Where are we going? In these hard financial times, companies are collapsing around the world, and as Dubai’s real estate sector dissolves, so too does a big chunk of the region’s advertising.
Even the most determined ostriches can’t bury their heads in the sand deep enough to avoid seeing 2009 will be harsh for our industry. Some agencies have started laying off staff, media have frozen their recruitment, and, if rumors – and common sense – are to be believed, many companies in the marketing and communications industry have firing lists drawn up in case the noose of financial hardship tightens further.
Reducing HR costs, by firing people, is one way of saving money for any company. Another place the world’s – and the Middle East’s – firms are likely to cut back is marketing. Yes, marketing and advertising budgets are being slashed, squashed, squelched into something smaller.
Communicate decided to ask some media buyers how they would cope with decreased spend. We made up some companies (based on our own whims) and gave them imaginary marketing budgets. These weren’t very large. Then we approached media buyers and asked them how they would handle our fictional clients’ advertising spend.
We also asked evangelists for various media channels why marketers should continue to give money to them and not to other media.
The main thing we found was that no one really seems to know what’s going to happen. In a time of financial uncertainty, it’s no great surprise that few in the media seem to know what lies ahead. Or, more specifically, they don’t seem to agree on what’s coming. There are some pretty strong arguments for contradictory developments in the media landscape out there.
Some buyers make a point of putting on a show of optimism – possibly forced. After all, it is part of their job to persuade clients to keep spending money.
And the media people we polled each say their channels are good, and will do well. But that’s pretty much what we asked them to say. Most agree, though, that their media will need to be used in the wider context of a varied marketing plan. Surprisingly few tell us their media is the only way to go.
LIMITING FACTORS. The Communicompanies have low budgets and vague objectives. The reason for the low budget is our imaginary firms’ reactions to the credit crunch. The reason for the vagueness is that the briefs above were dreamed up by a bunch of hacks and not devised by trained marketers. Both factors could have led to some variation in the reaction we got from agencies.
Usually, clients and buyers sit down and discuss briefs and objectives at length, before coming up with a detailed analysis of key performance indicators, audience reach strategies, tactical objectives and goals. That sort of thing. We scribbled our descriptions on the back of a ticket to Goa.
With a bit more money or a bit more direction, the buying strategies for our companies might have been different.
Outdoor is likely to bear the brunt of the media changes that are coming, say buyers. Clutter will be reduced, though, says Wissam Najjar from OMD, especially on giant hoardings, bridges and other big, expensive locations. “It will go to basics: the mupis, the lampposts,” he says.
Newspapers are also likely to see a drop in clutter; they, like outdoor, are heavily reliant on real estate advertisers. But there is still demand, insists Najjar. “For example, if [a big newspaper] used to get 100 bookings a day, where they can accommodate 20, now they will get 40.”
One thing most of our media buyers seem to agree on is the need to get tactical. Advertisers won’t be lighting brand awareness cigars with rolls of marketing-budget bills any more. And they will be a bit more cunning when it comes to getting return on investment out of their spend.
“If a half page delivers the same GRP [gross rating point] as a full page, let’s go half-page,” says OMD’s Najjar. “And no more ego by the road, when companies see Emaar got a hoarding and want to build a double-sized hoarding.”
For clients with more money than ours, buyers tell us, television would feature more heavily. It might be an expensive medium but it’s also one of the most popular. It’s got good reach, and smaller television stations – which admittedly don’t have that reach – are cheaper. The big stations have money and, says Amer Hajj, regional media buying director at Publicis Groupe Media, “You have a lot of clients like P&G, like Unilever, like all these big clients who will never stop supporting the small stations, and the small stations mainly get their budgets out of these clients. Because [the multinationals] have a strategy to support everyone as long as they have the budget, as these stations might have potential to grow.”
Hajj doesn’t speak for all buyers, though. Georges Naaman, general manager of MPG, predicts that, “Small TV stations will suffer more and more. … The focus will be on pillars of the media, in TV and magazines.”
Najjar agrees that small media will be hit. “Small mediums will be affected,” he says. “All vehicles. Small magazines, small newspapers”
But, says Yves-Michel Gabay, international business and development director at Mediaedge CIA, this won’t come down to size as much as quality. “If you have a small TV channel or magazine very well done and very relevant, it will keep its viewership and readership, so advertisers will continue to invest in it.”
There’s good news for digital, though. It’s measurable and it’s cheap. As Hassan Shoker, Mindshare’s buying manager, says, “What is happening now will give a big push to big advertisers to go digital, as it will be cost-effective for them.”
Dimitri Metaxas, group director of OMD digital, says it’s the measurability and controllability of digital that will draw clients during the recession. “You have instant measurability,” he says. “[and] real data, agility of the medium to be able to make changes as the campaign is running, and to manage contingencies and opitimize.”
So the climate is, well, varied. Buyers seem to agree that there will be changes, and that marketing will – or should – become more focused.
ESTATE OF DISARRAY. Most agree that outdoor will be hit. The medium has been propped up by real estate companies, which have now slashed their spending – and, in many cases, their staff. Newspapers could be in for a punishing time too.
Spend will diminish, or at least is unlikely to increase, and will partially migrate to cheaper media like radio, and more measurable media such as digital.
These predictions are largely UAE-based. (It’s where we based our Communicompanies – for tax reasons.) Other regions which are not as heavily under construction will get off more lightly, say buyers. “Now, based on our readings and our monitoring,” says Hajj, “We think that Qatar will not get affected. Abu Dhabi and Bahrain will be affected slightly, Saudi Arabia won’t have a major problem because Saudi Arabia doesn’t have the big projects like Dubai.”
The only thing, it seems, that we can be certain of in this credit crunch is that we will have to wait and see whose predictions are right. “The problem is,” admits one buyer, “I don’t have any clear indications for 2009. The budgets are changing by the hour. Some of them are waiting for Germany, some of them are waiting for Japan, some for New York.”
Wait till the traditionally slow first quarter is over in April, says Hajj, and Mindshare’s Hassan Shoker agrees that we will know more. Talking about television spots, he says, “I suggest [stations] keep the 2009 rates the same as the 2008 rates, at least until March. Let’s see what’s going on, what will happen.”
So the crystal ball is cloudy for the region’s media industry. Perhaps if the future were clearer, we wouldn’t need to ask so many questions.