The Survival of the Fittest Era
Posted on 2017 Apr,25

Faysal Zok Managing Director Initiative KSA draws a bitter picture of the ad business, which he believes is in a chaotic state.

The state of advertising in the GCC (KSA specifically) during 2017 reminds me of the sequestration act that the US had to take during the 2013 crisis to curb extra spending and try to clean the market from the excessive fat, which is in a way similar to what the advertising market will be undergoing as an effect of government spending cuts everywhere in the region. 

However, the winds of change has brought with it gusts of foul air to the advertising industry, and agency work is judged now based on the price tag rather than the quality, and media agencies started selling space they do not own at the price they see fit acting on behalf of the media owner. It’s bitter for someone who was part of the golden days of advertising to live through this phase.

 I will quote here a dear friend and media guru, Pierre Abou Jaoude from Al Arabia Outdoors, describing the scene in his own poetic style. He says: “Those were the days my friend… Those were the days when advertising made sense… Those where the days when advertising used to score and sell… Days when the advertising industry was a priceless art, where advertising was a creative integrated activity, and where the best made the best of advertising history. Advertising is now a trade where a Rembrandt or Picasso is to be negotiated for the price of a novice.” 

As a matter of fact, the reported 25% decline in the advertising spend (source: IPSOS) in YTD 2017, versus the same period in 2016, remains conservative compared to the reality on the ground, since many media are, in fact, granting more free space due to the availability of inventory and to keep their occupancy rates high. For agencies, on the other hand, logic says that when your budgets drop you start focusing on maintaining your relationships with key strategic partners who represent the best fit for your client’s portfolio of business, which left many ‘novice’ players, in the media scene, facing drops in their ad spends with no other opportunity but to start abusing their platforms for an opportunity to be noticed. 

The split between media and creative agencies has created a lot of duplicate jobs thus bringing more cost to groups. Several other layers within agencies are also being established like social, digital, programmatic, and content creation, which is adding insult to injury, and unless groups realise that and consolidate their businesses back in a ‘one stop shop’ model, the industry is heading to its demise. This opinion has been expressed by many marketing experts (source: May 2016). Pepsi president said "As content and distribution platforms become more interdependent on each other, the concept of a media agency [and] a creative agency will once again merge." P&G CMO also stressed that "we're looking for a higher degree of consolidation to make integration and interdependence more effective”, Pierre Abou Jaoude from Al Arabia Outdoors also expressed his view “very soon the traditional roof of an agency will take shape again. It will be born again soon”.

In my opinion, the survival of the fittest will require courage to turn the compass, of a chaotic advertising order, east towards a brighter future.