Dubai: For an ad man, Elie Khouri does not believe in sugarcoating bad news. His manner when it comes to diagnosing what’s in store for the region’s advertising and marketing sector is precise and leaves no room for misinterpretation.
And what Khouri, the mercurial regional chief executive at Omnicom Media Group, has to say is the stuff of nightmares.
“Last year and this year are the worst in the normal cycle of [the advertising industry’s] business that I have seen in the last two decades,” said Khouri. “You have to go back to the 2008-09 financial crisis and the Gulf War for phases that were even worse than what you see now.
“Will this continue into the next year? Absolutely, because we do not foresee a reversal in the price of oil. And even if oil prices were to rise again, it will be a full year before the benefits are felt in the markets.”
Even within the region, the ebbs and flow vary with the territory. The Gulf markets, which make up more than 70 per cent of the overall ad billings, are down 10 per cent this year in terms of ad industry investments, while for the Levant it gets even worse, declining 15 per cent. The only shining light is Egypt and North Africa, where the ad industry is looking to a 10 per cent growth.
“There’s money flowing into the Egyptian economy and that’s been good for the ad sector,” said Khouri. “But in the Gulf, there is both the economic challenge and the political, which is driven by the wars in Yemen, Iraq and Syria. There’s less money going into investments and trickling down into the economy.
“So, we have two negatives [the Gulf and Levant] and a positive [Egypt], and when all of that is put together, we are looking at a drop of 7-8 per cent this year.”
And when the times get tough, consolidation is a term that one starts hearing frequently. “In the media- [buying] industry, scale is all-important — if you don’t have it as an agency, there’s no way you can talk to a Google or a MBC [the region’s premier satellite TV broadcaster] and hope to get benefits on the ad volumes you place with them,” said Khouri. “The small media agencies just cannot cope with the game any more — they are not agile enough.
“Clients are seeing a region where things are shrinking, whether it is retail, tourism and even in FMCG [fast moving consumer goods]. Across the region, the momentum is of a slowing down.
“Clients are saying, ‘Help us overcome the stuff we are seeing. Give me more for less’. For the ad industry, now’s the time to squeeze a little bit here and a little bit there.”
Interestingly, when the 2008-09 crisis threw up a mushroom cloud, it set off a boom in the number of ad agencies that were formed in the UAE.
According to Khouri, there’s a stark difference. “What was happening was a lot of freelancers set up shop... but this was only happening in creatives. You do not need scale there.”
Khouri believes now is the time for synergies. “The market’s shrinking doesn’t mean you have to shrink too. It means others will have to struggle more than you do.
“We are growing... but it’s not double digits any more. We are getting growth in terms of content, in digital and in data.
“Instead of just pushing messages to consumers, brands now create content and brand experiences that consumers will seek. The ultimate aim is to address the right message to the right audience. The ultimate aim is to address the right messages to the right audiences. That has to be to the right time and in places where they are most receptive to receiving them. This is what ‘addressable communications’ is going to be all about.”
That means the creatives will get to sit at the same table as their counterparts in media planning. The old way of doing things — of receiving a brief from the client, passing it on to internally and then going back with the campaign recommendations — are passe.
“There has been a debate about the role of creatives in a media company. What you see today is a merging of the two — more media companies investing in talent that come from a creative background,” said Khouri.
“We are a marketing services company, not just a media company or a communications company. We sit with clients and see how we can do things better.
“There are always ways to attain better achievements. If we harness data, technology and content, we will end up saving money for our clients.”
