BEIRUT: In Saudi Arabia, people between the ages of 18 and 40 spend an average of 28 hours per day in front of a screen, meaning most individuals consume media and content on multiple devices throughout the day. In the Middle East, where television remains the reigning advertising medium for both global and international brands in most countries, 68 percent of people in this age group check email while watching a program, 55 percent will update their status on a social network and 28 percent will look up information online about the show they are watching. In Lebanon, the smartphone penetration rate is 55 percent.
Until the late 1980s, gathering this type of data on the media consumption habits of a target consumer group in order to plan when and where to place an advertisement and negotiating rates with media outlets was traditionally the domain of full-service agencies. But the proliferation of digital content and the emergence of an increasingly fragmented modern media landscape over the past two decades have pushed the one-man band advertising agency model popularized by shows like “Mad Men” toward obsolescence.
Today, behind nearly every advertising agency in Lebanon is a media buying company that collects data such as this to identify the ideal contact points for specific brands to reach their customers.
“Media is science plus creativity. That’s what we do,” the managing director of Starcom MediaVest, Wilson Issa, told The Daily Star. “If I want to reach you, I need to make sure to reach you in the most cost-effective way possible and capture your imagination.”
In Lebanon’s advertising industry, as in most of the industrialized world, the media-buying field is dominated by a few major players affiliated with multinational advertising agencies, including Starcom MediaVest, which is owned by the French PR conglomerate Publicis along with its sister agency Leo Burnett and collected these statistics in some of its latest research; OMD, the media-buying arm of BBDO, both of which are owned by the Omnicom Group; and Mindshare, which is part of the same group as J. Walter Thompson and Memac Ogilvy.
It’s a complicated family tree that has become increasingly tangled over the past two decades by global shifts in media consumption habits, technological developments and a wave of consolidations of multinational advertising and media planning firms that culminated in July with the merger of the Omnicom Group and Publicis into a giant $35 million PR holding company.
It is still too early to tell what the consequences of the Omnicom-Publicis merger will be for the Lebanese advertising market, but the announcement has spurred renewed debate about the relevancy of specialized media-buying firms in an increasingly digital modern advertising landscape that promises to further blur the traditional distinction between “above-the-line”campaigns in classical media outlets and “below-the-line” marketing strategies that lend themselves to social media.
The Daily Star interviewed executives at the Lebanese branches of OMD, Mindshare and Starcom MediaVest – who collectively control an estimated 60 percent of the market – about how brands have adapted to the migration of consumers to digital mediums and how the economic downturn in Lebanon has affected the fortunes of the advertising market.
Online advertising is currently the fastest growing segment of the Lebanese market, but only claims between 1 to 2 percent of annual advertising expenditures – a paltry share compared to the 40 percent spent on TV, which remains the top category followed by outdoor and print, according to Issa. He believes the Internet is poised to grab an even larger share of advertising dollars as more brands are forced to follow their customers online, but its not there yet.
“The potential for digital is huge in Lebanon, so it’s only a matter of time before this share increases, but you can’t say that digital will take a share from print or any other media because the consumer has changed,” Issa said. “Now they can do two things at a time. Now they can watch their favorite program and tweet at the same time and chat with a friend about content. With every given program you see the Twitter hash tag at the bottom of the screen. So even TV stations are driving consumers to have online conversations about their TV shows and print is doing the same thing.”
Hana Khatib, the managing director of Mindshare in the MENA region, said the firm’s clients began to gradually embrace online campaigns about two years ago and most were now willing to devote an average of 10 percent of their annual budgets to online advertising. Online campaigns now account for 20 percent of Mindshare’s annual billings, which Khatib said was a much higher proportion than that of other Lebanese media-buying firms. The firm is affiliated with J. Walter Thompson and Memac Ogilvy, but 80 percent of Mindshare’s clients have independently contracted media and communications advisory services from the firm, Khatib said.
“There used to be a time when clients were only interested in TV. The main shift in strategy has been instigated by the consumers themselves. People used to be passive. They used to sit in front of the TV set waiting to be exposed to the advertisement to react to it. Now they demand engagement and interaction by the brand. TV-only advertising is not appreciated by the consumer now. We’re moving out of TV-only to have a mix of touch points.”
Rachid el-Khazen, the director of investment at OMD Lebanon, said that Lebanese brands were increasingly open to online advertising, but haven’t figured out the right way to communicate with their customers on social media yet.
“Online, unfortunately, we’re still way behind – not even Europe and the U.S. but even Dubai,” he said. “Most of the local clients are still family businesses and family-owned and most of them are not ready to accept this social media boom, because they don’t understand it. The expectations of an online campaign are still not clear. Clients say, ‘I want to spend money on a Facebook page and I want this many likes,’ but if they don’t engage with the fans what’s the point.”
Khazen’s concerns are echoed by his colleagues at Starcom MediaVest and Mindshare.
“You see a lot of brands just uploading their [TV commercials] on fan pages, but social media is different,” Issa said. “If you manage to get fans for your brand the last thing you want to do is throw all the [commercials] they see on television at them. If you’re lucky enough to get social media fans, you need to reward him and treat him in a special way. He’s not someone who’s passing by. He’s someone who is now attached to you, and if he decides to speak with you, you better listen and you better answer back.”
Some of Starcom MediaVest’s clients have hired full-time community managers to manage their social media presence, but many others have yet to devote the resources necessary to realize the full “efficiencies” of online advertising, and social media in particular, Issa said.
Though the portion of advertising spent on print and other so-called “legacy” media may drop further as the Internet claims a larger share of advertising dollars in Lebanon, Khatib doesn’t expect the declining performance of classical media to impact local newspapers as significantly as it did their Western counterparts.
“Print has never been a big performer in Lebanon,” Khatib said. “The shift to online has made the performance worse, but I wouldn’t say that its 100 percent responsible.”
For at least the next five years, TV is expected to continue to outperform other media in Lebanon and much of the region, she said, though print still claims the largest share of advertising dollars in Jordan and Kuwait.
In Lebanon, by contrast, print-media advertising budgets of OMD’s local clients have dropped between 15 and 20 percent at least between 2012 and 2013, said Khazen. At least three Lebanese print-media outlets have started to offer free online advertising to print buyers as an incentive.
“I believe it’s getting very difficult to justify paying $15,000 for a full-page newspaper ad to just appear one day and then go in the trash,” Khazen said. “[Some print outlets] have integrated online ads into the cost of print, so every time you buy an ad on specific pages you get exposure on the website, which I think is a nice way for them to bring advertising traffic to their websites and now the idea [of online advertising] has been planted in the clients minds.”
Surprisingly, all of the media buyers interviewed for this article said they had yet to see local clients drastically reduce their advertising budgets this year or any international brands completely exit the market.
“People will always use fast-moving consumer goods. They will always need to take a bath,” Issa said. “The average middle-class individual during a recession may change their habits in terms of buying luxuries, but then again luxury is more affordable than it once was. Lebanon’s economy regulates itself in miraculous ways. If one category drops its ad expenditures, another will fill the gap.”
Mindshare said most of its local clients maintained their advertising expenditures between 2012 and 2013 – energy drinks have even emerged as a new promising category of the market, Khatib said – though it had seen dramatic cuts in the budgets allocated to Lebanon by international brands, which comprise 35 percent of its client base.
“A lot of our international clients are active in other markets on satellite and pan-Arab media so they feel that if they focus activities in pan-Arab markets, they will reach their priority markets and Lebanon as a secondary market,” she said.
Khatib believes the flight of international brands in the most competitive category of the Lebanese market, fast moving consumer goods, could be an opportunity for smaller local companies that have shied away advertising on television in the past because it was too expensive to compete with the frequency of major international advertisers.
“If you are [competing with] a highly active international client on TV, even if you can afford a campaign of 20 spots and normally this would have been a good reach for your brand, the existence of international clients pushed them to increase their budget and frequency to be visible,” Khatib said.
“Now these clients are walking out, so I would tell local clients, ‘Now you have clutter free air on TV, clutter free space in newspapers. Take advantage of that and come back if you were a client avoiding TV.’ Now media owners are accessible in a better way, negotiable in a better way and the visibility of the campaigns will be much higher.”