Dubai: With clients ever more inclined to penny-pinching, advertising agencies must brace for some tough months ahead.
"Even maintaining current levels of spending with creative agencies or media, clients are highly responsive to under-cutting," said Nadim Khoury of Grey Dubai.
"The competitive environment in which agencies are operating today is extremely price-oriented with them having to offer more for less.
"Sadly, this price war is going to take a heavy toll on the industry at large, both creatively and strategically. Ultimately, 2012 is going to see continued pressure on fees whether that corresponds to an overall cut in expenditure, increased delivery against the same fee or, indeed, a diversification of activity that could see the fees shared among increasing numbers of communications disciplines."
In other words, have all the efforts of the ad sector in turning things around in the last two years come to naught? "I don't think there was a bull run over the last two years — it was rather a mild canter," said Avi Bhojani, who heads the BPG Group.
"As for 2012, the glass is more half-full than empty. Our strategic focus for this year is Saudi Arabia and Iraq."
When market sentiments are less than favourable, the debate inevitably veers back towards whether it makes more sense for clients to go with agencies with an established regional network.
Those who favour such an approach talk of the immense cost savings clients would have by dealing with a single agency and that it is easier to communicate a unified message.
Tanvir Kanji of Inca Tanvir has heard all this before and he is not impressed by the argument.
"The ‘Death of the Independent' has been around for at least 30 years and similar to the prophecy of TV killing off radio and cinema, and the internet doing the same to TV," he said.
"Network agencies have their own strengths… and weaknesses. They cannot be as agile and accommodating as independents, since they have to follow international company policies and guidelines.
Fresher thinking
"In Europe, in the US and India, more clients are turning to independents since the economic downturn — for newer, fresher thinking and fast turnaround time to react to the fast changing market dynamics."
Ask the same question to the head of an agency with impeccable network credentials, you are bound to get a diametrically opposite viewpoint.
Irrespective of the state of the market, this is one debate that will not be decided anytime soon.
