Leo Burnett plans Middle East expansion

Dubai Global advertising agency Leo Burnett expects growth from digital media to help fuel its expansion in the Middle East and North Africa this year, the company's regional chief executive said.

The firm that counts the likes of Kelloggs, Procter & Gamble and McDonald's as clients is looking to open an office in Sulaymaniyah, Iraq, as well as establishing a presence in Oman after it won an assignment with Omani telecoms operator Nawras. It opened a Doha office last month after successfully securing work with Qatar Telecom.

"Our strategy is we go pitch for the business, we win the business, and we follow the business," Raja Trad, Leo Burnett's chief executive in the Mena region, said.

At the heart of its regional push is an expectation that digital media will be at the forefront of industry growth. Last month, Leo Burnett's French parent Publicis Groupe acquired Flip Media, a Dubai-based digital media agency, with plans to fold it into Leo Burnett's global operations.

"There is a major shift towards social media, considering the population in the Mena region is very young and we know where to find the young," said Trad. He added that the slow take-up of digital media is because there isn't enough understanding yet and knowledge of what this particular advertising form represents.

"It's to prove to the client that digital media will pay off in terms of return of investment, because it is easy to measure, and it's about creating engagement," said Trad. "Digital media is not a one-way communication, it's a two way interaction".

According to an Arab Media Outlook report on the industry, online advertising is currently close to one per cent of overall advertising spend in the Arab region and worth only $56 million (Dh205.6 million), but this is expected to grow substantially over the next few years to nearly $266 million.

However, compared to traditional platforms it will still contribute only a very small proportion of advertising revenues, about four per cent in 2013, according to the report.

‘Major growth'

"The [industry] growth will come from the digital media," said Trad, adding that total monitored advertising expenditure in the Mena region was around $4.5 billion in 2011 and digital spending at its best represents only 4-5 per cent of the total number.

"I strongly believe that there will be a major growth in the coming four to five years in the digital space."

Trad said the outlook for the broader advertising industry in 2012 is a little less rosy as turbulence from the Arab Spring, which affected some countries, has created nervousness among advertisers. He added visibility related to Leo Burnett's business should be clearer after the first quarter of this year.

Arab region: growth potential

According to the Arab Media Outlook report, advertising revenue in the region is seen at about $5.9 billion (Dh21.6 billion) this year, up from $5.6 billion in 2011.

"In my opinion, when things settle down and when the transition period is over in some of the countries that have witnessed the Arab Spring revolutions it will become clearer to the different players in the different industries that the potential is there for healthy growth in the Mena region," said Trad.

— Zawya Dow Jones