The Year Ahead 2017: Advertising Agencies

This will be the year when reality bites. A drive for cheapness will leave bodies on the field, says Hubert Boulos

Recovery in the region is definitely not around the corner in 2017, and 2018 will not be any better. We’re now clearly in for a ‘trench war’. Indeed 2017 will confirm that we are in a new cycle of slow or no growth in the region. That cycle had already started discreetly in late 2015. Back then it was thought to be temporary, with some levels of optimism beyond 2016. But this is no longer the case, and it is a new way of life in our industry for 2017
and beyond.

So, welcome to the real world. Welcome to a world where you have to work for your market share – like anyone else in the rest of the world, actually. The good times of relying on GDP growth to carry you effortlessly, and turn you into a marketing/advertising genius in the awards videos are definitely over.

Here are some of the most unpleasant consequences:

Agency and client relationships will keep deteriorating. Agencies will be increasingly blamed for any shortcomings, even when they are not responsible for them. There will be no mercy. Therefore, we will see a record number of pitches, even for tiny amounts. Indeed, many decision makers will blame their agencies first. But in 2018, some may need to find a new excuse. In any case, agencies are bound to lose some business, but the name of the game will be to win more than you lose, or at least break even.

There will be dead bodies. As our region is at the crossroads of East and West there are simply too many brands around and too many agencies. It was an easy way to make money and/or boost one’s ego in the past, but this is no longer sustainable. No market in the world, except perhaps the United States, can support such a level of abundance. 2017 will start a long-term trend with some agencies disappearing locally or regionally, or being clubbed with a sister agency if they are part a of holding company. When combining, technology and tighter budgets, you do not necessarily need to have a dot in every country on the map of the Middle East. The same goes for the least competitive brands.

There will be dead bodies: part II. We all know that talent is an issue when it comes to marketing and advertising professionals. So, when weak talent faces tough market conditions, it will look a bit like a flock of sheep running into a minefield.

Top talent, that key component of our industry, will be increasingly difficult to manage. Frustration and dissatisfaction levels will hit record highs amongst the workforce. There will be no raises, no bonuses yet even more hours spent at work. The reward: you get to keep your job. Basically, if you believe, as I do, that happy and engaged talent has a
significant impact on business success, I can let you imagine where we are heading.

In social and digital, the secret password in 2016 was ‘CHEAP’. It was a nice way to keep lots of people extremely busy with low budgets. I unfortunately do not see any of this changing in 2017, as the new secret password will be ‘@CHEAPER’. We will, however, find our vocabulary enriched with more bulls**t jargon from people who have spent more time socialising on Facebook than understanding brands and consumers. Too much use of the @CHEAPER password will further push some brands into the #deadbodiesof2017 zone.

Last but not least, we will keep talking about Iran but nothing significant will happen in 2017 when it comes to marketing and advertising, especially in light of Donald Trump’s victory in the US elections.

There will, however, be clear winners out of this chaos in 2017:

It’s the brand, stupid! Indeed, some will focus on strengthening the brand vs a short-term, tactical approach. Such brands are a minority but they are the strongest, and they do exist. They will be the most dangerous. Brands do have a value; this is textbook marketing 101.

The ‘No compromise’ approach.

  • Value brands, which have been very discreet in the past, will start rising, and become serious competitors. Consumers need them more than ever, and there is a clear gap. Indeed if you want to be short-term and tactical you may as well go all the way with a true value approach instead of acting like a value brand with premium pricing.
  • Super luxury brands. Same story as value brands, but reversed. There is always a market for true luxury. And even within the same brand the most successful products will be the most exclusive at the top of the range.

Figuring out social/digital beyond technology and jargon. It is all about consumers, strategy and, above all, ideas. Sounds simple? Maybe, but nobody has figured it out. Some brands are working on it already, and hopefully we will see some clearly successful  benchmarks in 2017. Of course, that comes at a price vs the @CHEAPER approach.

New business will be the name of the game, with almost everything up for grabs. Agencies with new business at the core will come out on top. Let’s not be naïve, and face the fact that loyalty days are over. Failing to understand that is very foolish, and borderline dangerous.

Dubai will come out as an even stronger regional hub for marketing and advertising. Indeed, as resources and talents are getting scarcer and scarcer, and with fewer agencies and marketing teams on the ground in the Middle East and North Africa, there will be an even stronger centralisation drive for the region and beyond (for example, in Africa, Pakistan and Iran). This is clearly a case of the survival of the fittest. There simply is no alternative to Dubai when it comes to top talent and leadership positions in our industry. In that context, however, Beirut will be very active again when it comes to outsourcing some activities from Dubai, such as social media, which require cheaper operating costs not necessarily in line with clients’ expectations.

“Properly practiced, creativity must result in greater sales more economically achieved,” said Bill Bernbach, the founder of DDB.

As brands may finally need to use some creativity to beat competition and tight budgets, we will perhaps see – late into 2017 – award-winning work on our screens instead of case-study videos only seen at awards gala diners.

Hubert Boulos is CEO Middle East at DDB