Elie Khouri talks about “the good old days” as he surveys an unusually grey day in Dubai Media City from his corner office.
It’s a phrase he uses more than once and it’s not clear if he’s being nostalgic or ironic – or perhaps a combination of both.
Several floors below, the street artists Thierry Noir and Run are painting murals on the walls of the Omnicom headquarters. But even the splash of paint seems unable to brighten the mood in Dubai’s creative hub.
With wars raging from Libya to Yemen, oil trundling around seven-year-lows and the strong dollar clobbering retailers, hoteliers and exporters, the media sector has lost something of its swagger.
Traditional forms of advertising are under attack from the relentless migration of dollars from analogue to digital platforms.
At the same time, advertising agencies are under scrutiny from their clients like never before, demanding better bang for their buck as well as complete transparency over where it has been spent and why.
The good old days of the advertising industry may have lasted longer in the Middle East than in many other parts of the world, but the march of technology has remoulded the media landscape, where newspapers, billboards and television stations by the dozen have long held sway.
The industry’s new mad men are analysts, econometric modellers and data engineers.
They are the professionals now in demand at companies such as Omnicom, which controls 13 per cent of advertising spending across the Middle East.
“These are the new breed of people who are coming to the industry. It is a lot more focused on analytics and data, and understanding on a continuous basis the behaviour of consumers in terms of media consumption,” says the 51-year-old regional chief executive of Omnicom, one of the big-four global advertising players,
Elie Khouri is a 25-year veteran of the Dubai media scene and one of its best-known personalities.
That industry experience combined with his upbringing in war-ravaged Lebanon may be why there is no sense of alarm as he describes what some of his peers might perceive to be an alarming situation.
He sees the scale of the retreat in advertising spending over this year and next as comparable to the decline that followed the 2008 financial crisis – the difference being that it is likely to happen in a slower and more subtle fashion this time.
Newspaper proprietors should be particularly concerned, as advertisers look increasingly to digital platforms.
“Globally, what is happening is that print is going down, be it magazines or newspapers – it’s a freefall. Outdoor is holding. TV is going down – not at the same speed as print, but there is a decay in terms of investment. What is going up is mobile and desktop, that is the only thing that’s going up.”
The market may be contracting, but that doesn’t mean Omnicom has to as well.
“How do you grow from a shrinking pie?” You have to take market share from your competitors, he says.
Born in Beirut in 1964, Mr Khouri was a child of the country’s brutal civil war, and that experience seems to have shaped his resilience in business and entrepreneurialism. Today he is among the highest-profile advertising executives in the Lebanese-dominated Dubai media scene.
He points to my smartphone, which is recording our conversation.
“We, as media and advertising agencies, are part of your daily life. We try to follow you and influence you, we try to present products and brands to you, hopefully in a subtle way and not in an obstructive way. Sometimes we succeed and sometimes we don’t.”
The smartphone increasingly finds itself at the crossroads of the emerging advertising landscape – the preferred conduit for advertisers to connect with us and increasingly anticipate what we want to buy or where we want to fly.
Globally, digital spending is expected to account for half of the overall advertising pie within four years, according to the management consultant McKinsey.
Within digital spending, it is mobile phone-based advertising that is expected to outperform – growing at roughly twice the rate of non-mobile digital advertising through the end of the decade.
“Technology is shaping the world. Everything is happening on the phone. You don’t just make phone calls, you look at your Facebook account, your photos. We are trying to converge everything on the phone today.”
Beyond the economic woes that are squeezing client spending, advertising agencies are also coming under increased scrutiny from the industry’s big spenders. In March, what began as a routine presentation by a former industry executive to a group of top advertisers in the United States ended with a bombshell.
Jon Mandel, the former boss of WPP’s MediaCom unit, said that many US agencies were taking rebates and kickbacks from media outlets in exchange for advertisements placed with them. All of the big agencies published statements that defended their transparency and ethics.
But the issue has not gone away, and in October the Financial Times reported that big US advertisers had hired corporate investigators to probe the media buying supply chain.
The film How to Get Ahead in Advertising features a boil with a face that starts to sprout from the neck of Richard Grant and berates the industry's lack of scruples, and the current probe into rebates threatens to do the same. While that investigation does not cover the Middle East, the industry's regional reputation is far from unblemished.
The popular perception of the Dubai media scene is one that lacks transparency, reliable audience measurement and that has been dominated by cronyism.
Noura Al Kaabi, the chief executive of Abu Dhabi’s media zone twofour54, has even described the Arab advertising industry as corrupt, in a 2013 interview with Al Arabiya.
“We are in a region where the media market, from an advertisement perspective, is corrupt,” she said.
Mr Khouri roundly rejects any suggestion that the local advertising scene lacks ethics and transparency.
“We always honour our agreements with clients and our financial dealings are transparent,” he says. “If some smaller players here and there are not respecting that, I doubt this is happening within the big holding companies, particularly Omnicom.”
The Middle East may be a long way from the focus of the US advertising industry investigation into rebate payments, but there is clearly sensitivity around the issue among regional agencies.
And when the questions turn to that subject, the answers come by way of prepared statement rather than off the cuff.
“Transparency has always been something we greatly value because we respect the faith our clients place in us,” he says. “Over the years we have built our business here in the Middle East on an understanding of mutual trust between agencies and clients. As a result, we’ve developed relationships we are extremely proud of. Going forward, we will continue to honour the integrity of our relationship with our clients by continuing to provide full transparency over the way we manage their media investments.”
Closer to home, the advertising industry has more pressing concerns, not least of which is the rash of regional wars and the collapse of the oil price.
“Typically, multinationals come here and see it as a lucrative market. With pressure elsewhere, people are looking at the Middle East and North Africa with more scrutiny and will want to extract more revenue from those markets, and therefore be careful in how they invest marketing and communications dollars.
“There is a growing element of caution among those multinationals today. So if you combine those factors we are not looking at a very bright 2016. Even 2017 is not looking too good.”
There are some bright spots out their in advert land, but the downward trend is unmistakable. “We are anticipating a drop next year of about 10 per cent across the Middle East and North Africa, which is a big number. So maybe now if you are looking at 2015 and next year together, you could be looking at a cumulative drop of 20 per cent, which can be compared to the 2008 crisis in terms of impact,” Mr Khouri says.
“Now, it is happening smoothly and subtly. It is happening more strongly in some markets than in others. For example, Saudi Arabia is feeling the pinch more than the UAE. The UAE is feeling it less than Egypt. Lebanon and the Levant are catastrophic in terms of investment because of Syria and everything that has happened. So it varies by markets,” he says.
The advertising industry may have changed much since the good old days when the young Mr Khouri left Beirut to make his name in media, but ruthless competitiveness has always been its constant. And in the Middle East, so has war. With old advertising mediums fast crumbling, that competition will only become more fierce.
“It’s the survival of the fittest,” he says with a resigned shrug. “The stronger will prevail.”
BIOGRAPHY
Elie Khouri, chief executive, Omnicom Media Group Mena
Mr Khouri has worked in the advertising industry for 25 years incorporating work with multinational clients across the region, including in Beirut and Dubai.
He has previously held senior roles at OMD, Media Direction and BBDO.
An avid supporter of the arts and the advancement of education, Mr Khouri regularly features in most influential lists in publications across the Middle East.
A board member of Injaz-UAE, an organization dedicated to educating students about work readiness, entrepreneurship and financial literacy, he also supports the Association for the Promotion and Exhibition of the Arts in Lebanon (APEAL), a non-profit organisation dedicated to showcasing and encouraging Lebanese artists.
“Both organisations are very close to Elie’s heart, as he is also a renowned art collector who has transformed the company’s regional headquarters into an art gallery,” says his company profile.
scronin@thenational.ae
