Business

Region's ad sector looks to Ramadan

In culturally diverse countries like the UAE, it's tough for advertising agencies to make commercials that appeal to all. But the Arab ad industry is becoming ever more creative.

Ben Flanagan

February 16, 2012

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In culturally diverse countries such as the UAE, it is tough for agencies to make commercials that appeal to all. But the Arab advertising industry is becoming ever more creative, according to the people who work in the sector.

Lance de Masi, the president of the UAE chapter of the International Advertising Association:

Good advertising has an entertaining element. [In the Arab world], it exists at a lower level. In markets such as the US and UK, while there are regional differences, there is [always] target audiences for any piece of advertising.

You take a market like the UAE, which is so highly fractionalised and splintered - with different languages, different nationalities and different cultures - and it's not easy for a single piece of advertising to become talked about.

Reda Raad, the chief operating officer for the Middle East and North Africa at the advertising agencyTBWARAAD:

The closest that we've got to the Super Bowl is probably Ramadan. That's the time when a lot of the packaged-goods companies put on their greatest [advertising].

It's a different context altogether, but in terms of eyeballs on TV, that's the closest we have.

Advertising in the US tends to be a lot more entertaining, a lot freer. There's not as many restrictions or taboos; it's much more sophisticated and advanced. But that's not to say that our stuff is not getting there. I think in the past five to six years there's been an improvement in the entertainment value of [ads] being produced across the Arab world.

Vincent Raffray, the creative director and founding partner of theagency Tonic International:

The reason the Super Bowl advertisements are so expensive is that it's the highlight of the sporting calendar in the States. So many people are watching. In our region, there's nothing close to it.

Advertisers launch the adverts online before they are shown on the Super Bowl, on YouTube and things like that. They build that story around the Super Bowl ads. They take advantage of social media to push their media budgets much further. If the clients are going to spend that much money, they might as well make the most of it.

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Tomorrow 2021

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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