Lebanon calling

Political unrest and economic turmoil have left Lebanon reeling. But can the country’s advertising industry bounce back yet again, asks Tim Burrowes

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By  Tim Burrowes Published  October 30, 2005

Lebanon calling|~|lebcrowd200.jpg|~|People power ... Lebanese protest on the streets of Beirut following the death of former Prime Minister Rafik Hariri|~|It was going to be the year that things finally got back on track. For once, Lebanon’s agency bosses were cautiously optimistic. With the civil war at an end and multinational clients beginning to contemplate serious reinvestment in the country, Beirut was once again going to be the place to be. But on Valentine’s Day, all that went out of the window when a huge bomb blast took the life of former Prime Minister Rafik Hariri. It was to trigger another tumultuous year, and suddenly the fate of the local advertising industry appeared relatively inconsequential. Yet the aftermath was keenly felt by the whole industry. Indeed, at the time of writing, the UN’s report into the assassination had finally been published — offering either the hope of finally giving the country’s economy a reason to move forward, or the threat of further chaos. And while Lebanon’s violent history suggests that further challenging times lie ahead for those involved in marketing, there is optimism too. Naji Boulos, managing director of Memac Ogilvy & Mather, was among those who was getting ready for a better tomorrow. He says: “The first three months were incredibly good. We got a lot of new business. It should have been a perfect year. Instead, we’re going to have a stagnant one. But in any other country the economy would have collapsed completely.” Among the survivors is Georges Slim, chief operating officer for Lowe Pimo. He says bluntly: “The recovery has been very hard. Lebanon is a country that has lived in the deep shit of war for more than 15 years.” And Antonio Vincenti, chief executive officer for Pikasso, the leading Beirut-based outdoor firm that also operates in Iraq and Jordan, offers an equally downbeat verdict. “The current year was an impossible year and times are very tough.” The immediate consequence of the assassination was for virtually all ad campaigns to be pulled — nobody wanted to be seen to be advertising in such circumstances. The tourism and retail sectors were hit particularly badly. With January traditionally a slow month, as media plans are put together, and February and March virtually wiped out by the murder, it was a desperate first quarter. Says Vincenti: “It could have been a catastrophe after Hariri was killed. For weeks, our work stopped. Nobody wanted to post a campaign.” And the consequences for one of the country’s biggest media owners, Beirut-based Future TV, were far more than just economic. The station was in the ownership of the Hariri family and ended up with a pivotal role during the uprising that followed the assassination — an uprising that has been described as the Cedar Revolution. A month after the killing, Future TV called a demonstration, which became one of the biggest ever seen in Beirut. Estimates varied from between 800,000 to one million people taking part and the event united many different factions. Among their demands was a call for the pullout of Syrian forces from Lebanon after Syria was speculated to have been involved in the killing. With the help of international pressure, the pullout followed at the end of April. Most TV stations pulled normal programming from the air in the aftermath of the murder, leading to massive drops in advertising income. Tarek Ayntrazi, who joined Future Television as its general manager during the summer, says in masterful understatement: “Because of the assassination of Prime Minister Hariri the station went off course.” Dani Richa, president of the Lebanese chapter of the International Advertising Association, says of the industry: “On the economic front, we’ve had a serious drop this year. It’s a terrible year economically and it’s not the first terrible year. We’ve had bad year after bad year. There was a serious drop in advertising expenditure. I estimate a 30% drop to date.” Fortune Promoseven managing director George Jabbour adds: “We have been through a very difficult year in 2005 where we had the assassination. When you had TV stations without proper programmes for the next month and at least for two weeks without accepting advertising. “It affects every aspect — production, PR, event management. How can you organise an event if you don’t know if tomorrow is a bomb? “Journalists were too busy covering the bombings. Frankly, we cannot evaluate what the drop was for the whole market. Our drop was about six to ten per cent.” Yet, the resurgent interest in news from a public desperate for information on the latest developments certainly helped the country’s TV channels win back audience share lost to the rapidly proliferating pan-Arabic satellite channels. Jabbour says: “What we had been facing before is the drop of TV audience because we did not have a local programme or news that were attracting an audience. When everything started we saw people tune into the news and watch political talk shows. We are witnessing local TV stations taking the audiences. Readership of newspapers has been going up too.” However, this was of little comfort to media owners as, although they may have had the audience, they just did not have the advertising. The window of opportunity offered by the end of the civil war to once again challenge Dubai as a regional hub had closed again. Gaby Assad, regional director for Optimedia, says: “Lots of people had started moving head offices to Beirut. Lots planned to come and make it the hub, but with the assassination the whole scenario changed.” It’s a similar story from Carole Hayek, general manager of media agency Optimedia Lebanon, who saw the promised growth slip away. She says: “This year has been very hard. We had a lot of investment coming into Lebanon, especially in ||**||Lebanon calling|~|Fadia-Safadi-Gebran200.jpg|~|Speaking out ... Fadia Safadi Gebran, director of Impact Porter Novelli|~|2004 when GDP increased. The trend was positive.” One of the real veterans of the scene is André Rizk, chief executive officer of TBWA Rizk. He says: “The problem is for the last two or three years advertising spend has decreased. We had three or four very bad months.” And Rizk warns that the confidence has not yet returned: “Clients are afraid to invest. They are working day by day.” Nabil Maalouf, managing director of Euro RSCG Sharp Pencil, adds: “I never left Lebanon and this is the worst. I’ve never seen such a bad situation. It’s the uncertainty.” However, since the Syrian withdrawal and parliamentary elections, a certain amount of stability has now returned, although there are still sporadic bombings. According to Ayntrazi: “We are now picking up again. In terms of revenue, we had the best Ramadan ever. Ramadan and back to school means the fourth quarter is very important. September was particularly strong because of back to school.” And Manhal Nacouzi, managing director of Team Y&R and Asda’a, believes the challenges of the current situation are also caused by the fact that things have changed so fast from the ducking and diving of running an advertising business in a conflict situation, to a more regulated scenario. He says: “It’s a difficult market. It’s professional and unprofessional. It’s as if we’ve jumped from Stone Age to robotic without passing by electricity. “We’ve gone from business in a bordello to a professional business. The state has not been making things easy for us. We had to get used to paying taxes and things like that but the facilities are not there.” With reduced ad budgets, media owners are forced to fight for the scraps, and drop their prices. The international advertisers have also got wise to the fact that prices have dropped, meaning they do not necessarily have to pay as much to achieve their desired gross ratings points. This in turn has a knock-on effect for media agencies, who make their margins by taking a commission on their clients’ budgets. Hana Khatib, MindShare Lebanon’s managing director, warns: “Local clients are very short on budgets so they need to be fierce in negotiation. This information reaches the multinationals, who then expect the same, so the industry is shrinking. They end up achieving the same GRPs for less budget. “I’ve been in this country for eight years after four years in Dubai. Since the first day we’ve been telling people we’re shooting ourselves in the foot. The suppliers suffer, the agencies suffer. We’ve been shrinking in Lebanon.” Advertisers are also spending their budgets more cautiously, with an emphasis on short-term return, rather than long-term brand. Boulos says: “Today the advertisers are not willing to take risks any more. It’s very short-term thinking. You cannot compare one year with another. Every ten days we have something happening in this country. It’s not like Dubai where you read the newspaper and there is just no political news. Today the advertiser will not invest in expensive TVCs. The money has shifted from above the line to below.” He estimates that Lebanon’s advertising market has declined from US$120 million to US$80 million since 1998. And if life has been hard in ad and media agencies, then in PR it has been even worse. From persuading sceptical clients of the need for PR, to getting journalists to take an interest in writing about products rather than the drama of the latest bombing, the environment is a particularly tough one. Joëlle Jammal, PR manager for Promoseven Weber Shandwick, says: “There’s a lack of understanding of what PR is all about. In our culture we have strong relations with people at different levels anyway, which plays against professional PR, so clients want to know why should they pay to place press releases when they think they can place it themselves.” Many of the current sporadic bombings appear to be aimed at either intimidating individual journalists or disrupting everyday business, rather than causing large-scale loss of life. Jammal says: “There’s a problem of security — it’s not about killing humans. We had bomb blasts Sunday and Friday. We had four projects cancelled over ten days.” She adds: “In this environment, it’s a hard challenge to convince the journalists your story will get the readership interested.” Referring to a car bomb attack on the Lebanese Broadcasting Corporation’s TV presenter May Chidiac, which left her critically ill in hospital, Jammal asks: “How can you call a journalist and think about creating a write-up for your client when you know one of their colleagues has just lost an arm and a leg?” However, Jammal does predict: “There’s light at the end of the tunnel. We are moving towards a positive trend at a slow pace.” Fadia Safadi Gebran, director of PR outfit Impact Porter Novelli, says that persuading clients of the value of PR can be the hardest challenge. She says: “Clients are not really used to PR — it tends to be an afterthought. We get the rest of the budget after the media spend. In terms of building a relationship with the public and targeted activity throughout the year, very few customers are into that, except the multinationals.” And although business has been slow, she says that clients do seem to be ready to get going again. “There is a lot in the pipeline. I hear from clients ‘Get your plans ready and once things get going again we can press the button’.” Many within advertising agencies are depressed about what client cutbacks have done to the country’s levels of advertising creativity. Smaller budgets almost inevitably mean lower production values. According to Lowe Pimo’s Slim: “I don’t think Lebanon has the talent here now, I would be lying to myself. “Creativity needs investment. Clients are moving towards investing in quick money, forgetting about brand building and moving to promotions, below the line, lotteries. In Lebanon everything has to have a gift with it. “You know how much it costs to do a good TV commercial, and if you do do one, you need to do it for much less. The clients don’t invest in producing commercials for Lebanon only, they adapt, or shoot a commercial for the whole region.” Joe Ayoub, CEO of Red Cell, agrees about the fall in creativity: “Unfortunately, it has dropped. How can a creative think creatively when he is worried for his life, his income, his family? “You need a client in order to be creative. Our level of creative output has gone down. The client wants more immediate things. “The ratio has dropped. It used to be that you’d have six pieces that were||**||Lebanon calling|~|Nabil-Maalouf200.jpg|~|‘The Lebanese level of creativity has been demonstrated over the years. The market is more sophisticated than the Gulf.’ Nabil Maalouf, managing director of Euro RSCG Sharp Pencil|~|good, four not so. Now, everywhere you get six out of ten that are lousy.” “The creative people are no longer meeting and discussing things — they are not planning; they are reacting.” Red Cell Beirut has not seen a lot of support from its parent network. Ayoub’s agency has been cut loose from the WPP-owned Red Cell network as part of a restructure of the agency which has seen it dramatically cut its number of offices around the world.Ayoub is now looking for a new creative alliance from within the Middle East. Richa, who as well as his involvement with the IAA is managing director for Impact BBDO’s Lebanon office and chief creative officer across the whole region for the network, says: “The level of creativity naturally suffers. But the effect tends to be on the production values rather than on the ideas.” He also says that blue chip clients have helped his own agency buck the trend by sticking with long-term branding strategies, even when weaker competitors have not Ibrahim Lahoud, planning director, Publicis Graphics, agrees that creativity has fallen off. He says: “There is definitely a major problem of creativity. We do not have the quality of people in Lebanon any more and that really hurts.” Yet Maalouf, of Euro RSCG Sharp Pencil, says that Lebanon can still call on its creative heritage. He says: “The Lebanese level of creativity has been demonstrated over the years. The market is more sophisticated than the Gulf. “Within Lebanon we’ve still got one of the highest levels of education. We have to be more creative because of the limits we are working within.” But he concedes: “The amount of investment behind creative work has declined. The opportunity to demonstrate creativity has shrunk a lot.” Team Y&R’s Nacouzi believes that the varied cultural influences on Lebanon, along with the fact that most inhabitants speak English, French and Arabic from a young age, all helps create great ad makers. He says: “Dubai can beat us with money. But it’s not what you do, it’s how you do it and I think we know how to do it. We were open to the world before anyone else. We have 15 million Lebanese abroad, and four million here. Somehow the rich heritage of immigration gave us the neuron to be open-minded. Having so many cultures crossing our country and being the door of the Middle East has helped us a lot to grab all the good bits.” Camille Haddad, managing director of JWT in Beirut, which is also the regional network’s creative hub, says: “This is the wonder of Lebanon — we feel we are leading in terms of creativity in the region. Many Lebanese are the creative directors in other offices around the region. Many don’t have the local opportunity here because local clients are not active and multinationals are adapting.” He says that JWT tries to champion creativity by selling the concept to clients. “Whenever we come back from festivals we invite clients in, to show them where advertising is heading in the rest of the world.” Jabbour also believes that Lebanese culture creates instinctive ad people. “Of the creatives working in the Gulf, the majority are Lebanese. The environment we live in, our education, our TV programming. We speak three languages from day one and this opens the mind to all outcomes.” And Rizk believes that all the country’s agencies deserve credit for what they have achieved. “What we do in Lebanon is miracles regarding the budget that you have. When you do a film for the Lebanon market you never have a US$70,000 budget. Sometimes you are doing a very nice film for US$20,000. “I’m very hopeful in the future. We Lebanese think in advertising. We Lebanese, we can put ourselves into shoes of local people more easily than any other community in the Middle east. We are a mixing of all different cultures.” Memac O&M’s Boulos dreams of a return to the standards of a decade ago. He says: “Ninety four to 1998 was the golden years of Lebanon, with all kinds of awards. We were very creative. But in 1999 the economic crisis started.” The obvious point of comparison between Lebanon is Dubai — not least because it has proved to be a home in exile for many of advertising and media’s most talented Lebanese. And whereas Beirut was once the region’s creative hub, now most agencies and clients put their regional headquarters in Dubai. Says Lowe Pimo’s Slim: “In a small country like Lebanon, everybody knows Dubai is eating up the Lebanon market. The majority of the multinationals in the region are now based in Dubai. It’s a small market but it has the potential to regain its position. It will regain its position against competition with Dubai. “Lebanon was the one in the Middle East but during the war everyone had to move to Greece, Cyprus, Dubai. Dubai took most of the Lebanese creatives. They pick up the best of each field. In the last couple of years people have tended to come back a bit but still it has the majority in the GCC market.” But he suggests that Beirut can still find a niche. “We have an opportunity. Lebanon is a small market. Creative networks put their centre in Dubai or Lebanon.” Says Red Cell’s Ayoub: “I can see that coming back again. Once Lebanon is prospering again we will find a lot of multinationals basing their resources here. “They are costing too much as expats in the Gulf, we will see new business units here which will be cheaper, and the rise of the micro-networks. It’s a good indication you can operate today from hubs.” But Euro RSCG’s Maalouf warns that at present Dubai is still tempting away the best talent. “It’s extremely hard to retain the talent unless you||**||Lebanon calling|~|Antonio-Vincent-200.jpg|~|Antonio Vincenti, chief executive officer for Pikasso|~|find true believers in this country —people start to lose hope because of the never ending disappointments.” But Pikasso’s Vincenti does not accept the argument that the flow to Dubai is a brain drain. He says: “People are attracted by the wages and the opportunity of Dubai. It’s a healthy thing.” Haddad also believes there is a positive side. He says: “It’s healthy we have this kind of competition between offices and between countries.” Team Y&R’s Nacouzi believes that Lebanon will find a slightly different role to being a straight challenger to Dubai as a hub. He says: “The best thing we can do in Lebanon is to become the academy. “You should have a tour of duty in this market. For a strategic planner or MD or a good creative, who becomes a consultant and his dream is to teach a seminar in Lebanon. I think we can be the academy. “Unlike much of the region, there are no real restrictions on advertising, you can advertise from A to Z.” But as hard as it is to find an adman who had a good year, it’s equally difficult to find one who does not feel at least some measure of optimism, even if not immediately. Ayoub says: “We are not very optimistic in the short term. Our business is vastly related to the economic cycle and the drastic changes happening in Lebanon cannot but affect the communication strategies of clients and the businesses we are in. It will have a very drastic impact in the way we operate and do things. “It forces people to think about everything. If changes are happening on the political and social level it will affect us all. But if it takes us to a better future, our attitude in a year’s time will be different. “Lebanon has no oil, no diamonds, we have nothing. What will be the role of Lebanon? They will have to invest in human terms, infrastructure. Small and medium companies will need investment. I believe they want to make a model of this region and if the world does support us then things may get better.” Ayntrazi — whose Future TV is close to the government — is even more positive. “For Lebanon itself we are optimistic. To use the financial broker’s term, we are bullish. We are optimistic about the future of the country that there will be economic growth and public reform, more transparency in business practice and more investment in the Lebanon market. “There are very promising plans to liberalise the economy and encourage investors to come to Lebanon. We are optimistic about the future of the country and this will translate into more advertising. “For the region there is an encouraging economic boom. Look at the stock market in Saudi Arabia. Oil prices are driving economic growth and reforms and the market is growing at a double-digit rate. Economically speaking the region has a positive outlook and this will translate into more activity in the advertising sector.” The IAA’s Richa believes that things have already begun to pick up. He says: “With Ramadan, Eid, Christmas and New Year, there’s still a lot happening. We are hoping for a drop of no more than 15 to 20% in the end. “We’ve got reasons to be optimistic. This country has the will and the people to go forward and now we’ve got the international community looking at us. We have a fantastic opportunity for Lebanon over the next couple of years to finally see very positive growth and change. The advertising will follow.” And according to Maalouf: “I do see some signs of optimism. I believe that the politicians in power should vanish in one way or another. The way they handle politics has become obsolete so I think we have to be ready for a new era. I am hoping that we will have some better days. I think it will be pretty soon, otherwise it will be a complete disaster. “If Lebanon can present itself to corporations as a big opportunity then of course they will invest. The people themselves offer the biggest advantage. We have this entrepreneurial way of doing things. It’s like in times of war we have to act like a guerrilla force. The Lebanese agencies need to act as guerrillas. You cannot be an organised army in Lebanon.” He believes that in order to thrive Beirut based agencies must look for business beyond Lebanon’s borders. He says: “The advertising industry in Lebanon is sufficient for the region, not just for Lebanon. We need to find ways of growing business to this scale. I think this is the future for Lebanon.” JWT has a similar train of thought. According to Haddad: “We are selling our over-capacity in terms of creative to other markets, also to multinationals.” When asked, Boulos also replies that he is optimistic: “Yes. A lot of people say we have to take back the regional role. I don’t think for ten or 15 years we will take back that role. Dubai is far, far away from us. “But we were the pioneers and we have a lot of talents. People do have hope to invest now we are not in a situation of war. We have a lot of positive signs. “Dubai is becoming very expensive and I think more and more people will come back to Beirut and do business from Beirut. If you say to a junior executive move to Dubai he will now have to think before going because it is so expensive. But today salaries are increasing a lot in Beirut. We have ten people working here who have returned from Dubai.” Nacouzi believes that Beirut has two things going for it — the talents of its people, and the fact that, although it has no oil itself, the rising price will allow other countries in the region to invest. He says: “We are still very important for the region. We are a breeding ground for creativity. We are a people that believe communication is our USP. We are very optimistic. With the price of oil going up there’s so much money in the region. Since 9/11, Arabs are not excited to invest in Europe and the States and this money should go somewhere. With the price of a barrel at US$100 for us it would mean investment liquidity.” And not all the players have had a dreadful year. Memac Ogilvy and Mather expect to finish up about 20% on last year, Impact BBDO says it has done okay and Leo Burnett is seen by many other agencies as being on the up. Several of the most talked-about new pieces of advertising were broken from Leo Burnett. Managing director Kamil Kuran says: “We refused to lay down and die. We jump-started the agency with a whole bank of initiatives. It was a challenge, but we’d take the ideas to clients and they would support us.” That level of success still appears to be the exception for now. JWT’s Haddad sums up the mixture of optimism and resignation: “The situation definitely must become better than now — because now it’s a disaster.”||**||

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