BEIRUT: Three years ago, Nijad Khunaysir opened an advertising agency out of his apartment in Beirut with a small staff and budget. By paying fewer overhead costs, he gained a competitive edge over much larger companies in Lebanon and elsewhere in the region.

“After the financial crisis, clients lowered their budgets, and [now] they don’t care about who does their campaigns,” he says. “People working at big agencies have the same qualifications as me, but I’m charging lower prices.”

Khunaysir says he can charge competitive rates, often as much as 25 percent less than his competitors, because of low overheads and a fast turnaround.

Today, there are nearly 70 advertising agencies with offices in Lebanon. Around 30 of these agencies are independent; most were established in the past decade. In recent years, these newcomers have been able to win over clients with their lower costs, fast delivery and personalized service, while larger agencies suffered disproportionately as a result of the shaky economy.

Real advertising expenditures in Lebanon slipped to $174 million in 2011, declining 3.3 percent from $180 million in 2010, according to a forthcoming report in Arab Ad magazine.

This followed a rapid growth of 15.4 percent in 2010 and 18.5 percent in 2009.

Lebanon might not have the financial resources of the Gulf or the institutions of New York and London, but the past several years have seen big gains by small agencies with low budgets. These modestly sized but feisty outfits have already won awards for their creative ways of promoting products, including extensive online campaigning.

Last year, Interesting Times, a first-year agency with fewer than 20 employees, won the prestigious Effie Grand Prix award for their “Courage is contagious” campaign, launched on Facebook, for the new beer Lebanese Brew. This is an unprecedented feat for such a young and small company in the region.

With the help of small but energetic startup companies, “Lebanon is entering the game again,” says Omar Habib, former director of client services at Interesting Times. “This signals a shift in quality.”

He notes: “Lebanon is an innovator in the region.”

Indeed, with a well-educated, multilingual and business-savvy workforce, Lebanon has historically been a hub for marketing creativity in the Middle East.

Advertising is one of Lebanon’s oldest industries, dating back to the 1930s, and it has earned a solid reputation over the decades.

The 1960s and early 1970s saw the golden age of advertising in the country, with major agencies such as Grey, Leo Burnett and Intermarket making names for themselves.

Like all other sectors, advertising suffered with the outbreak of the Civil War in 1975 as well as the rise of Dubai as a regional business hub. By the 1990s, most of the region’s major advertising firms had relocated their main offices to the Gulf, although much of the management remained Lebanese. The July 2006 war saw more business relocations to the Gulf.

With the global financial crisis of 2008, businesses were forced to make tough decisions about their budgets, and these affected advertisers as much as their clients.

“Until 2008, everyone in Dubai was making money. When the bubble burst, there was a reality check, and there was more focus on local markets. The smaller and weaker markets became stronger. In 2008, there was a lot of shift in quality, and people started to leave the big conglomerates,” says Habib, who previously worked for larger ad companies in the Gulf.

“We don’t change the rules. People still have needs, wants, demands, but the [big advertising agencies] are lagging behind,” he says.

Indeed, much of the shift is also to do with consumers, many of whom are increasingly getting their news and other information online.

“A couple of years ago, a client relied solely on big agencies for all their communication, marketing and PR needs,” says Marc Dfouni, CEO and managing partner of Eastline Marketing, an agency founded in 2006 that specializes in online advertising.

“Today, clients are more aware of true production costs and are becoming pickier,” he says, pointing out that businesses have recently developed a better understanding of the details of the costs of advertising as they look to tighten their bottom line. “Clients are more aware of the creative process and wish to actively participate in it. [In the past], agencies could more easily convince businesses to accept high production costs.”

As the younger agencies continue to prove themselves in digital marketing campaigns, some larger agencies have begun to outsource a portion of their work to their smaller counterparts.

Bshara Nicolas, a freelance 3-D animation designer who works with both large and small agencies, sees this as an inevitable result of the ongoing recession, with clients seeking both creativity at lower costs and well-qualified people ready to deliver a commission on demand.

But he worries that smaller companies could eventually lose the quality for which they’ve recently become renowned as they continue to be sought out for their low budgets and quick services.

“Before, when the whole industry was booming, creativity was the main criterion, then came budget concerns and deadlines,” he recalls.

“When the money comes first, the creativity goes down,” he adds.

“They’re trying to make a crack in the system and do something better. They could become like the bigger agencies. It’s a vicious circle.”

Still, for now, Lebanon’s smaller independent agencies appear to be filling a gap as clients cast about for a different brand of advertising agency.

Habib says: “I’m hopeful. I know the business environment is bad, but [we have] the know-how and the quality, and we’re beginning to get globally recognized.”