Advertising agencies are losing all their battles
Posted on 2019 May,24

A number of separate conflicts are being fought by advertising agencies and they’re losing them all, says Naji Boulos, the founder of Jicébé

The battle against Google, Amazon, Facebook and Apple (GAFA). Advertising has financed the economic rise of GAFA and today we assist in the stranglehold that they have on the advertising world. By dispossessing the advertising groups of their clients they are killing advertising.

The battle against consulting firms. Today, six of the 10 largest marketing companies in the world are consulting and tech giants. The top three are Accenture Interactive, PwC Digital Services and IBM iX. Some traditional agencies are not even in the top 20.

The battle against in-house agencies. Some 80 per cent of advertisers in the US have some form of in-house agency. Additionally, the work being done by in-house agencies is no longer confined to ‘low-hanging fruit’ such as collateral/promotional materials and internal videos, but includes a range of services such as strategy, creative for both traditional and digital media, and media planning and buying.

In Lebanon, advertising agencies are facing many challenges. Consulting firms are not a threat yet, since many companies are not physically present in the market, and if they are, they focus on audit and financial advisory services.

Since 2011, Lebanon has struggled on the economic front. The last two years were terrible for the advertising market (except for the two-month election period in April/May 2018). Investments are shrinking and print investments alone dropped by more than 50 per cent. Budgets spent on social media and Google are not being re-injected into the market and this will affect the media scene even further in the short term. Already four newspapers and a dozen magazines have closed down in the past two years.

Agencies are relying on local clients since international clients moved to the Gulf a long time ago, or even to Jordan or Egypt. The list of these local clients is shrinking. Even the banking sector is reducing its spending drastically. The phenomenon of in-house agencies is hitting the country as well. Data is not available, but a majority of clients are relying on in-house teams that are educated, talented, and can bring something to the table. They do the day-to-day advertising work, including social media.

So what is the best way for brand agencies to survive in this new deal?

For multinational agencies, the only solution is to create hubs for regional clients. Lebanon has enough talent to do this. This is the only way for brand agencies to cover their high costs.

For small agencies, there is a golden opportunity to offer exactly what the local market is asking for: agility, flexibility, efficiency. Clients are looking for the wonderful, not just the cold, stark efficiency of a massive branding agency. Small agencies can offer a more friendly relationship and immerse themselves in the client world. They can partner with in-house teams or select the best talent in town to answer clients’ needs. Small agencies will be the new champions of the sector.