Expert predicts that advertising will revive in 2004

Interview with Edmond I. Moutran who knows a thing or two about advertising in the Middle East. What he does not know it is not worth knowing anyway.

The Bahrain-based chairman and chief executive of Memac Ogilvy & Mather Holding – one of the top five communication agencies in the region – was in Dubai last week to head the board meeting of his network’s extended interests in these markets.

With the advertising sector having passed through some very testing times over the year, and with the expectation that things can only improve from now onwards, this is a good time to seek an update from Moutran.

Is the board meeting a prelude to changes in the equity structure of the company?

The holding entity is 55.5 per cent owned by myself and my family, 40 per cent by Ogilvy & Mather Worldwide and 4.5 per cent by the staff. There has been no change to this structure since 2002 and I do not foresee any in the near future.
The main objective of the meeting was to improve the way we look after our people – this takes up 30 per cent of the senior management’s time. There are plans to introduce a new rewards scheme, and restart training of personnel, which was frozen in 2003. Approval was also given to increase our creative staff by 40 per cent. Moreover, the board has also approved all investments for 2004.

Each of those present at the board meeting felt that 2004 would be a much better year. While the region’s advertising sector was down 12 to 15 per cent, we as a group are running well above last year’s total, but short of the ambitious target we had set at the start of the year. It is disappointing, especially after two record years in 2001 and 2002. We could have set another record if it were not for the war (in Iraq).

Was any decision taken to expand your network?
We will definitely move into Iran before year end. Our entry into any market is dictated by our client requirements. From a business perspective, a presence in Iran could be deemed premature. But we are not bothered about that.

Another area where we will be focussing on is North Africa. We intend to be much more serious there. I see five offices there between now and June.

We have affiliates in Morocco and Tunisia – this could be converted into equity, or if negotiations fail, we will go in on our own. Algeria and Libya are also being considered.

What of Lebanon? Any substance to speculation that the country’s advertising market is ready to compete for the mantle of the Middle East’s advertising capital?
We had a merger with a firm there, which has seen us quadrupling the business this year. But when we went in for the merger, there was a lot of suspicion about our intentions.

The name of the game for Lebanon’s advertising sector is consolidation through mergers or acquisitions. But the egos tend to be much bigger than the purpose of clear business objectives. That has got in the way of Lebanon’s ad industry.

So can Lebanon reclaim top spot?
It can certainly regain its lost glory. What I do not understand is this concept of having only one capital for the industry in the region. Look at Europe – there are so many centres of advertising excellence. Why cannot the Middle East have two, three or even four centres of excellence for the ad industry?

Any truth to speculation that you might consider shifting the Memac regional base from Bahrain to Dubai?
No. Our Bahrain office takes care of those clients such as Gulf Air which are headquartered there. And our Dubai office happens to be the biggest in the region. The current status serves the needs of our clients very well. I am not a political person. It does not matter where you are based – two of the top five agencies are based in Bahrain.

What of your Saudi operations?
We were hit as hard as anyone else. But I see that as a blip of bad luck – more of a slight headache that a Panadol can cure. Clients were not spending because of the situation in the region. However, my expectations for next year from this market are tremendous. I am not somebody who approaches a big market with fear. Those who do so tend to fail.

Where do you see Memac in five years?
To be the best agency in the region with a high reputation as a good corporate citizen.

And in gross billing terms…
I do not care for the billings. If I dropped my rates, I can easily take on more business. That’s not how I see my company growing. I am far more concerned about numbers related to revenues, return on investments and profit margins.

Will you still be there right at the centre of all this action? Or do you plan to take it easy?
I am only 59, which makes me still young to pursue what I want. I intend to take it easy when I can finally afford to buy the boat I have been looking for; and when I see that my team can take care of Memac on their own.

Having said that, there is a grooming process on for the new successor. May be, by the time I turn 65 I might be ready to pass on the mantle and start thinking of the boat.