Rising inflation and dirham could choke ad spending - Emirates24|7

Rising inflation and dirham could choke ad spending

(KHAMEIS AL HEFAITY)    

 
 

The UAE recorded the highest spending on advertising in 2007 in the Arab world. It is expected to keep that ranking for 2008.


The Arab world in general lags behind Europe and North America in advertising spend but it enjoys a distinctive edge by sharing culture, language and traditions among its 22-member states. This homogeneity, on paper, should enable the region to receive more attention from regional and global media and advertising players, as it eases the process of understanding the average person’s perception and way of thinking, and simplifies the positioning of different products and services.

But besides stirring up storms in teacups, the advertising and public relations agencies in the region are also expected to deliver to a certain standard, which they should attempt to maintain.

In an interview Ramzi Raad, CEO of advertising agency TBWA/RAAD, spoke to Emirates Business.

In spite of the growth in advertising spending in the UAE last year, some media and advertising critics claim there is a significant wastage of the money spent and lack of efficiency. What do you think? 

—I agree. Let us take the real estate sector since it is one of the major spenders on advertising in the UAE and the region right now.
Don’t they need to see, after spending all that money, whether they are spending it right? I should not be criticising them, since in the end I am making money out of this, but many advertisers are throwing their money down the drain and they need to take a fresh look. 

How?

—Take Lebanon, for example. When I go there and see hoardings for property developers on buildings from top to bottom, I wonder who is getting the message? Lebanon is in a crisis and businessmen from the Gulf are avoiding it. Even the Lebanese are not in a situation to spend or invest outside their country. So why are advertisers continuing to pour millions into that market? After Emaar started, Tameer and Nakheel followed. Who said you cannot advertise any real estate project unless it is a two-page spread? Sure, the more the advertiser spends, the more money I will make. But I am a professional and I realise the consumer is looking at all these big ads and does not see any difference.

So what can be done to regulate advertising spending in such sectors?  

—It is about accountability, credibility, honesty and professionalism. There has to be action. We see a lot of malpractices around where many people are not behaving in a professional way.

But in spite of the money being wasted, as you explained, the total advertising spend in the region – the UAE and the Arab world – is still among the lowest worldwide. Why?

—Because we have had humble beginnings. Whoever started the advertising business in the Arab world did not charge big money for the space they were selling. That is not about lack of professionalism, but the mentality and maturity. In Europe and America, advertising agencies started by considering the market first. We have been under-priced and the Arab advertising sector grew on imported products.

But don’t you see a trend in recent years?

—Yes, but only in the past 10 years when consumers started to see the emergence of big Arab brands, which led to the growth of Arab advertisers on the international scene. Emirates airlines was at the root of that. Then came Gulf Air and Etihad. And then the real estate and financial institutions in the UAE, which created brands that brought a lot of business for branding companies.

The UAE and four other Arab countries have growth rates in the advertising industry that are among the 10 fastest worldwide. How do you evaluate current perceptions on advertising in the region compared to other international markets?

—The whole advertising world’s attention has been focused on China with the preparations for the Olympic Games in Beijing, and India as a huge emerging market. But we are lucky that we can be referred to and categorised as a region or world – the Arab world – that has a common language, culture and history. Europe is facing the challenge of trying to do pan-European advertising. But the only pan-European media are the music and sports channels. Otherwise, you have the Germans, French, English and others all with their own culture, language and way of thinking. But the Arabic language, with all that it has, is a help to us.

So what are your expectations for the near future?

—All advertising agencies will suffer due to the inflation in the UAE and the dirham’s rise because of being pegged to the US dollar.

Do you have a plan or strategy to tackle this challenge?

—We all realise there is an important market emerging here and we want to continue to tap it. Some agencies have started laying off staff to cut costs. Others are outsourcing work to other places.

Another solution is complementing each other. We have a network of 14 agencies in the Arab world, including Dubai and Abu Dhabi. We need more effective utilisation of available manpower resources and not duplicate talents since that can be expensive. We are also trying to bring top-notch people from around the world.

What would you tell media outlets, advertisers and advertising agencies that may have to adapt to the current challenges?

—People need to care more for their money. You need professional and honest people who can really independently judge what is happening. Our business is a business of salesmanship. Someone may come and tell you even though his idea is expensive, it is the brightest. But that is how many people bluff.

Ramzi Raad

Chairman & CEO TBWA/RAAD


He graduated from the American University of Beirut and started his career in advertising in 1967. For the next 12 years, he was involved in expanding the Middle East’s first regional agency network. When the Lebanese Civil War broke out, he moved to the UAE and settled in Dubai in 1975. He left for Europe – France and the UK – in 1982 and returned to Dubai in 1986. Two years later, he was voted president of the UAE branch of the International Advertising Association (IAA). He was named vice-president and area director of the IAA for the Middle East and North Africa in 1991-92. He is a founder and board member of the GCC Advertising Agency – a Middle East Research Forum. In September 1999, he founded TBWA/RAAD Middle East.
 
 
 
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