Alex Malouf 10 Jan 2017 // 2:32PM GMT
For many in the Middle East’s communications industry, the past twelve months have been the toughest since the financial crash of 2008. For others, 2016 was the year when the communications industry grew triple-digit (yes, you read that correctly). For the Holmes Report, we spoke to some of the key agency players in the region to understand what happened in 2016, and what they’re looking forward to in 2017.
The Middle East/UAE
It’s fair to say that the region’s communications hub has had a mixed year. Agencies in Dubai saw growth slow in 2016 as government spending dropped. However, the discipline’s evolution from pure media relations to an integrated approach has helped many agencies create new revenue streams. For many in the industry, 2016 was the year of change.
"There is a growing realization amongst clients that communications should be used in a continuous and sustained fashion as part of the marketing mix and not just when in trouble or to get some quick wins," explains Ajit Ramaswami, regional managing director, of MSLGroup Middle East. "There is also far more specialization in terms of what agencies offer their clients today rather than just a one size fits all solution. We saw an increasing use of the discipline in more 360 communications rather than a stand-alone ‘media relations’ machine."
Unsurprisingly, the word digital featured prominently as clients followed consumers online. Weber Shandwick’s MENA CEO Ziad Hasbani estimates that 90% of the briefs the agency received were for both public relations and social media.
"Digital and social media continue to prove essential channels for brands looking to engage with their highly connected audiences. By becoming ‘mainstream’ social and digital media have put us, as PR agencies, in a unique position to focus on what we do best – that is creating engaging and sharable content. Being committed to offering fully integrated communications solutions to clients is absolutely essential for maintaining growth," says Hasbani.
Other areas of interest for clients in the region during 2016 included working with social influencers and working with communications agencies on paid-media strategies, according to Loretta Ahmed, CEO Middle East, Turkey and Africa at Grayling. However, there’s still room for improvement in areas such as evaluation and measurement.
"Clients have embraced digital and we have fewer clients giving us ‘traditional’ briefs," explains Ahmed. "We also have more and more clients giving us broader, integrated briefs – media relations no longer dominates and thank goodness for that! In terms of professionalism I think we can always do more. Evaluation is still to come of age, but again the inclusion of social and digital elements, including paid media, into many mandates is starting to finally force through the changes we needed to all see in this area too."
The talent crunch, which has often impacted the region’s agencies and industry growth, also seems to have abated somewhat over 2016. "Corporates continue to invest in strong talent with the result that many brands are improving their communications, as well as facilitating stronger client-agency partnerships that act as the foundation for delivering great work," says Jason Leavy, Managing Director at Edelman Dabo. "The bottom line is that we’ve always been a talent-based industry and as we stand here now, that pool of talent is deeper than ever."
Government spending across the rest of the Gulf has mirrored that of the UAE; dependent on oil and gas revenues, governments have cut back on spending. Qatar’s agency landscape experienced a major shift at the beginning of the year following Qatar Foundation’s decision to hand over its account to BLJ, a decision which prompted Grayling to disband its team in Doha. Many agency heads hope that 2017 will be the year when government spending on communications recovers. Weber Shandwick’s Hasbani’s advice to governments is clear – let the in-house teams pick their agency partners based on the quality of services on offer.
"Procurement, especially within Government organisations, is still taking the lead on the selection of PR agencies, which is counterproductive when you are talking about selecting a strategic partner," argues Hasbani. "In-house marketing communications departments need to take the lead and own the process for agency selection, and use procurement as an internal resource to ensure transparency and fairness."
Looking forward, 2017 promises to be a year where the gap between agencies will widen, between those who invest in creative and digital, and others who remain media-focused.
"I genuinely believe this year will be a critical watershed period, driven primarily by technological change," says Leavy. "We are operating in a media landscape that is fundamentally different from the one we used to operate in, and one that continues to evolve at a rapid pace.
"In terms of agencies I think we’ll witness an already growing divide become a gaping chasm, between those who choose to adopt a ‘circle the wagons’ mentality and continue just operating as a traditional PR shop and those who instead view this period as an opportunity and embrace it accordingly," adds Leavy. "As a firm we’ve already invested in key areas, bringing in new talent such as a director of strategic Planning and a creative director to allow us to operate effectively in this new world."
For Hasbani, growth will be driven by digital engagement as well as industries and events where Dubai is investing heavily, such as tourism and Expo 2020. Agencies will also need to increasingly prove their return on investment through the use of measurement.
"The ongoing decline of print media will likely see a shift in even more brands targeting their audiences using digital channels," explains Hasbani. "The rise of creative visual content across mobile and social platforms will also impact our industry here in the MENA region.
"The importance and impact of online influencers will keep growing, however there will be more emphasis placed on ROI, measurement and earned equity," he adds. "Measurement in general will become more sophisticated as clients will look to get the most from their budgets. It is likely agencies will need to achieve more with less budget, with clients placing more emphasis on generating real value for brands, from a brand equity and business value perspective."
The Arab world’s most populous country has had to deal with more than its fair share of issues. From terrorist incidents, currency controls and devaluations to a new media law, Egypt’s public relations professionals have had their hands full. "2016 has been a big year for Egypt, from economic and political reforms to new laws and regulations regarding media. These [issues] have changed market dynamics, and brands are thinking about reputation management and crisis planning," explains Mai Abaza, partner at Cairo-based Publicist Inc.
Whilst Egyptian brands may be waking up to why they should care about reputation management, most are still using communications tactically, according to the founder and managing director of the Cairo-based agency CC Plus. "There is interest in public relations, and corporates understand there’s a need for it, but it’s still not being utilized properly," explains Lamia Kamel. "To many, public relations is not a strategic function, driving perception and image. Instead, it boils down to tactics, such as PRs, event and social media."
With every cloud there’s a silver lining, and despite the downturn experienced by the Egyptian comms industry last year – many Egypt-based organizations cut their PR spending – there’s been an increase in demand for services such as social media and, unsurprisingly, crisis planning.
"Contrary to what clients may think, companies will need to engage more than ever with consumers through PR, such as with the price increase issues that we’ve experienced," explains Kamel. "We’ve seen this [during 2016] with many companies who are looking to engage with their stakeholders."
However, as Abaza also notes, with the increasing complexity of the stakeholder landscape, its becoming more difficult to resolve reputational issues. "The challenges of managing reputations are increasing. Brands are looking at more solid crisis planning, or they kneejerk when a crisis happens."
While 2016 hasn’t been a stellar year from Egypt’s established agencies, the past 12 months has seen an growth in the number of organizations or people offering communications services, be they former or practicing journalists or media agencies who are extending their service offering. Many of these new players are winning business through networking. Social influencers have also done well in 2016, as brands kept up or increased their spending re online endorsements.
Moving forward into 2017, expect more of the same. As Kamel points out, there’ll be more crisis firefighting to do. However, the economic challenges will force organizations to restructure, which will offer communicators an opportunity to prove their worth both internally and externally. Abaza notes that budgets will continue to be squeezed, and smart brands will need to count both the pennies going in as well as the return on investment. "Brands need to think about their strategy, their audience and then what tools will be the most cost-efficient. Diversification of skills will be critical, and lines between us and marketing are becoming blurred. We need to ensure our strategies are not just focused on one tool. Creativity is key, and we’ll soon see Egyptian PR agencies employing creatives."
The second most populous country in the region after Egypt, Iran was the proverbial new kid on the block when it came to the communications industry. Following the lifting of the UN-imposed sanctions in January 2016, a steady stream of American and European blue chip firms have sought to re-establish themselves in Iran. And they’ve brought with them a number of major agencies. In August of last year Grayling announced an affiliation deal with Tehran-based Iranian advertising and marketing comms agency PGt Advertising allowing Grayling to provide services in the country.
Grayling weren’t the first major Western agency to enter Iran. In February, emerging markets specialist Speyside launched a dedicated reporting and counseling service to help companies assess risks and opportunities in Iran through providing local insights. Italian firm SEC Group claimed to be the first foreign agency to enter the Iranian market in July, when it signed a co-operation agreement with the Iranian company PAT to provide support to its clients.
According to reports from Iran, more agreements are in the pipeline, including partnership deals and affiliation agreements between WPP-owned firms. Speaking to the Holmes Report just over a year ago, the CEO of Tehran-headquartered Mana Payam explained his belief that 2016 would be a breakthrough year for communications in Iran.
"Everyone understands the opportunity is there, but we need more players in the market," said Arash Vafadari. "Iran is one of the largest countries in the region, our consumers are savvy, and most of the organizations based outside of Iran know the value of PR and communications. The market will boom next year. 2016 will be the year of public relations in Iran."
Judging by the amount of interest shown by the communications industry in Iran, Vafadari may have been right. However, with the change in the White House and political tensions between Iran and the Gulf region, Iran’s growth story may be shorter-lived than many in the country would have hoped for.
The economic powerhouse of the region, 2016 was an annus horribilis for the Kingdom’s communications sector. Facing a double whammy of low oil prices and rising costs, the country’s government hedged existing contracts by a minimum 10% and delayed or cancelled new projects. In the words of Yahya Hamidaddin, managing partner at Adalid Public Relations, 2016 has been one of the hardest years the comms industry has faced.
"2014 was one of the best years on record for us. In 2015 we felt a drop in terms of revenues. 2016 has been even tougher, due to the drop in oil prices and the region’s conflicts. [The economic climate] has impacted spending by both MNCs, who have dropped spending by over a half, as well as the government."
The Kingdom, which sidestepped the financial crash of 2008, had enjoyed somewhat of a communications renaissance of late, with a top-down effort by the Saudi government to open up and engage with its citizens. This in turn spurred the growth of locally-based, locally-owned agencies in Jeddah and Riyadh. Last year’s government cutbacks have been particularly hurt, according to Hamidaddin and other agency heads the Holmes Report has spoken to. The advice is simple – ride out the short-term and look forward to a stronger economy in a couple of years.
"The government has needed to communicate to citizens on issues of importance, such as the Saudi Vision 2030, but they’ve both dropped budgets and they’re delaying payments. I don’t see anything will change in 2017. Government cuts will continue. If oil prices go up, the situation may improve. Longer-term, I’m positive in terms of the country’s vision and the impact of these reforms. I hope the economic situation will also focus minds on communications, particularly on social media. We need to take public dialogue online, and for that the government and brands will need effective communications counsel."