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Lebanese ad agencies eye alternative markets
Jabbour, Khater, Sadek and Azzi all agree that the advertising sector needs to offset its losses with new markets.(The Daily Star/Mohammad Azakir)
Jabbour, Khater, Sadek and Azzi all agree that the advertising sector needs to offset its losses with new markets.(The Daily Star/Mohammad Azakir)
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BEIRUT: As Lebanon continues to suffer from the absence of a government, a spate of deadly security incidents and stagnation that refuses to release its grip on the economy, advertising appears to be the last concern of businesses that are desperately treading water.

But Walid Azzi, publisher and editor-in-chief of ArabAd magazine, believes that “ad agencies should highlight the importance of advertising in times of security problems” in particular, warning that a freeze in companies’ advertising activities during crisis would lead to consumers forgetting about their brands.

Moreover, Azzi emphasized the need for a major decision to be taken by the caretaker government to boost economic sectors in Lebanon that in turn would increase the revenues of the advertising sector.

Real advertising expenditures dropped 10 to 15 percent in 2012, according to a survey conducted by the International Advertising Association, a lobbying group comprised of representatives from agencies, their business clients and media outlets, following a 16.6-percent drop in 2011.

However, the annual survey of the advertising market in the Arab world by ArabAd magazine and research firm IPSOS-STAT shows that real advertising expenditures in Lebanon totaled $182 million in 2012, constituting a rise of 4.5 percent from $174 million in 2011 and compared to a contraction of 3 percent in 2011 and increases of 15.4 percent in 2010 and 18.5 percent in 2009.

“The advertising sector is able to generate an excellent income for the government in terms of taxes because it has a turnover of around $200 million,” Azzi said. “It is a very important income for the National Social Security Fund as well since it employs between 3,000 and 4,000 people.”

Echoing Azzi’s remarks, Makram Khater, general manager of Havas Worlwide, said the security and political situation was weighing heavily on the economic sectors in the country and subsequently having a negative effect on the advertising sector.

“If the tourism and manufacturing sectors, for instance, are functioning well, businesses such as hotels, tour operations and juice manufactures would want to communicate more on their products and offers,” he said.

In the meantime, Lebanese advertising agencies are looking for ways to increase their revenues by finding alternative markets where they can make up for their losses from the heavily affected sectors, particularly tourism.

Hence, the advertising association has been trying to change some laws in order to improve the ad business in Lebanon, explained George Jabbour, president of Lebanon’s Advertising Agencies Association and CEO of Middle East Communication Network.

“However, the absence of our institutions is preventing us from going on with our plan,” he said, referring to parliament’s failure to hold sessions needed to approve suggested laws.

One law in particular that ad agencies are anxious to remove is the ban on advertising over-the-counter pharmaceutical products.

“Such a move would bring additional revenues of $10 million to the advertising sector,” said Waddah Sadek, CEO of Allied Advertising.

Sadek added that OTC pharmaceuticals such as Panadol that do not need prescriptions could be advertised everywhere except in Lebanon.

“Even some herbal medications manufactured in Lebanon are allowed to be advertised, but other OTC drugs that are used regularly by people are not, and this is weird,” he argued.

Sadek noted that doctors make deals with medical companies to advertise their products and display brochures of drugs they prescribe in their offices.

“Why can’t we do this on billboards? What difference does it make?” he asked.

Jabbour concurred that OTC advertising would definitely contribute to increasing the revenues of the advertising sector in Lebanon.

“We are working on lobbying a lot to move forward when it comes to OTC advertising,” he said. “However, in a country where nothing works well, we cannot expect from the AAA to make things happen easily.”

Azzi also highlighted the importance of looking for ways to increase revenue in the advertising sector in the midst of the current prevailing security situation. “The income that would be generated from OTC advertising is high,” he said.

Azzi also voiced his belief that the AAA should wield more power and be able to impose a set of rules and regulations for the advertising sector.

“This would probably enable it to lobby for the removal of the ban on OTC advertising,” he said.

However, the AAA, which was founded in 1959 with the aim of protecting the industry and safeguarding the interests of its members, still lacks sufficient authority to regulate the industry despite past efforts to increase its influence.

Sadek, therefore, did not harbor much optimism regarding success in removing the ban on OTP advertising.

“I am not confident that the AAA will be able to remove this ban because the Syndicate of Pharmacists won’t allow it,” he said, adding that removing the ban would prompt medical companies to reduce by around 50 percent the money paid to pharmacies to advertise their products.

“Medical companies would allocate 50 percent of their advertising budgets for advertising through agencies, and I am sure that the Syndicate of Pharmacists wouldn’t accept this,” he said. “The Syndicate of Pharmacists is more powerful than the AAA.”

A version of this article appeared in the print edition of The Daily Star on December 09, 2013, on page 5.
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