Middle East: Middle Eastern promise

Despite state censorship and political instability, the Middle East contains some of the world's fastest-growing audiences and ad markets, Tim Burrowes reports.

If anyone in the advertising industry has chosen to overlook the potential of the Middle East, the events of recent weeks mean they have now run out of excuses. March saw the International Advertising Association's World Congress come to Dubai. More than 2,000 delegates from 50 countries flew into the United Arab Emirates for an event that rubber-stamped the country's place on adland's world map.

Virtually every agency in the UAE spent the week on red alert as international bosses inspected the troops, many of them on their first visit to the region. Allen Rosenshine, the BBDO Worldwide chairman, flew in from New York, not just to argue that the TV ad is here to stay, but also to kick the tyres of the Middle East Impact BBDO franchise.

Tateo Mataki, the president and chief executive of Dentsu, used the event to make his first speech outside his native Japan and to meet the team behind Dentsu's joint venture with the Saudi Arabia-based Drive Communication.

And if the TBWA\Worldwide president, Jean-Marie Dru, could not manage to get to the offices of the local affiliate TBWA\Raad in person, he at least managed a helicopter fly-by after lunching with the senior team at Dubai's Burj Al Arab hotel.

Clients were present, too, including Procter & Gamble's global marketing officer, Jim Stengel. One of the world's most influential marketing men, he took the opportunity to urge improvements to the region's woeful lack of media measurements.

And if that were not enough, the numbers are beginning to justify the optimism. Last month, WPP's quarterly trading statement announced that the Middle East was now its fastest-growing part of the world.

WPP's chief executive, Sir Martin Sorrell, had to pull out of his keynote speech to the IAA Congress at the 11th hour because of a bereavement, but his interest in the region remains obvious. He told Campaign: "The Middle East accounts for 2 per cent or 3 per cent of our revenues, a couple of hundred million dollars. We expect to see this growth continue. I am very bullish for the region." In a trading statement in which he had been so downbeat about the UK's prospects, his views on the Middle East stood out all the more. WPP is to hold its board meeting in Dubai later in the year.

Dubai, the second city of the UAE, has been at the centre of advertising growth for the region. Although a lack of robust data leaves most figures as little more than educated guesses, the latest material from the Pan-Arab Research Center suggests the UAE even overtook Saudi Arabia last year, with an estimated adspend of more than $900 million - an increase of 43 per cent year on year. Meanwhile, Saudi Arabia itself grew by a not-unimpressive 27 per cent during the same period.

These figures may be skewed by the fact that much of the advertising targeting Saudi consumers is now being created and bought out of Dubai, so Saudi Arabia's true growth as a market is probably larger still, while the UAE's is correspondingly less.

This is just one of the factors that has driven growth in the UAE. Another has been the willingness of Dubai, a staunchly Islamic city, to be hospitable to Westerners. While the UAE's capital, Abu Dhabi, can enjoy its immense oil wealth, neighbouring Dubai's own income from oil, while sizeable, is more limited.

So Dubai has concentrated on making itself business-friendly. Not only has this seen the creation of the Dubai Media City free zone, but also a willingness to allow expat workers home comforts - supermarkets stock bacon, while bars outnumber mosques.

With year-round sunshine and tax-free salaries, it is not difficult to see why Dubai has taken over from Lebanon as the region's advertising hub. And it is these three points on the Middle East triangle, Dubai, Saudi Arabia and Lebanon, on which the advertising market of the Middle East pivots.

Dubai is where the advertising money is, while Saudi Arabia is home to the bulk of consumers. And Beirut offers what little creative heritage, and much of the home-grown talent, that the region enjoys.

Indeed, although the money is further down the Arabian peninsular nowadays, a couple of major networks still centre their creative teams on Beirut.

Grey's regional operation is headquartered in a mountain retreat just outside Beirut, while both JWT and Impact BBDO's regional creative directors are based in the city itself.

Yet most of the work comes from elsewhere in the network. Although the civil war is long over, the Beirut economy has yet to sort itself out.

Last February's assassination of the former prime minister Rafik Hariri was a huge setback, while December's assassination of Gebran Tueni, a campaigning editor and publisher, left much of the marketing and media industry feeling under siege.

Dani Richa of Impact BBDO, who is both the managing director of the Beirut office and the network's regional creative director, says: "On the economic front, we have had a serious drop. We've had bad year after bad year." He estimates that last year will have seen a 30 per cent drop in business industry-wide.

Similarly pessimistic is Gabby Assad, the regional director of Optimedia, who says: "Lots of people had started moving head offices to Beirut. Lots planned to come and make it the hub, but with the assassination of Hariri, the whole scenario changed."

Dubai, a four-hour flight from Beirut, offers far more stability. Although occasional rumours surface, there has never been a publicly acknowledged terrorist incident.

The press in Dubai - and, by extension, advertising creativity - is relatively free. But self-censorship, rather than overt government intervention, tends to be the key issue. Anything that might offend cultural sensitivities is generally judged out of bounds. Questioning or poking fun at the country's leadership is certainly out.

But Dubai offers far more freedom than neighbouring Saudi. The youth daily newspaper Shams was recently suspended after publishing some of the controversial cartoons of the Prophet Muhammad, albeit as part of an editorial attacking the Danish newspaper that first ran them. It was an issue that was to have a direct impact on other parts of the region.

When protesters firebombed the Danish embassy in Beirut, they also burned out the offices of Team Y&R, Intermarkets and Mediaedge.

Yet even the most conservative of Arab consumers is changing fast because of the influence of youth. Nearly 60 per cent of Saudi Arabia's population of 25 million are aged under 25.

Jac Asmar, the managing director of MindShare Arabia, says: "The consumer is changing because of the age of the population and it is noticeable. The boys have nothing to do; the girls are frustrated because they cannot do anything on their own. You see more and more Saudi women without their abaya, and more and more Saudi boys outside national dress."

Another major factor in speeding the change is the massive growth in satellite TV. Pan-Arab networks such as the Dubai-based MBC primarily target the large Saudi audience. Offering everything from Oprah to The Simpsons (redubbed Al Shamshouns), the stations have given consumers a strong taste for Western culture.

The same goes for oil-rich Kuwait, where adspend grew by an estimated 14 per cent to $435 million, according to Parc. In Kuwait's case, the biggest factor in opening consumers' minds to the West was its 1990 invasion by Iraq, and its "liberation" the following year.

According to Said Zeineddine, the general manager of Horizon.FCB's Kuwait office: "Things have changed since the invasion. They became exposed to other influences. Because of satellite TV, you cannot really control what they watch and what they see. Even the people who did not go away became friends with Western culture. They are grateful and they say loudly they are not ashamed of it. It's not shameful any more to dress in jeans."

However, Kuwait's advertising market's growth has not tended to match the boom of the rest of the country's economy - mainly because agencies have not yet managed to persuade companies of the value of advertising.

Matthew Dezzani, the general manager of Bates PanGulf, says: "There are two types of clients: those who absolutely understand the role marketing plays in the brand matrix, and those who don't fully understand what marketing is. But there's been a trader mentality in the Gulf for hundreds of years and people like me are not going to change that in five years. All the creativity is geared towards selling."

Nawaf Jaber, the general manager of the local agency Graffiti Marketing Communications, also believes the market is struggling to get clients to pay a fair price. He says: "The clients in Kuwait are demanding on service and quality, but don't like to pay for this."

It is the same issue in Egypt. Wadih Massaad, the managing director of Grey Worldwide's Cairo operation, says: "A lot of local clients still only want sales-generating campaigns. They want to see the money as soon as possible. It's still tough to persuade clients of the purpose of brand-building."

But not as tough as in Yemen, where many potential clients simply do not understand what advertising is for. Mohammed Bin Humaid, the general manager of the Sana'a-based Bin Humaid For Advertising & Marketing, says: "People used to think advertising was free. They couldn't see it's the gateway to business improvement."

Most agency bosses believe even greater potential lies elsewhere within the region, and at its borders. Stability in Iraq will bring a landgrab from agencies eager to be first to target its 27 million inhabitants.

Many agencies are also looking east towards Persia and the massive Iranian population. And in North Africa, beyond Egypt, the likes of Algeria, Tunisia and even Libya also hold promise.

Samir Ayoub, the chief executive for MindShare in the Middle East and North Africa, says: "Iraq is potentially a very promising market." Which is clear from the media owners already racing in. The Beirut-based outdoor company Pikasso is one of a number of companies already invested heavily in Jordan and Iraq.

Completing the optimistic picture for the Middle East is Qatar, which saw something like 28 per cent advertising growth last year. As the home of Al Jazeera, which is about to launch an international English-language news service (page 31), and the host of the Asian Games later in the year, there is a huge amount happening in the relatively small country, which has one of the world's largest GDPs per capita.

Anthony Ryman, the managing director of the Doha-based agency Grow, says: "Qatar is the fastest-growing economy in the world. It's going to be the richest country on Earth within two years."

With all those wealthy consumers, it is no surprise that Sorrell is bullish about the Middle East.

COUNTRY 2004 (dollars m) 2005 (dollars m) % growth
UAE 634 904 43
Saudi Arabia 699 891 27
Egypt 445 570 28
Kuwait 382 435 14
Lebanon 276 267 -4
Bahrain 116 103 -12
Qatar 93 119 5
Jordan 76 108 42
Oman 72 103 44
All Arab markets 4,619 5,416 17
Table based on estimates from Pan-Arab Research Center.