what-have-you, all of that has put a brake on investments and growth.

As you may know, last year, there were 2.5mn people expelled out of Saudi. That is the number of people in maybe Abu Dhabi and Sharjah put together; it’s half of Lebanon. That has also affected the level of consumption. Therefore, multinationals had to cut down on some of their investments – across industries, across clients. We were expecting much better growth. But this is the reality.

TV commands 33 per cent of spends. Has lack of a robust measurement mechanism impeded investment into TV?

I’ve been here for 25 years. We’ve been talking about this problem of measurement all along.

Naturally, given the lack of transparency and clear visi- bility on viewership, you would tend to not invest a lot of money. The questions have always been there. But, is TV advertising lower compared to other mediums? No. Is TV advertising lower compared to other parts of the world? Yes. The per capita advertising is lowest compared to other parts of the world, but that could be attributed to other reasons.

TV is quite resilient in this part of the world. Especially in Saudi Arabia, which is a very traditional market, very fragmented market, and time spent on TV is one of the highest in the world.

In my view, the TV meter is already outdated. As a measurement device, it has a lot of faults. Today, if you want measurement, you have to go more to social media, where you have live feedback on what’s happening w.r.t. media c onsumption. Sometimes, what we find on social media is contradicting what we have in terms of media measurement. The future of measurement is going to be with the phones.

Will spends on TV come down?

It will come down. Online video is going up dramatically, taking market share from TV. In this region, one (TV) media group is making money, others are not. Increasingly, it is going to be difficult for TV stations, because the market is not growing. So in future, you will see an MBC Group, and a YouTube or some other emerging digital platform, driving the market.

How is digital growing for you?

For Omnicom Media Group, 20 per cent of investments are in digital, in MENA. TV is about 35 per cent. The rest is print, OOH and others.

Digital investment is growing at the rate of 40 per cent year-on-year. If you look at OMD and PHD in different markets, it varies, depending on how sophisticated clients are. In Saudi it would be lower compared to Dubai. Especially in Dubai, we have some clients who have appointed us largely on the basis of our digital capabilities.

Is digital growing at the cost of anything else?

It’s growing at the cost of print. TV is growing at small single digit rates. Outdoor in the region is growing in single digits, may be even 10 per cent. Everything else is pretty much either the same or going down.

How big is OMG Mena today, in terms of headcount, and how big is each unit?

The biggest is OMD, at about 50 per cent of the group, while PHD is about 20 per cent. The other SBUs and companies ( Integral, Annalect, Resolution, Fuse) would make up the rest. The total headcount has been growing steadily year on year. We’re at close to 500 people now.

What would be the growth drivers, priorities, going forward?

We’re talking about new research initiatives, starting with ‘Future of the UAE’, which is to be revealed shortly. It is based on ‘Future of the UK’, which we initiated in London. It’s not a media study. It’s about the economy, the happiness, the satisfaction, contribution of the economy to well being in society, client optimism, consumer lifestyle. It’s a very broad study, which we believe is going to add a lot of value to marketers and brands here.

The second thing is ‘Mission Control’ – the way we visualise data and information, how we fuse it in a way that it is clear to marketers and our planners, for them to be able to plan continuously. It’s a room where you have TV screens displaying not just social media, but all the data that are related to a client and a brand put together, and analysed graphically. It’s not just media, but also consumer behaviour, feedback, tracking studies – any type of data that is relevant to a brand. Social is not enough to give a full perspective on a brand. It has been launched and has been utilised for big clients now. Slowly, we’re rolling it to other smaller clients. It requires a team of experts to be able to monitor and manage this platform.

Surely, we are also entering a new era of research integration. Integral, which is into research, is going to merge with one of the biggest research groups that is part of Omnicom – Hall & Partners. We’re re-launching as Hall & Partners in Dubai next year.

What are the primary challenges?

The biggest focus is that media has to evolve from media communication consultancy to more of a marketing consultancy. We need to talk business top lines and key KPIs that are important for brands, not just media KPIs. This is important for us to expand our horizon and to really have a greater impact on our client’s business. To deliver on that, we are doing a series of things – in terms of training and development, structure. We used to have champions in