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Thu 7 Jan 2010 04:00 AM

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Silencing the critics

Joseph Ghossoub, the CEO of the advertising agency, Menacom, talks to Claire Ferris-Lay about the future of internet advertising, Dubai World and what the new year is likely to bring.

Silencing the critics
Silencing the critics
Joseph Ghossoub says that the recent acquisition of Maktoob by US internet giant Yahoo! is likely to increase the number of Arabic portals for Arabic advertising.

Joseph Ghossoub, the CEO of the advertising agency, Menacom, talks to Claire Ferris-Lay about the future of internet advertising, Dubai World and what the new year is likely to bring.

“I’m usually not much of a crystal ball reader. But what I do know is that there couldn’t be anything worse than 2009,” Joseph Ghossoub says grimly.

It’s pretty safe to say that if Ghossoub does see any improvement in the region’s advertising industry this year, then it will happen. For many he will need no introduction. As the president and CEO of Menacom, a Dubai-based advertising agency, which counts ASDA’A Burson-Marsteller and Intermarkets amongst its subsidiaries, Ghossoub has been dubbed “the godfather” of the GCC’s advertising and communications industry.

So when he speaks, the industry — and the media — usually listens. While his predictions are usually spot on (he did, for example, accurately predict that the UAE’s advertising industry spend would drop by 25 percent in 2009) he still remains unsure about what 2010 will bring.

“Maybe 2010 will prove worse but I doubt it because now we have the worse benchmark, which is 2009. Now we have a benchmark from there so 2010 can only be similar or slightly better,” he says. “But you never know what can happen; are we out of it? Is it really over? Do we know everything? It’s hard to tell but if everything goes on the way it is going… I would say that 2010 will be up on 2009 slightly,” he adds.

Advertising revenues in the Gulf mirrored the region’s five year boom before the global economic downturn saw marketing and advertising budgets slashed in the second half of 2009. In 2007, real estate developers increased their spending by 102 percent, overtaking government and other sectors, according to Dubai-based Pan Arab Research Centre. Revenues in the last quarter of 2009, however, saw advertising decline by nearly as much as 40 percent compared to the previous year while the average decline of property advertising dropping nearly 75 percent in the first half of the year.

Despite the significant fall in UAE advertising budgets compared to global declines — around ten percent — Ghossoub doesn’t think that this region is exceptional. Asked what is in store for this region’s advertising and communications industry, he is quick to point out that the GCC can no longer be referred to as separate economy, only demonstrated by global markets when state-backed Dubai World asked to restructure its debt payment in November last year.

“We are not a region anymore, we are part of the global world and whatever happens outside happens here,” he says adamantly. “There is a global issue today that we are all facing, which is the downsizing of advertising budgets. Overall we are talking about a ten percent decline worldwide [but] it depends on different parts of the world. In Asia Pacific its fifteen percent, the Gulf 30 percent, in the UAE probably around 35 percent but in Saudi Arabia it’s much less.”

But that doesn’t mean to say that he doesn’t expect Dubai World’s recent announcement not to affect his client’s budgets this year. “Everything affects our industry, we are like the targets; the first [area] that is hit by everything is advertising… economies are cyclical.”

While we’re on the subject of Dubai World’s restructuring plans, he slams the world’s media for its “overblown” hype in the week long period that followed the announcement. “Its media hype from my point of view. Look for bad news and you’ll find bad news,” he continues.“There are companies restructuring worldwide,” he explains. “We are part of this world and we are all facing the crisis. I don’t see what the difference is between our restructuring and restructuring of any other company in the world. You see countries going bankrupt and nobody cared.

“The whole world went bananas,” he adds. “Nothing warrants that, they should have waited to see what it was about, know exactly the reason for the story, and then commented on. I don’t think it’s because of a lack of transparency. They said they were facing some problems ‘or at least we can see some problems coming up and we need to restructure.’”

Ghossoub began his lifelong career in advertising in 1979 when he joined one of the Middle East’s oldest advertising agencies, Intermarkets, in Saudi Arabia. He quickly climbed the ranks, moving back to Beirut to work for the firm in the 1980s before heading up Team Advertising and Marketing in 1993.

He established The Holding Group in 1999, which is today one of the region’s largest agencies with more than 1,200 employees and 57 offices across seventeen countries in the MENA region. In addition to his old advertising agency, Intermarkets, the group also includes communications agencies, Asda’a Burson-Masteller — the region’s largest public relations firm — and Mediaedge:cia.

While the Gulf’s oil-rich wealth ensured continued growth of The Holding Group during the boom years, Ghossoub has himself been forced to restructure his own firm to better cope amid the downturn. In September, the group announced its rebranding to better reflect its activities outside of the UAE. In addition to renaming the firm MENA Communications Group or Menacom for short, there has also been a strong emphasis on saving money for cash-strapped clients. “It will synergise the company a lot more,” explains Ghossoub, who hopes the move will save his clients up to 20 percent.

In addition to seeing some growth this year, he also predicts that online advertising will take on a larger role as firms recognise the benefits of a more measurable medium than print. Ghossoub says online currently only accounts for one percent of revenues in the MENA region but he predicts this will increase.

“The future is definitely towards online advertising and an example of this is the growth we have seen worldwide. Although it’s still new — I mean we are talking about ten percent of the total ad spend on digital — but its growing year on year. In this part of the world we are only at one percent, which is tiny, but it can only grow.”

He adds that the recent acquisition of Maktoob by the California-based US internet giant, Yahoo!, is likely to increase the number of Arabic portals for Arabic advertising. “What we lack in the Arab world in general is portals… I would suspect that the few that are out there will be bought up by the likes of Google,” he says.

“Our generation will be the last paper generation,” he continues. “Young people are going online now. They are not interested in newspapers. Publishers have to help themselves and look at how they can adapt with this future. They’ve been doing exactly the same day after day. I think they have to look at the new order — the way the young generation looks at things.”

Does he think giving away content away for free is a good model? “Some content should be given away but not all of it because otherwise no other media will be able to justify its existence,” he says unsentimentally. “Google worldwide is a good example. Yes, you can have content but pay,” he concludes.

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