Saturday, January 21, 2023

Good and bad news: Lebanese ad agencies are expanding elsewhere

Cover of "The Story of Middle East Advertising" by Ramzi Raad

During the Lebanese war, and I mean the long 1975-90 war (as there has been others), Lebanese ad agencies found themselves caught between a rock and a hard(-shelled) place. Stories of ad people almost losing their lives during the war were not uncommon - snipers, abductions, explosions, shelling, all these were truly very close encounters with death.
This meant that at some point Lebanese ad agencies, no longer able to serve their international clients from Beirut what's with electricity, telex and phone line cuts, had to immigrate elsewhere to do it. That migration is fully detailed in Ramzi Raad's book "The Story of Middle East Advertising" of which I have had a copy. Please note the book is for free, it was supposed to be distributed to ad agencies and universities but many did not claim theirs. So there are, sadly, extra copies of the book if you wish to get hold of one. It is indeed a very exhaustive and very well-detailed and researched book.
The reason am writing all of this is because whereas there are elements of similarity in today's landscape, there are also major signs of difference.
Let's start with the similarities. In today's Lebanon, we have the same elements of chaos - barely any electricity, major hurdles in payments, incredible logistic nightmares, the presence of well-trained and experienced talents on the market. 
The local market has been in total chaos especially since late 2019, the crisis deepened and turbo-charged in 2020 what's with banking problems, and ultimately with many agencies losing their places of work following the devastating August 4, 2020 explosion.
This blog alone has written and documented many times the dismal state of affairs.
So many, many agencies have been trying to expand their businesses considering not just that the local clients have become too far and in between, but also that said clients have themselves liquidity issues, payment problems, are barely able to pay their own employee salaries, and literally look at marketing/advertising as a major luxury. And please, spare me the-client-who-invests-when-the-market-is-down-remains-top-of-mind because what Lebanon is going through right now is now just "when the market is down" but rather a literal economic existential crisis where all the indicators are off the charts and barely continuing month to month is in itself a miracle to many companies - and also individuals. 
So finding themselves in such a dismal state of affairs said agencies have been trying to expand. Sure, many agencies are already multinationals - so the Beirut hub has been handling the international accounts. It's a win-win, the local bureaus remain active and the international accounts get served. Of course, no one wants to admit it, but with inflation being what it is, local talents are paid a pittance so clients are having their work done on the cheap from Lebanon. Sure, all advertising managers would wish to sidestep this issue and not speak about it, even if it is true.
Saudi Arabia, Qatar and the UAE are usual places where such agencies try to land. Naturally, the laws of the countries dictate that this must be done with a local partner - who usually has more than half of the shares. But also Oman and Africa are places where other agencies are trying to secure places in such markets. A few days ago a local agency owner told me "I am trying to open a branch in Lagos, Nigeria. Sure it is just a front, the work will be done from Lebanon but the market there is enormous and it will bring in cash - a lot of cash - if done correctly". The presence of a large Lebanese diaspora in Africa - with some of them owning huge conglomerates of companies - is also of major interest to the agencies in question.
Now, of course, the idea is - it worked once why shouldn't it work twice?
Here's the issue. At this point, the markets in the GCC area have completely changed. Meaning that to begin with, large accounts are already spoken for. Here's a small anecdote, in Ramzi Raad's book he ends up meeting  a young Saudi Youth at a coffee shop, the man in question turns out to be the son of Abdul Latif Jameel, the man who has the Toyota license for the kingdom and the agency in which Mr. Raad was at the time ends up scooping the account. Such adventures are now totally out of the equation - already Abdul Latif Jameel owns its ad agency (Drive Dentsu) to do the work in question (I know so because I was part of said agency - full disclosure).
Now that we covered the major large accounts, the other issue is that, when the first big migration of Lebanese agencies and talents happened, there was basically almost no one else there. Today, to be able to charge an account for a certain amount of money, there are talents already established in the said countries who could it for less - and in order for you not to think I am hiding behind my finger, I am specifically thinking of Indian or Pakistni talents who charge less, still make some profit and the profit can be sent to their original countries for their families to subside on it.
Also there are at this point a different local landscape for talents. Meaning? Since then many local talents have been educated abroad in the said countries and combined their knowledge with what they know from local customs and idioms and slang to establish local agencies and are able therefore to speak to the markets in ways only they can. Such talents, let us be honest, did not exist at the time - or almost did not.
Just to be clear, I am not saying that expanding to the Gulf does not work, or that the Lebanese agencies do not have their own flair or know-how or expertise. They do. But also, as I said this is not the original market that was "virgin" back then waiting to be conquered by the intrepid Lebanese breed of advertisers. 
Far from it. Lebanese advertisers are now faced with a totally different landscape.
But if history proved anything, our local communication professionals are undauntable.