‘An idea has foremost importance in the advertising industry’

 

The secret of good branding is to avoid the obvious, says Alain Khouri, Chairman and CEO of Impact BBDO Group.

The group provides the full spectrum of marketing and communication services through its advertising agencies. It also offers public relations consultancy through Impact Porter Novelli and customer relationship management and promotion services through Impact Proximity.

 

The advertising industry in the Arab world is undergoing rapid changes. In this exclusive interview Khouri describes some of the challenges it faces – and the opportunities that are there to be seized. And he gives his views on the contentious subject of the peg between most currencies of the Gulf Co-operation Council countries and the declining dollar.

How has the dollar peg affected the advertising industry in the UAE and GCC?

It is becoming more expensive to do business. In the UAE, for example, everything costs more. Some regional media, mainly satellite networks, have started to invoice us in dirhams, not dollars. If the dirham exchange value changes I believe this may make sense in the short term, but not the long term.

What will be the long-term effect of the peg in terms of operating costs?

I think we will have a hard time to meet the rising costs and keep the same margin of profitability. We will bill more but will not increase our profits – and our profits may even decrease.

Do you suggest severing the peg as Kuwait did?

If today the dirham is revalued against the dollar this will be better for us since our income will be worth more. But who knows whether the dollar will go up or down in the future? The dollar has reached a low level – the damage has already been done.

Spending on advertising in the Arab world is less than that in other regions. Do you see this changing?

Yes, but it is getting better. I think some of the numbers saying Dh3.8 billion was spent on advertising in the UAE in 2007 were kind of exaggerated – I believe it was about Dh3.2bn. The GCC and the rest of the Arab world are experiencing a positive awareness of the benefits of advertising and what advertising is all about.

 

 And we are not at significantly lower levels any more as we are finally catching up with the big economies in this regard. This has happened quite abruptly as the advertising investment in the Middle East markets, including the UAE, has tripled over a five-year period.

Can clients and agencies determine how effective an advertising campaign is?

Nowadays both clients and agencies are perfectly capable of measuring their advertising effectiveness against the criteria for success that are defined beforehand. The US department store merchant John Wanamaker had the feeling over a century ago that half the money he spent on advertising was wasted, but this is definitely not the case any more.

 

Unfortunately though there is clearly some level of sameness in the visual communication of certain categories of products and an increasing number of communication recipes are being applied across most media. This is resulting in what I call ‘wallpaper communication’ – a tendency towards sameness that results in lack of efficiency and often confusion in brand attribution.

Who is to blame for this?

We are all to blame, agencies and advertisers alike. And while I believe this is not a UAE-only concern, I have recently observed that many parties have been working hard to break this cycle of sameness and clutter and we are already seeing some progress.

What is the biggest change in the way people perceive advertising and branding in the region compared to 20 years ago?

Today’s consumers are more marketing-savvy, they understand the game. They play their consumer role in a more educated and professional manner. They communicate their reactions to our marketing communication more rapidly, more directly and more frankly. This phenomenon has recently reached an interesting point internationally with clients actually making their own ads.

And have any factors remained unchanged?

The most important factor in our business is the predominant importance of the idea. Every successful communication has and will continue to have at its foundation a big idea. And clearly the better this idea is executed, the more clearly its target is defined and the more it makes use of an optimal media mix the more successful it will be. And this, I believe, will never change.

Some critics believe the number of advertising agencies in countries such as the UAE and Qatar is reaching saturation point. How true is this?

At this point there is a place for everybody, but the market is very close to saturation point. When this stage is reached depends on the speed of growth in each market.

Which markets in the Middle East are the most promising?

Dubai is booming and Abu Dhabi is really emerging as a promising new market. Egypt has a surplus, it has money. And let’s not forget that events in Iraq have made many Iraqis pour into Jordan and invest there, they offer and promote products and services from there. Advertising growth is proceeding at a slow pace in Jordan but it is moving in the right direction. In Qatar the revenues are huge and they are trying to build a more modern country.

What are the different challenges you face in the different markets?

In all the countries the problem is the shortage of talent. The challenge is not the people, but developing them. Our staff is 80 per cent Arab. We want to recruit people, develop them and keep them for 15 to 20 years, if possible.

What concerns do you have about the advertising industry’s performance in terms of branding, labelling and messages?

As a network of regional communication agencies we are involved in all aspects of branding – from creating the brand name to defining its attributes and personality, to designing the brand across all its applications, creating communication, defining its turf and protecting it. This is not as new a phenomenon in our region, as some may think. 

 

Brands were created in Egypt in the late 1800s and in Lebanon, Syria, Palestine and Jordan at the beginning of the last century. These were not always very unique brands. In Egypt, after the 1952 revolution, every product from batteries to matches to cars was called Nasr, which means victory in Arabic. And when it was felt that this brand name had been over-used they created a myriad of products with the brand name Nesr, which means eagle in Arabic.

 

Needless to say the confusion was total. In Lebanon in the 1950s the brand Cedar, or Al Arz in Arabic, appeared on no fewer than 50 different products and outlets. This phenomenon of using obvious names could start creeping in slowly in the Gulf, and this is what concerns me.

What measures is Impact BBDO taking to minimise this danger?

If a brand is a simple ‘me-too’ then it is very hard to shape its communication, to give it a character and a credible reason for being. So the hard work with the client involves defining as clearly as possible at the start what a brand is and where we see it five or 10 years from now. Success depends on how well we understand the consumer, the market’s dynamics and the brand’s environment – including its competitors. But we constantly remind ourselves to avoid the obvious, to be daring and to never, ever underestimate the way a consumer is attracted by a competitive brand.

Someone who has never been to the Arab world and has seen troubling TV images might wonder whether there can really be an economic boom in the region. What would you tell them?

I’d say welcome to the Arab world. We are trying to build countries. The UAE and particularly Dubai and now Abu Dhabi are growing. Also things are happening in Jordan, Egypt, Tunisia and Morocco.

What stage would you like Impact BBDO to reach five years from now?

We would like to be an agency that clients depend on totally. They have to see that we are adding value and we want to be sure this is not just talk. We plan to expand into public relations and digital communication. That is why we have just appointed two chief operating officers – one for the Middle East and one for North Africa. One COO is not enough. Our priority is to be the best.

 

He founded Impact in 1971 in Beirut, Lebanon, and in 2002 co-founded Optimum Media Direction, of which he is chairman. At the beginning of his career he taught advertising at the Lebanese University of Fine Arts in Beirut. He was at the forefront of Impact’s merger with BBDO in 1979 and the aggressive expansion of the group throughout the Arab world.

Today, Impact BBDO ranks among the top three international marketing and communication networks in the region with 10

full-service offices and more than 750 professional staff throughout the Middle East and North Africa.

The group’s motto is: “The work. The work. The work.”