GMR | JAN 2011 by MediaquestCorp.

SECTOR ANALYSIS COUNTING THE COST OF THE CRISIS IN THE FINANCE WORLD A MediaquestCorp Publication

JANUARY 2011 - NO 194

CONSUMER SPEND 2011

NEWS PLUS PORTFOLIO PURGE IN MENA RETAILING

CLIENT SERVICING WHY DIGITAL STILL DIVIDES AGENCIES

MEDIA EGYPT HAULS ITSELF INTO THE DIGITAL AGE

Registered in Dubai Media City

profile

Clarins Group ME president Osama Rinno celebrates 10 years of the 36 company.

www.GMR-Online.com JANUARY 2011 – Issue No. 194

NEWS

Global IAA chief questions nonclient representation on the UAE Chapter Board, plus 2010 election results. Kuwait hosts its first digital seminar. P&G searches for the face of the new Crest line. Dusit checks out QR code ad tracking for regional print campaign. Al Islami launches marketing course. Carat MENA unveils Deutsche Bank regional campaign. Doha tweetups gather pace.

World News

Malaysia’s 1MDS to expand across Iran. Synovate makes further inroads in Russia. BK chooses London for second European Dessert Bar. GroupM predicts record 2011 media spend. Endemol drafts TV format with Foursquare. Saatchi’s Francis heads for Aegis. Coty takes a philosophical approach. PepsiCo poised for Russia F&B dominance. UK marketers undervalue social media, says study. Unilever and UM Australia split up. TV Everywhere app debuts in US. WPP’s VML and ghg unite to form digital healthcare agency.

NEWS PLUS

Developers and retailers should now put greater emphasis on research-led developments and early engagement with consumers, or they run the risk of unsustainable asset performance, says MENA report.

Cover story WHAT LIES AHEAD

What lies ahead in 2011. Yahoo! Maktoob Research asked consumers how they planned to spend – or not – during the year ahead, while we asked various representatives from the region’s marketing com-

munity how they see the future shaping up.

Client servicing Why digital IS so divisive 42 OK, let’s be honest. If agencies think that all a digital campaign takes is a microsite, Twitter and making friends through Facebook, is it really surprising clients are so slow to make the connection?

MARKETING

Feulling growth pushes executives to venture into new markets, launch offerings and acquire competition but, for some companies, this may be exactly the wrong strategy, says Booz & Co.

Media: Egypt plays catch up

Egypt’s marketers are way behind consumers when it comes to digital media, says UM Egypt’s Dina Hashem. We report from Cairo.

Sector Analysis Banking & Finance

The region’s financial services have emerged bruised, if not battered, by the 2009 crisis. Gone is the swagger, replaced by a wiser, less profligate and more consumer-centric sector. Our analysis shows credit cards are still struggling for acceptance in a cash-dominant region; money exchange firms discuss their fluctuating fortunes; and targeting women may help reverse fortunes of beleaguered banks. Also, will Islamic finance continue its global ascent, and does the future of finance lie with the region’s youth? Plus latest PARC analysis and ad spend stats, and Sekari SEO monitoring.

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News

Global IAA chief questions UAE Chapter Board line-up Alan Rutherford asks why there has been no client representation on board.

Omissions? No clients on the newly elected IAA UAE Chapter Board. From left: Nassib Boueri (VP), Ziad Hasbani (member), Elie Haber (member), Ghassan Harfouche (treasurer), Rajeev Khanna (member), Faris Abouhamad (general secretary), Dr. Lance de Masi (president), Saad El Zein (board member), Reda Raad (board member), Douglas Palau (board member), Yousef Tuqan Tuqan (board member), Nadim Khoury (board member). Not pictured are Kamal Dimachkie and Marwan Kai, Inset: Alan Rutherford

UAE The chairman and world president of the IAA has criticised the IAA UAE Chapter for not having any clients on its board. According to Alan Rutherford the UAE Chapter is the only one of the 56 chapters in the 78 countries in which it operates that does not have client representation. Speaking exclusively to GMR, Rutherford described the IAA – which has 4,000 members – as a tripartide organisation representing clients, agencies and media owners. The UAE, however, is the only region where there is no client involvement. “It is very, very unusual and it’s something that I think we need to address over time,” he said.

Rutherford was speaking at an ABG networking evening in Dubai last month which, somewhat ironically, coincided with the night of the 2010-2012 IAA UAE Board Election that did not result in any client representation. “We are now working actively with the Word Federation of Advertisers – and I know you [the ABG] are members – to bring our organisations much closer together. So that’s going to be an interesting dynamic,” he added. “In the UAE, as everywhere, we need to bring more advertisers into the IAA fold. We will be so much more effective by working together.” In a written response, the UAE Chapter said: “The IAA UAE Chapter, the largest

chapter in the world currently, has always had on its board clients such as P&G, Phillip Morris, Tecom, to name a few, and was one of the first around the world that did so. “For this year’s elections, no clients presented their candidacy. Hence the reason why this term will see no clients on the board. “Having said that, the IAA UAE Chapter and the ABG have worked very closely in the past four years on many industry initiatives; both associations’ members have attended the various events/ networking sessions held and we will continue reaching out to them for any initiatives that benefits the marketing and communica-

tion industry and the people working for it.” Incumbent president, VP and general secretary, Dr Lance de Masi, who is also president of the American University in Dubai, Nassib Boueri, CEO (MENA) of Y&R/ Wunderman, and Faris Abou Hamad, managing director of Interone Resonance Middle East, were re-elected for a second term. New board members include: Reda Raad, group managing director, TBWA/RAAD Middle East; Yousef Tuqan Tuqan, CEO Flip Media, and Ziad Hasbani, CEO, Weber Shandwick MENA. In related news, Bahrain has been selected as the venue for the 2012 IAA World Congress.

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News

Kuwait digital seminar calls for greater transparency Internet penetration is 39 per cent with 4,000 bloggers, say local sources. Kuwait More than 40 agency executives and clients attended what was reportedly the first digital advertising seminar to be held in Kuwait. The event was organised by ad network Ikoo, with support from the IAA Kuwait Chapter and mediaME.com. It was part of a regional road show, which Ikoo plans to take to Qatar in Q1 2011, as well as Bahrain and Levant. An analysis of the regional and local digital ad scene from Ikoo’s Samer Murad, GCC sales manager, Lower Gulf, showed Kuwait’s internet penetration at 39 per cent. A presentation on measurability and accountability was given by Effective Measure (EM) MEA regional director Dinesh (DJ) Arasaratnam. There was also a panel on the challenges of digital advertising in Kuwait. The panel included Arasaratnam; Viva Telecom’s SM

Catching up: mediaME.com’s Zeid Nasser updates participants on the current status of digital marketing in Kuwait

and integrated marketing manager Hind Al Nahedh; Ikoo CEO Isam Bayazidi; IAA Kuwait Chapter president Louai Alasfahani; GMR deputy managing editor Precious de Leon; Ikoo sales director Hussam Khoury; and mediaME.com founder Zeid Nasser. There was a marked focus on transparency, championed by Alasfahani, who emphasised the need to regain a higher

number of audited titles “prerevolution” in Kuwait and the need for print to catch up with the accountability that digital offers. Trends in mobile marketing and the need for clients to look at digital and social media platforms as part of long-term strategies were also in focus. More than 4,000 bloggers in Kuwait alone were highlighted as an untapped op-

More than 120 show for Doha tweetup Qatar More than 120 tweeters attended a Doha tweetup last month. The monthly tweetups are held to meet with new and existing people on Twitter and discuss current regional and local issues. Held in collaboration with Virgin Mobile Qatar (VMQ), a service provided by Qtel, the meeting featured presentations from Qatar Animal Welfare Society and Stormy

Virgin territory: Doha’s tweeps

Foundation, an expat organisation that offers support to migrant workers. An Acer Liquid E Ferrari Special Edition smartphone

was given away during the event, courtesy of VMQ – the exclusively seller of the handset in Qatar. Driven through Twitter, the Doha Tweetups group and VMQ told GMR there has been “a steep incline in fans since September, creating more buzz around monthly events”. Previous discussions have ranged from comedy to mobile technology.

portunity to reach a targeted audience through either online advertising or digital behavioural targeting. “It was a great networking opportunity… to interact and discuss bits and pieces of online advertising and its importance in the marketing cycle. Online is the new inbox,” Al Nahedh said. Ikoo is owned by the Jabber Internet Group.

sweet deals Carat MENA has launched its first regional campaign for global client Deutsche Bank. The Pan Arab, ATL, B2B work targets institutional investors and corporations. Focusing on its global tagline ‘passion to perform’, the ads highlight grouprelevant topics from the bank’s corporate story. Carat MENA has also won the account for family-owned, Dubai-based, chocolate ‘artisans’, ChoCo’a, which launches a new ATL campaign this year.

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News

Dusit tracks ad clout via QR codes UAE Dusit International has introduced a smart phone app giving its clients instant access to more information about offers they see in its latest advertising. The app enables clients to scan Quick Response (QR) codes assigned to print ads, allowing Dusit to track ad interaction and assess the effectiveness.

Code breaker: Sam-Erik Ruttmann

“QR codes are becoming increasingly attractive to the hospitality industry because they function as a powerful form of information exchange. Ads are used more actively by users both online and offline, allowing us to track the interaction and effectiveness of each ad campaign,” says Sam-Erik Ruttmann, Dusit International regional VP ME. The new ads with the QR codes are running in publications in the Middle East, Europe and Asia Pacific. Media selection is at corporate level handled from Bangkok, with creative from a Thai-based agency, a spokesperson told GMR, adding that focus to date is on B2B and consumer travel titles.

P&G launches consumer ‘reality’ search Smile competition adapted to creative writing for Saudi Arabia Middle East Procter & Gamble is inviting women, aged 20 to 35 years, to compete to become the ‘face’ of its latest dental launch, Crest: 3D White Fresh. The brand promises to deliver up to six times longerlasting freshness, as well as whiter teeth. To mark the regional launch the brand is searching for the ‘Girl with the Breathtaking Smile’. The winner will front the 2011 integrated marketing campaign in seven countries across the Arabian peninsula, as well as receiving a one-year contract with modelling agency Bareface. The online competition will run in the UAE, Kuwait, Qatar, Oman and Bahrain. Contestants upload their images for public vote. A panel of beauty and fashion professionals will select

training day

Breathtaking: P&G’s Crest 3D White Fresh rides UCG wave

the winning face at the end of January. The campaign has been developed specifically for the region and is not a global adaptation. Asked how the launch would be handled in Saudi Arabia, Mohammed Ali Faruqi, brand manager, Oral Care, Arabian Peninsula, tells GMR it will be robust with a holistic campaign incor porating every consumer touch-point. There will be strong focus on in-store messaging, print

advertising and retail activation, Ali Faruqi says. “Our Saudi competition is based on consumer insight that Saudi ladies love to write. “The spin is a creative writing contest through beauty magazine, Al Jamila, where readers submit entries on what has been the ‘most beautiful moment in their life that has made them smile’, tying back to the Crest 3D White Fresh USP; delivers a breathtaking smile.” Budgets were not disclosed.

Al Islami Foods and Dubai Women’s College have launched a joint International Marketing programme. Six groups of final-year graduates from the business department will develop six international marketing plans for the French, Malaysian, German, Egyptian and Levant markets. Each plan will be evaluated on the basis of unique issues involved in international marketing, assessing global market opportunities, cultural environment of global markets, effectiveness and practicability of global marketing strategies and implementing them. The finalists will be announced at the end of January.

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World News

Francis to quit Saatchi for Aegis US Simon Francis, the EMEA chief executive of Saatchi & Saatchi, is quitting after three years to take over the running of Aegis EMEA. He is succeeded by Robert Senior. Kevin Roberts, Saatchi & Saatchi Worldwide CEO, said: “After three years of dedicated service, commitment,

On the move: Simon Francis

and hard work, Simon Francis has decided to take up an opportunity with Aegis, running EMEA.” He added: “I am delighted to announce that Robert Senior has agreed to become CEO of EMEA and harmonise our operations. Having the UK separated was not our long-term goal and we will, therefore, take this opportunity to bring the UK into the heart of EMEA. “Charlotte Street remains our soul and with Robert continuing to lead our business there, it can only help all our clients and all our people come together as one team, one dream.” Senior will continue to run SSF, taking responsibility for EMEA this month. Francis will transition roles and join Aegis in March.

Synovate: majority stake in COMCON Russia Synovate has signed a deal to buy a majority stake in one of Russia’s largest independent research agencies, COMCON. Established in 1991, COMCON is currently wholly owned by its management and, with offices in Moscow and St Petersburg, is particularly active in many sectors, including healthcare, FMCG, financial services and media. Robert Philpott, Global CEO for Synovate, said: “Our goal for the integrated business is to be number one in the Russian market – the combination of COMCON’s wellestablished Russian business and Synovate’s existing

Russian steps: Robert Philpott

Russian operation creates that opportunity. “Looking ahead, our significantly broader footprint in Russia will enable us to assist domestic clients to expand internationally and

ghg and VML to roll out new healthcare practice US Global healthcare communications agency ghg (grey healthcare group) and VML, a digital marketing agency, both WPP companies, have together formed a healthcare agency, Healix Digital Health. The joint venture combines ghg’s expertise in healthcare marketing and communications with VML’s experience in enterprise digital marketing, a WPP press release reports. According to WPP, the initiative was created to leverage the strengths of both companies to meet the diverse needs of contemporary pharma and healthcare clients.

Healix Digital Health’s headquarters will be based in New York City. The programme will also include an innovation centre in Kansas City, with access to the entire WPP network. The new company will be led by executives from both agencies, with senior management oversight from Lynn O’Connor Vos, CEO, ghg; Matt Anthony, CEO, VML; Erin Byrne, EVP, chief engagement officer, ghg; and Jim Radosevic, managing director, VML. In related news, Grey Dubai has recenty launched Grey Worldwide health practice Healthy People.

support global clients in gaining access to the Russian market.” Over the coming months, the management, operations and research capabilities of both companies in Russia will be integrated into a single Synovate-branded business. Elena Koneva, general director and founder of COMCON, becomes managing director of the combined business with immediate effect. Oleg Feldman, the founder of COMCON-Pharma, will continue to lead the healthcare business. Synovate Russia’s current managing director, Panicos Ioannides, will assist Koneva in the integration process.

Unilever/um split

Unilever has ended its 10-year relationship with Universal McCann Australia (UM). PHD, Mindshare and Initiative are now pitching for the $39.5 million account, Campaign Asia reports. A decision is expected during Q1. The move follows UM’s recent win of L’Oreal’s $49.4 million consolidated business. In related news, Unilever head of marketing in Australia, David McNeil, is moving to Singapore as senior VP. He is succeeded by previous global VP of brand development, Peter Boone.

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W o r l d N ews

Endemol teams up with Foursquare US Endemol USA and Foursquare are working together to produce an Amazing Racestyle TV format. Foursquare is a platform that allows users – some five million to date – to “check -in” at restaurants, attractions, landmarks and other sites via their mobile phones. Those

Global ad spend to hit $500 billion high 2010 spend recoups nearly all dollars lost in 2009, report says US Global ad spend in measured media could reach a record high of $502 billion this year, up 5.8 per cent over 2009’s $474 billion. According to a 70-country forecast from GroupM, spend in the US is expected to hit $147.7 billion, a 3.7 percent increase from 2009. The study, ‘This Year, Next Year,’ also reported that worldwide 2010 spend is expected to increase by 5.9 per cent over the $448 billion in 2009. In the US, 2010 spending rose by 1.2 percent from 2009,

when $141 billion was spent. TV and online have been the main beneficiaries, driven by local TV coupled with a resurgence in retail and auto spending. The report added that spend had recouped nearly all the dollars lost in 2009, adding the recovery has been broadbased with spend increases in toiletries and cosmetics, autos, beverages, retail, financial services, entertainment and food. Internet advertising is expected to contribute 37 per

cent of global ad growth in 2011, reaching $82 billion, suggesting it will overtake newspaper spend (forecast at $90 billion in 2011) during 2012. Nations expected to spend the most in 2011 are the US and China, each with minimum $5 billion, followed by Canada, Russia, Indonesia, India, Brazil and Japan, each expected to outlay $1 billion-plus. GroupM is parent company to WPP media agencies including Maxus, MEC, MediaCom and Mindshare.

‘Marketers isolated from social media’ New concept: Check in to Foursquare

reports are then shared via users’ social networking sites. Frequent users can become “mayors” of locations when they check in more than anyone else. The new show will integrate the Foursquare service into the concept. “This marks a groundbreaking partnership for Endemol USA, and we are thrilled to partner with an innovative company like Foursquare in developing a unique show,” said David Goldberg, chairman, Endemol North America. “We hope working on this project with Endemol will expose even more people to the benefits of Foursquare,” said the mobile application’s co-founder, Dennis Crowley.

UK Marketers are still confused about the value of social media and are failing to realise its potential as part of the marketing mix, according to a recent study. Wildfire PR found that just seven per cent of companies are measuring the impact of social media and generating ROI. Having canvassed 250 UK marketing decision-makers, the study also found that while almost half of businesses have adopted social media, 15 per cent do it so they don’t get left behind, 12 per cent because they feel they have to and 10 percent because it’s what their main competitors are doing. The vast majority of companies are merely using social media as an extension of existing marketing tactics,

Out of the picture: Marketers fail to realise the value of social media, study reports

with 10 per cent saying they use it for press release distribution. Some five per cent use it for market research, while a meagre six per cent integrate with their marketing campaigns. The survey also revealed a lack of consensus among marketers about ownership

of social media strategy; asked which department was best placed to own social media, the in-house PR team came top with 27 per cent. Just one in five marketers, however, said the marketing department should own it, with 20 per cent saying it should belong to IT.

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World News

BK opens first UK Dessert Bar UK Burger King Corp (BKC), in line with its strategy to diversify from burgers, has extended its Dessert Bar concept i nto t he U K by opening a standalone outlet i n L o n d o n’s We s t f i e l d Shopping Centre. Featuring a modern restaurant design, the Dessert Bar offers established items such as BK Fusions ice cream and mini pancakes, alongside a selection of new sweets and drinks.

Fit for a king: BKC’s Dessert Bar

Sarah Power, marketing director, Burger King UK and Ireland, said: “The Burger King Dessert Bar is an exciting new development for the brand, which complements our ‘Taste is King’ marketing strategy.” The London outlet is the second to open in Europe, following Benidorm, Spain, which launched the Dessert Bar last year. Similar concepts are also operating in Latin America. Brazilian-backed PE company 3G Capital bought BKC i n S e p t e m b e r 2 010 f o r $4 billion.

Malaysian retailer moves into Iran 1MDS links into Islamic Republic’s $6 billion halal sector Malaysia Malaysian department store chain 1MDS plans to open 11 outlets in Iran in the next five years as a gateway to west Asia’s burgeoning halal sector. The first store, measuring 40,000 square feet, opens in July next year at the Tehran Mega Mall, the largest shopping centre in the capital. Thereafter two more stores will open every year. The mall is owned by Malaysian-based Neguin Group of Companies. According to Datuk Seri Jamil Bidin, CEO of the Halal Industry Development Corp (HDC), Iran’s halal sector is predicted to reach $5.8 billion by 2015 “The idea is not only to promote our brands in Iran.

Room to grow: 1MDS sees Iran as an entry point to larger West Asia market

It will also be a gateway for us to enter the West Asia market,” Bidin says. Jamil added that the outlets will showcase a variety of Malaysian halal food and beverages, cosmetics, fashion and FMCG.

Neguin will be both the buyer and manager for the outlets. HDC was set up in 2006 to promote the halal industry in Malaysia for both domestic as well as international markets.

Coty strengthens skincare portfolio UAE Coty Inc is to buy US skincare company philosophy from The Carlyle Group, a global alternative asset manager. The acquisition allows Coty to further diversify and expand its Prestige division, a Coty press release said. Founded in 1996, philosophy products can be found in QVC, Sephora, Ulta, Nordstrom and other premier retailers, and was expected to generate sales of more than $200 million in 2010. “This acquisition will allow Coty to strengthen its pres-

Smell of success: Coty boosts presence

ence in the skincare category, which is one of our key strategic objectives,” says Bernd Beetz, CEO, Coty. Financial terms of the transaction were not disclosed.

Created in Paris in 1904 and today operating in 90 markets, Coty enjoys global annual net sales of $4 billion, the company says. The Prestige portfolio includes Balenciaga, Bottega Veneta and Calvin Klein. The beauty portfolio includes adidas, Beyonce Knowles and Celine Dion. Coty, Puig Fashion and Beauty S.A. have a strategic partnership for the distribution of Nina Ricci, Carolina Herrera, Prada, Paco Rabanne, and Antonio Banderas fragrances in the US and Canada.

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World News

Turkish Airlines’ new love match Turkey Turkish Airlines has signed the current World No 1 female tennis player, Caroline Wozniacki, as the new face of its improved Business Class. The 20-year-old Dane will make appearances at various events in Europe to meet with fans. She will also represent the brand on TVCs and in PR for the next three years.

Lobbyist: Caroline Wozniacki

Guest appearances on news and sports channels are also scheduled at the same time as the TVC launch. “It’s not my first time in Istanbul,” Wozniacki said at a press conference in the Turkish city last month. “I won my first tournament here. “It feels like yesterday coming here. I think I have changed a little since then. Coming to the same place brings nice memories.” Turkish Airlines has signed partnership deals with football clubs Barcelona and Manchester United, NBA star Kobe Bryant, and has become the naming sponsor of the Euroleague, the continent’s top basketball competition.

Traditional media holds sway in China TV ad spend to hit $50 billion by the end of third quarter 2010 China Companies in China are sticking with TV, newspapers and radio when choosing where to advertising, according to research firm CTR. Total ad spend in the first three quarters of 2010 rose 14 per cent from last year to $64.5 billion, according to latest data. Growth was seen across all traditional sectors, as these continue to attract firms “due to their enormous influence on local consumers,” said Yuan Shimin, a brand consultant. TV spend hit $49.67 billion by the end of the third quarter, an increase of 12 per cent from 2009. Newspaper and magazine both saw a 19 per cent rise, generating $8.56 billion and $1.65 billion, respectively, while

radio spots made $1.58 billion, up 33 per cent. Online was worth $1.43 billion in H1 2010, up 27.9 per cent, according to The Nielsen Company. The total generated in 2009 was $2.7 billion. Figures from the State Administration of Radio, Film and TV also show TV and radio gains of more than 10 per cent in October 2010, compared to the same period in 2009. Major events in China, including the World Expo in Shanghai and the Asian Games in Guangzhou, may have aided the growth. In addition, China Central Television (CCTV) held its 17th annual prime-time slot auction in November, attracting win-

ning bids of more than $1.86 billion, up 15.5 percent YoY. Top TV advertisers were from the F&B, home appliances and finance and insurance sectors, while print advertisers were from property, auto, education, tourism and fashion industries. In a recent report by the New York-based World Brand Lab, CCTV’s brand value exceeded $17 billion, putting it fourth domestically behind China Mobile, State Grid and Commercial Bank of China. According to OMG, about 45 per cent of Chinese mainlanders say they will spend freely in the next six months, compared to 24 per cent in Hong Kong, 18 per cent in Singapore and eight per cent in Australia.

MTV India launches lifestyle magazine India In line with its strategy to extend its brand beyond TV and music, MTV India has launched its first print title, Noise Factory. Priced at $1.65, the magazine is available via subscription and at selected locations and bookstores in 23 cities, including Mumbai, Delhi, Bangalore and Kolkata. Contributors to the first issue include well-known author, poet and journalist Jerry Pinto; stand-up comedians Vir Das, Sorabh Pant and Rohan Joshi; and VJs Anusha and Jose. Other guest contributors are planned. Noise Factory will feature articles on music, films, tech-

Shouting out: 10,000 readers to date

nology, food, photography, shopping, travel, current affairs, as well as human interest pieces. It will also carry interviews with leading musicians and bands, information on the best of gaming, along with monthly competitions.

“Young people are getting noisier than ever. They want to hear as much as they want to be heard,” said Aditya Swamy, channel head, MTV. “MTV understands this and hence goes beyond entertainment. We want to reflect, educate and lead all in the trademark MTV look and feel,” he said. Noise Factory’s distribution schedule was unspecified and MTV India offices could not be reached for verification. Published by Infomedia18, the magazine reportedly has 10,000 readers and is distributed in colleges, bookstores, gaming centres, cafés and cinemas across the country.

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news plus

product re-cull

The purge of slow-moving items is non-negotiable, says new report.

Greater product parity between shopping centres and retailers is needed if developments are to remain sustainable long-term investments, according to Colliers International’s MENA Retail Overview Q3 2010. The report provides comparative key performance indicators across nine cities, as well as a retailer sentiment survey. Despite the slump in the economy, the MENA retail sector has demonstrated a degree of resilience in 2010. Developers and retailers are continuing with their regional expansion plans as consumer confidence returns. Colliers, however, cautions that unless developers and retailers become more closely aligned to the market forces influencing the purchasing power of end consumers, they run the risk of unsustainable asset performance.

“The discretionary spending habits of consumers are shifting and we are seeing retailers purge their brand portfolios in line with this,” says Stuart Gissing, regional director of Colliers International. “They are downsizing their underperforming products and being more selective about where they place their new brands. Retailers today are more concerned about ensuring that each brand is perfectly matched to their mall location and are questioning issues such as market posirealignment

Discretionary: Colliers International’s Stuart Gissing

tioning, shopper profile, store location, footfall and centre management.” According to the study, this portfolio cleansing and drive towards selectiveness on the part of retailers will start to have an impact on overall mall performance for landlords who continue to lease retail space on the basis of occupancy alone. Better communication between mall owners and retailers will ensure product mixes are realigned to the new economic reality. “The challenge ahead now is how new, or even strong, existing developments align themselves to the commitments retailers have to their consumers,” says Gissing. “Currently we have a cat-and-mouse situation with some landlords offering perceived relief positions by tweaking their mixes or lease terms to attract new

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product. This is a very short-term tactic. With retailers more attuned to their customers’ wants than ever before, there is a clear need for greater parity between the two.” Gissing adds that this project selection and product alignment should be viewed as a sign of market maturity. “A greater emphasis on developing shopping environments together with the input of retailers should become more commonplace when defining specific positioning statements for new or existing developments,” he says. The more successful and established retail developments will maintain their prime status, while the gap between prime and second-tier locations will continue to widen. In the small- to medium-mall segment, development collaboration will be key as landlords look to, and should, reposition themselves to match the market. This is likely to mean a shift towards more targeted developments such as replicated community or neighbourhood outlets.

“…we have a cat-and-mouse situation with some landlords offering perceived relief positions by tweaking their mixes…” Although building sustainable retail developments requires more co-operation between landlords and retailers, the overall short- to medium-term outlook for retail projects across the MENA region remains positive, given the undersupplied positions of various cities and improving consumer confidence in the more mature markets. Emphasis should now be towards greater research-led developments and early engagement of all parties. According to the study, Dubai and Abu Dhabi remain upbeat – the former for its established position as a global retail platform and entry point for brands into the region, and the latter for its forthcoming supply of retail space and strong domestic consumer purchasing power. With an existing supply of 542,450sq m of retail space in Abu Dhabi, the market

remains relatively undersupplied to the tune of 678,270sq m, based on current permanent population figures. However, overall supply is forecast to increase by 112 per cent to 1.1m sq m over the next five years, making Abu Dhabi a potentially balanced retail platform by 2015. The report also favours Saudi Arabia as its malls become more competitive to service the internal market, and Egypt and Syria for their undersupplied positions in terms of retail space. But matching new and established developments to the specific market dynamics of each city will become increasingly important if the existing demand is to absorb the future supply. n

Copy supplied by Colliers International.

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News Plus

retail: regional prospects

• Dubai shopping mall space is set to rise by about 30 per cent from 2010 to 2013, leading to an oversupply of more than one million square metres of GLA in 2013. While the market does benefit from tourism, the fallout from the financial crisis is likely to have a dampening effect on this external demand. • By the end of 2010, Abu Dhabi’s retail sector is estimated to reach approximately 609,690sq m of GLA, an increase of 55 per cent from 2009. Overall supply is likely to increase to 874,500sq m in 2013 and 1.1m sq m by 2015. • Riyadh’s retail supply is expected to increase by 700,000sq m before the end of 2013. A shift towards community or neighbourhood-sized developments may now be seen, which will help boost various retail formats. • Jeddah’s shopping mall stock is expected to grow by 689,000sq m of GLA by 2017, with a sizeable number of supply expected to enter the market by 2011.

• Dammam and Al Khobar’s shopping mall stock is expected to grow by 495,000sq m GLA before the end of 2013, with the majority of forthcoming supply expected to enter the market in 2011. With retail supply in Bahrain closely mimicking that in Dammam and Al Khobar, and both cities representing the third largest market share in retail apparel consumption in Saudi Arabia (20 per cent), the potential lies in destination malls such as super-regional centres or themed/ festival centres. • Following the removal of import restrictions in Syria, many global brands have established a presence in Damascus. Shopping mall supply is expected to increase by 365 per cent over the next five years. However, lower purchasing power in Damascus compared to other regional cities casts doubts over the ability of demand to absorb future supply. • Cumulative shopping mall supply in Cairo is expected to reach approximately 1.68

million sq m by 2013. With a strongly developing middle-income population and extensive overall populous, Egypt will be one of the top five countries in the region where brands will want to be represented. • Doha’s shopping mall supply is expected to reach 630,000sq m of GLA by the end of 2010, an increase of 31 per cent over 2009. Better marketing and management strategies will be critical if the older centres are to continue to offer competition to new developments. Diversification is the most obvious way in which retailers are seeking to minimize the risk of potential over-supply. • In Tripoli the forthcoming supply for shopping malls, as of Q3 2010, is in excess of 75,000sq m GLA. Many new developments are being activated and most have a retail and hospitality component. Given the need to find occupiers, Tripoli is an attractive long-term view.

Source: Colliers International

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COVER STORY

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Regaining balance

It depends how you look at it – purse half empty or half full – but a greater degree of equilibrium is definitely emerging as consumers assume a more balanced approach for 2011. The recovery in the MENA region is beginning to take shape, according to a Yahoo! Maktoob Research survey conducted for GMR on consumers’ anticipated purchase attitudes and saving intentions for 2011, compared to 2010. Only 22 per cent of respondents will continue to be frugal in 2011, while an impressive 63 per cent are planning to increase their spending. Fifteen per cent is still undecided. The survey addressed the attitudes of 1,167 consumers from Egypt (40 per cent), Saudi Arabia (34 per cent) and the UAE (27 per cent). Seventy-one per cent of the respondents were male, and half – 51 per cent – were adults aged 26 to 35 years, with an average age of 34. Generally, the UAE is slightly behind the other countries in relaxing the spending activity for 2011, with 53 per cent of respondents willing to increase their spending, compared to 73 per cent and 60 per cent in Egypt and Saudi Arabia respectively.

This higher consumer spending expectation principally stems from the perception of the continuous increase in consumer prices and living costs in the year ahead caused by the economic crisis. Also, a considerable proportion of consumers seem to have various investment plans for 2011; whether in marriage, acquiring properties or getting higher education.

The increase in spending among the group surveyed is reflected in most categories of consumer activity, but primarily in shopping (57 per cent), housing (45 per cent), entertainment (44 per cent) and holidays (35 per cent). Spending on services such as transportation and schools will also rise, but at a slower pace; 32 per cent and 26 per cent respectively.

spending plan Where will you be making changes to increase your spending in 2011? Egypt KSA UAE Total

70% 60% 50% 40% 30% 20% 10% 0%

Entertainment No answer/ do not know

Holidays

Housing

Other

School

Shopping

Transportation

Source: Yahoo! Maktoob Research November 2010

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COVER STORY

managing costs Do you expect your disposable income to decrease, increase or remain the same in 2011? 70% 60%

Decrease Increase No answer/do not know No change

50% 40% 30% 20% 10% 0%

Egypt

KSA

UAE

By how much are you planning to increase your personal monthly savings in 2011? 50% 40%

Total Egypt KSA UAE Total

30% 20% 10% 0%

Less than 10%

10%-20%

21%-30%

31%-40%

41%-50%

More than 50%

Do you intend to increase your personal monthly savings in 2011 compared to 2010?

Yes No

90%

No answer/ do not know

80% 70% 60% 50% 40% 30% 20% 10% 0%

Egypt

KSA

UAE

Total Yes No answer/do not know No

Do you plan to increase your spending in 2011 compared to 2010? 80% 70% 60% 50% 40% 30%

What is more, half of the respondents (chiefly in Egypt), are expecting a growth in disposable income, mainly due to an expected increase in salaries in 2011. And, given that there is an extremely close relationship between changes in consumer spending and consumer income, as the latter is the key factor that determines the strength of any consumer activity, the increase in spending will be a natural consequence in 2011. The survey also revealed that the greater number of consumers (83 per cent) seem to have an attitude shift in favour of boosting their personal monthly saving habits next year. Nearly 60 per cent of consumers surveyed intend to increase their personal savings from 10 per cent to 30 per cent with an average saving of 23 per cent a month. This saving culture was embedded in all countries and among all age groups. This projected increase in overall consumer income and spending, however, does not imply that the consumer will be able to affect a significant increase in discretionary spending during 2011. While consumers were under pressure during 2010, there is a sense or expectation that the pressure will systematically ease during 2011. Importantly, this does not mean that the consumer spending will return to previous highs. They will, however, begin to spend much more than in 2009 and 2010, but with a more realistic and prudent attitude. n

20% 10% 0%

Egypt

KSA

UAE

Total

Source: Yahoo! Maktoob Research November 2010

About the study This quantitative online research was conducted through Arab Eye, the Yahoo! Maktoob Research community in English and Arabic. The aim was to gain an understanding of spending plans for 2011 compared to 2010, with consumers in Egypt, Saudi Arabia and the UAE. There were 1,167 respondents, residents and nationals, 29 per cent female and 71 per cent male, aged 21 years and above.

Tamara Deprez head, Yahoo! Maktoob Research

Yasmina Amara market research manager, Yahoo! Maktoob Research

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COVER STORY

Predictions 2011: The marketmen prophecies An increase in digital spend and decrease in consumer spend seem to be the common consensus among the region’s marketing professionals. David Porter, head of media, Unilever Arabia Do you foresee any significant changes in consumer behaviour? Consumer confidence has taken a knock in MENA and people are looking for better value. In the UAE I see many South Asians returning to cultural comfort zones of fiscal prudence and planning for the next generation, habits some put on hold when they expatriated. Brands need to work harder to get close to consumers and shoppers, as they feel the need to justify purchase decisions more often. What lies in store for brands? Brands that invested through the downturn will be in the vanguard of the recovery, when it finally shows up in Q4. Price promotions will give way to activation, if

only to fill some of that oversupplied retail space. This will be the seminal year of the downturn, with the healthiest brands preparing for growth while less athletic rivals run out of breath on the final lap. Will the media landscape alter? OOH prices will finally re-base to preboom prices in Q3-4. We will get the digital opportunities we deserve driven by a dramatic price reduction for fixed line and mobile internet. We’ll have people meters in the UAE and possibly Saudi Arabia, prompting a wobble or two as the industry adjusts before these become the core trading currencies in the region. Visionary broadcasters will view digital more as a delivery channel and less as a competitive threat. 3D TV will arrive, give us all a migraine and go

away again. More TV channels mean more ad supply in a flat market, so ad-funded programming will become a vital part of broadcasters’ business. I hope we will see less digital work being produced in a silo, more brilliantly executed activations, and world-class measurement of audiences and effectiveness. Will the client/agency relationship change? Not much: few people are in the mood for a fight after the economic buffeting of the past two years. I hope it’s the first year in 30 in which agencies do not make public demands for pitch fees while privately pitching for every account that moves. This should be the year when agency planners abandon specialist digital units and require all teams to deliver across all channels.

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Raja Sowan, regional director, Retail Engagement Practice, ARC Leo Burnett Do you foresee any changes in consumer behaviour? The most apparent change started towards the end of 2008 and will continue for some time. Consumer behaviour will continue to change in 2011 and beyond as people become smarter shoppers, constantly on the lookout for opportunities to engage and establish relationships with products and brands. This will be further fuelled by the increasing web and online media consumption. What lies in store for brands? Smarter and savvier shoppers confronted by varied choices and evolved communication channels. With the fast-paced developments in technology, brands will need to be more human and find ways to engage with consumers and establish a dialogue, not only to capture, but retain consumer attention; more professional retailer networks that own relationships with their shoppers; the impact of technology on the traditional retail environment and the opening of new retail environments. Will the media landscape alter? It will advance, but more slowly than expected. It will need to be more integrated and technology will open new opportunities for media vehicles to interact and complement each other across the whole spectrum of traditional, web-based, mobile media and apps. Media will also need to measure up to the shopper engagement eco-system that commands a multidisciplinary approach aimed at identifying behaviours that drive crosschannel strategies rather than silos delivering piecemeal solutions. Shoppers will look to engage with brands and seek experiences that require dialogue within the retail environment. Do you think the client/agency relationship will change? I don’t think the relationship will

change. However, the terms of engagement and eventual output will. Clients and agencies will need to evolve the way they interact and plan the future of their brands. There needs to be a clear move away from traditional marketing planning towards experiential planning with human connectivity at the heart of the communication and with dialogue core to the consumer/brand relationship. In their quest to influence behaviour, advertisers and agencies will need to design well thought out brand journeys in a media-neutral environment to influence consumers and engage them in the conversation. Yousef T. Tuqan, CEO, Flip Media Do you foresee any changes in consumer behaviour? Mobile consumers are adopting the mobile web very quickly, and there will be pressure on brands to rise to consumers’ expectations by offering value, entertainment and brand engagement using mobile web platforms. What lies in store for brands? The expectation on brands to be everywhere at once is an exciting new challenge. It’s terrifying, because the world is changing faster than brands can adapt, but it’s a wonderful chance for brands to seize the opportunity to show that they are different, and that they care. Do you think the media landscape will alter? There will be greater emphasis on creative and value-added media buys within the digital space. We’ll see less standard banner buys and a focus on interesting sponsorships, branded content and clever use of the medium. Will the client/agency relationship change? Agencies have been guilty of some collective hysteria this year, and will realise that they have to bring more practicality to how they do business. Agencies will expect to be compensated more fairly, and become more discriminating in what they pitch for, and who they want to work with.

Samir Ayoub, chairman, Mindshare MENA Do you foresee any significant changes in consumer behaviour? We need to split consumers into two types: young and old. While both are now in the mindset of the crisis and its impact on their lives, the older generation will remain conservative. The younger one will tend to consume on the “life is normal” basis. That said, the consumer is no longer taken for granted. He is more demanding, picky, and adapts quickly to technology developments and changes. What lies in store for brands? The name of the game is engagement between brands and consumer. Brands will perform better to capitalise on the “engagement” element and be closer to the consumer. Do you think the media landscape will alter? I foresee very little change in the media scene, particularly the traditional ones; if there’s any launch and/or revamp of traditional communication channels, their impact will be minimal. That said we will see more developments on the digital front, many offline media will extend their offering online. We will also see integrated offerings between offline and online. 2011 or 2012 might be the turning year for mobile advertising, subject to local regulations; censorship and mobile operators will upgrade their offering in line with overseas markets. Will the client/agency relationship change? There will be a gradual move into ‘real partnership’. Sooner or later many clients, namely the international ones, will inject “ROI” and “sales performance” elements in their remuneration model. Philip Jabbour, CEO, MENA SMV Group Do you foresee any changes in consumer behaviour? I would not dissect consumer behaviour into fiscal calendars, as they

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COVER STORY

Hold the press: Samir Ayoub foresees very little change in the media scene, particularly traditional media

Resilience and optimism, sometimes to the point of blindness, explain why media entrepreneurship is still alive… don’t stop and shift gears on January 1. They will, however, continue to demand our attention so that we may earn the right to communicate with them. Media choices and technology are further shifting the paradigm of our consumer conversation. Our challenge lies in identifying, and at times, creating the right spaces to provide relevant content that they can use, share, search, you name it…and make it live within the brand communities in which they live. What lies in store for brands? Brands’ relationships with consumers will migrate from purely functional and emotional attributes into new value exchanges, where brands create communities for consumers to interact with brands and other consumers alike. How will the media landscape alter? Media will continue to evolve in the digital space offering consumers more

choice and control. Hopefully, as an industry, we will strive to elevate the level of managing and unearthing data that helps us all in better understanding the analytics of our business to provide clients with accountable communication solutions. Will the client/agency relationship change? It won’t “change” in the traditional meaning of the word, as much as adapt to changing communication and consumer interaction models, which will force agencies to develop different communication solutions that may need to be monetised in a manner that is “non-traditional”. Our business has come a long way from providing spreadsheets at the end of creative presentations … today, clients demand our expertise in measuring what counts, and applying that to drive simple human understanding that delivers meaningful brand experiences… in real time.

Tarek Miknas, Group CEO, FP7 Do you foresee any changes in consumer behaviour? The results for Q4 2010 suggest a gradual return of consumer confidence, and a gradual increase in consumption across virtually all categories, so I expect that to continue into 2011. However, the last couple of years have made consumers much more price-conscious and I don’t see that changing anytime soon. What lies in store for brands? Go anywhere in the region, and you’ll see that people like brands as much as they ever did, but all our research and insight generation work shows that brand owners face a much more sceptical consumer than before. They’re asking: “Does the brand give real value? Is the brand driven by real principles? Is the brand offering innovation, and genuine product advantage?” If the answers are yes, 2011 will be good, but if not, brand owners have some real work to do to maintain sales. Do you think the media landscape will alter? The biggest single dynamic will be the growth of ‘digital’, as more people go online as more and more bandwidth

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and WiFi are becoming available and increasing people’s ability to do all this. However, despite the growth of digital, I don’t expect the landscape to alter significantly – although newspapers might start hurting soon, as they are doing in many other regions. TV, after all, still delivers big audiences at very low cost per person compared to most other parts of the world, and it still works for brands; people still listen to the radio in cars; still like going to the movies; and outdoor still has the impact it always did. So the landscape will be much the same, but with a lot more digital. How will the client/agency relationship change? There’s far too much discussion about client/agency relationships because the fundamental basis for this relationship remains the same – the client looks at the agency and thinks: “Can these guys help me to build my business?” And if agencies can, the relationship’s great. Brian King, head of consumer products, Jashanamal Do you foresee any changes in consumer behaviour? They will remain priceconscious. This will be led from Dubai where retailers have had ongoing sales for much of 2010. The consumer has gotten used to no longer paying full price and will expect the same in 2011. However, as the economies improve, there will be an increase in occasional “splurge” spending or in “treating oneself”. This will be seen in the hospitality sector (overnight stays, special dining occasions) as well as in luxury. Consumers with increased savings will spoil themselves more often in 2011. What lies in store for brands? Brands must try to control their destiny at key points of sale where the consumer interacts with them. New product designs/innovations will be sought, so innovative and eye-catching PoS will be key to securing sales.

More brands will develop their own retail/kiosk/shop-in-shop concepts to showcase their attributes as well as the complete product assortment. Will the media landscape alter? There will be an increase in the “niche” concept, whether it is fitness, food, gifts, or fads. Media will venture back into niche supplements and publications. Social media will continue its ascent. Will the client/agency relationship change? Not sure I am qualified to answer. Francois Bourgoin, managing & creative director, DDB Bahrain Do you foresee any changes in consumer behaviour? I am not sure we’ll see very significant changes, at least not so much as a departure from what they were pre-crisis. Consumers will try to get back to where they left off before they actually start changing their habits – sort of going back to more familiar grounds to get their bearings before charting a new course. So it may not be until later in the year that behaviour may start to noticeably change – by design rather than by financial constraints. What lies in store for brands? The real need to reinvent themselves, because while consumer behaviour may not change immediately, it will sooner than later, and those who don’t evolve with change will be left eating dust. Do you think the media landscape will alter? Cost-effectiveness is the prime consideration, and so is the search for more cost-effective communication channels and brand-building avenues. Will the client/agency relationship change? It has already changed enormously. Due to cost effectiveness clients are increasingly dealing directly

with parties they used to rely on their agencies to deal with: media, media buyers, printers, specialist consultants etc. Agencies are then no longer paid for what they buy on behalf of client but for what they actually have to sell: strategic planning, brand communication consultancy, brand integration, and creativity. This is great news as agencies can now focus on their media-neutral, added-value core competence rather than on a gazillion other nitty-gritties they would involve themselves with in the past. They become more like specialist consultants. Michel Bort, marketing and relationship manager, Kassab Do you foresee any changes in consumer behaviour? Consumers will be looking for better prices and better packages. Attitudes to online purchasing and online subscriptions may be the most susceptible to change. What lies in store for brands? More accountability. Digital will play a more important role. Better pricing. Better packaging. Better displays. Will the media landscape alter? We will see the evolution of Digital OOH and more integration with all media vehicles – online/social media, mobile, OOH, TV, print, etc… Will the client/agency relationship change? The relationship will develop more into partnerships. The agency has to evolve to add value and explore ways to engage consumers and satisfy clients. Accountability is the key word again. Elda Choucair, general manager, PHD Dubai Do you foresee any changes in consumer behaviour? Consumer confidence is reasonably positive. In Nielsen’s latest

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COVER STORY

Specs appeal: 3D TV is predicted to arrive in 2011, but soon disappear, according to Unilever Arabia’s David Porter

3D TV will arrive, give us all a migraine and go away again. global consumer confidence survey, the UAE makes it in the global top 10, well above the global average. Another survey places Qatar slightly ahead of the UAE and indicates Saudi consumers are also feeling more confident. Retailers indicate that sales lifted in H2 10 and that it could compensate for the slow start to 2010. People are optimistic again and have decided the worst is over. Will we go back to the years of exuberance? Possibly not. While the luxury sector is recovering very fast globally,the downturn has knocked some sense into consumers here, acting as a reality check. Priorities are changing slowly, but surely. What lies in store for brands? There will be more. A recent report by CB Richard Ellis says the UAE is the second favoured destination for retailers, while 54 per cent of international retailers surveyed are present in the Emirates. Saudi Arabia is ninth, with 43 per cent. Add to this the growing home-grown

brands in retail, hospitality, travel and services and you have an increasingly competitive marketplace. Sources found about 5,000 brands active in media in 2000. Today, they report more than 37,000 active brands. This means that the balance of power favours consumers, along with distributors and the retailers. The battle for shelf space will not get any easier and this is already pushing some brands to establish their own retail network and branded stores. Brands are increasingly about a wallto-wall experience, from start to finish, so they feel the need to control more. They will need to combine this with value, as good deals are also a strong pull, probably more than ever before. Will the media landscape alter? Accountability is key, so performance is the first decision factor when it comes to media investments. The downturn has led brands to focus on the essential and opt for known quantities. This has served the

main players better, often at the expense of the accessory and ‘nice-to-have’. We saw some closures, mergers, redundancies and postponement of launches, but we still had some launches and more to come. Resilience and optimism, sometimes to the point of blindness, explain why media entrepreneurship is still alive and kicking. New niches are being addressed, be they cultural or interest-based and we will see even more happening in digital. Will the client/agency relationship change? Things tend to move slowly here, but there is no doubt that with changing expectations from clients, agencies have to adapt. This presents an opportunity to update the form and, to a degree, the nature of the relationship. The need for more data and analytics is greater than ever. Navigating in the dark is no longer an option. Brands not only better appreciate the subtle differences among countries in the region, they are also focusing on proper audience segmentation. Not all consumers hold the same value and the allocation of resources is therefore defined more precisely. With the growth of brand communications in content, social or live media, the na-

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ture of our work is changing. It’s less about managing media investments and more about communication planning. This intellectual work is more accurately remunerated through retainers or timebased fees, rather than the traditional media commission. The relationship is less about doing and more about advising, anticipating the brief rather than waiting for it. Real time will become very important. An increasingly fluid market will make the speed of response, as well as its quality of course, essential. The term ‘brand guardian’ will truly apply then. Hermann Behrens, CEO Middle East, The Brand Union Do you foresee any changes in consumer behaviour? What won’t change is consumer’s desire for value for money but after a prolonged period of guarding their wallets they may now loosen the purse strings. They will remain in the driving seat, will demonstrate discernment and be prepared to change brands if promises are not kept. We wonder if consumers who migrated to lower cost brands during the recession will revert to the brands they were with before; of course this depends on how well their needs are being met. Arab consumers will become more exposed to social media, more liberal and expressive and there will be less guess work from marketers and more real insight into Arabs as consumers. What lies in store for brands? Brands that have been marginal for too long will need to consider their futures. Being number four or five in the category won’t work, either get to number three through investment or cease to exist. Brands that have been consistent with marketing spend during the slowdown will make the most of the upswing. Brands in financial services and real estate have a long way to go to rebuild consumer trust. It’s actions rather than words that will help cement their relationship with consumers. Companies need to ensure their

promise is being delivered. Consumers who found it difficult to change banks in the past will not stick around if they don’t improve. Anything that does not deliver ROI will be shelved. Will the branding/media landscape alter? Brands have had to move out of their comfort zones to become more innovative in forging dialogue with consumers. Key to this is a strong social media platform. The winners of the social media battlefield will be the brands that go beyond a superficial presence and create content that is engaging, meaningful and, most importantly, viral. Agencies and media owners need to move their conversations from nice-tohave, to must-have by demonstrating real value and success. CSR is another trend as marketing is moving beyond selling to actively helping make a consumer’s world a better place. It has been empirically proven that consumers are willing to pay a premium for brands that they feel are ethically and eco-conscious and CSR is increasingly becoming a differentiator. However, it is imperative that the CSR belief is shared by the whole organisation. The level of transparency from the internet ensures that brands cannot pay lip service to social causes and get away with it. Will the client/agency relationship change? One of the things that a long recession does is clean away the excess. Marketing today is leaner, results-driven and perhaps more effective. However we could also be edging towards the tipping point, where relationships become so financially driven that they take the margin and the fun out of our business. For every hour we spend negotiating and justifying, we are reducing the time to inspire, create and deliver, which is ultimately what we are measured against. Some agencies will walk away from client relationships that have become commoditised, too painful and not worth the effort. Sensible conversations are those where agencies and clients talk about

maximising ROI. Agencies that partner to find a solution to this are the ones that can expect to grow in 2011. Tina Memic, retail manager, Bateel Dates Dubai Do you foresee any changes in consumer behaviour? There will be major improvement in consumption patterns. Consumer behaviour will recover from the crisis. More than just a financial crisis, the economic hit had an emotional impact, making consumers too anxious to spend and to save for harder times. In 2010 they have “lightened up” and this will continue throughout 2011, giving F&B and fashion especially, a lift. What lies in store for brands? This depends on their capability to innovate. Consumers are more sophisticated than ever and have high expectations. The basics are no longer sufficient. Therefore to succeed one has to excel, so we will see the culling that the downturn initiated continue with “not so good” brands vanishing while key players remain. Will the media landscape alter? Marketing will become more aggressive and unconventional. Consumers are more educated and sophisticated, therefore traditional advertising is no longer efficient. We are flooded on a daily basis with too much information, so unconventional marketing such as “guerilla ” will lead the media. A stronger shift to online marketing will be evident, marketing through social media will continue to grow, as it is not only more cost-efficient, but more successful than traditional approaches. Will the client/agency relationship change? Yes, to the advantage of the client. The market is saturated with agencies, many of which are fighting for survival, therefore advertising is as “cheap” as ever. This is difficult for agencies as the quality of their work has not changed, but the amount they can charge is considerably lower than it has been in the past five years. n

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Profile

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The GMR Interview

Clarins Group ME President Osama F Rinno recalls the highs and lows of the 10-year-old company with Precious de Leon. Rinno joined Clarins Group Middle East in 2001 after working with Cosmopolitan Cosmetics for a couple of years, where he handled brands such as Rochas, Gucci and Montblanc. Prior to that he was working on an FMCG brand, his first job in Dubai. fantasy cv Family: Wife: Zeina; Sons: Karim, four years old, and Ryan, seven months old Hobbies: Deep sea fishing First job: A part-time job in pager sales for Cantel, a now defunct telco operator in Canada Career High: Adapting to the fluctuating market and getting through the crisis. Career low: Investing full support and effort into the launch of a fragrance, which had a scent that did not take off globally. It has been discontinued. It was the biggest flop I’ve every seen in my life. Fantasy job: Surgeon

Originally from Lebanon, Rinno has Canadian citizenship, having moved there to receive multiple undergraduate degrees in management information systems and management. Almost immediately after, he moved to the UAE in 1994 for the FMCG position. “My interest was mostly in marketing and management. I love accounting and economics. This is why I love my job today because it combines all of those things,” says Rinno. Cosmetics, however, were another matter. It is pure coincidence that he heads one of the most recognisable brands of skin care and fragrances. “When I shifted from FMCG to luxury, I had to change my state of mind in terms of selling and positioning. The approach had to be completely different. Here I’m selling luxury brands and cultivating aspiration; back then I was selling a commodity.” In addition to the Clarins brand, the group houses Azzaro, Thierry Mugler and Porsche Design, as well as US-based jewellery and fragrance brand David

We meet in his office, furnished with an unusually clutter-free desk, a strong indication he has not been around for a while. But for the next week he is at one of the Clarins Group’s conference rooms in its office at the Dubai Airport Free Zone. With the end of the year fast approaching, Middle East president Osama F Rinno and his team are compiling a review of 2010. Referencing the report’s progress, he gives the impression of cautious optimism – but optimism nonetheless. Actually, Rinno exudes a relaxed yet solid presence, which could be the result of being in his role for the past decade and, during that time, overseeing a sixfold growth in sales and operation. Aside from the tidy desk, Rinno’s office is adorned with photographs. On one wall hang photographs of Beirut from the 1950s. Next to them are framed group shots of board meetings, conveying a sense of history for the office and his position.

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Profile

Life of luxury: Clarins supplies products to premium spas across the region, including the UAE, Egypt and Lebanon.

…distributors thought that since it was a skin care brand it should be lumped in with treatment brands. with distributors to service agents. This move mostly affected the GCC, where the group’s distribution and brand image needed attention. First on the agenda when the office opened was the evaluation of the distribution market. And it found problems in brand communication and distribution. For example, Rinno says, the company found Clarins products in pharmacies because distributors thought since it was a skin care brand it should be lumped in with treatment brands. In some instances, items were found in nondescript corners in supermarkets – indicating there was no clear brand positioning. In other cases, the product would be consistently out of stock, which meant a huge opportunity for competitive brands.

Yurman, which recently made its Middle East debut. It has also signed a licence agreement with Swarovski to launch a fragrance in the first quarter of 2011, as part of a global collaboration. In addition to managing a growing portfolio of brands, Rinno’s territory extends to 24 countries in the Middle East. The company defines this territory as the GCC, Lebanon, North Africa, and parts of the CIS and the Subcontinent. “Before the Middle East office was opened, my predecessor had twice as many markets as I do. It was impossible for him to give the right amount of attention to individual market issues,” says Rinno. Initially, one of the objectives on top of Rinno’s list was to move from working

A complete overhaul was necessary. Many “inappropriate distributions” were closed and the group office took on all marketing, sales and branding responsibilities. Distributors who remained partners were quickly redefined as service agents, which limited their responsibilities to working with retailers and purely logistics and distribution matters. “But I also recognise that the market has developed in the GCC. Back then, we didn’t have choices of all these nice shops and malls that we do now like the Red Sea Mall in Saudi Arabia, the Mall of the Emirates in Dubai and Marina Mall in Abu Dhabi. These didn’t exist before,” Rinno says. The group opened its first boutique store in the Middle East for the Clarins brand in November 2008 in Dubai Mall – something Rinno admits should have happened a long time ago. “I wish I did it 10 years ago. We were a bit late in doing it. While it’s a nice opportunity to have it in Dubai Mall because it is the destination in Dubai, frankly, during the past six years, with the big

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Profile

Cosmetic treatment: Almost half of the marketing budget is allocated to brand activation and PoS

When I shifted from FMCG to luxury, I had to change my state of mind… expansion in the market, we could have had a lot of opportunities to be in many different malls such as the Mall of the Emirates and Marina Mall.” He is setting his sights on opening a shop each in Abu Dhabi, Lebanon, Qatar and a couple in Saudi Arabia. Rinno confirms that the Middle East contributes about five per cent of the total group sales. But he’s quick to add that although this is a small figure, the global office recognises the growth potential of this market. This confidence is reflected in the investment in marketing. Rinno says marketing across the group takes up no less than 40 per cent of total sales, with about 20 per cent going towards brand activation and PoS initiatives. Specific breakdown is undisclosed, but in 2009 and 2010, the group reduced its print spend and completely stopped outdoor.

Instead, it injected much more money into PoS activities. “If you are advertising to people at home, they are not necessarily in the state of mind to go shopping. So the most important investment is on the point-ofsale, where the customer is already in the mall with the intention of buying. So a lot of training and activation was done during those two years,” he says. Promotions, product offers, and make-up and beauty demonstrations and consultations were some of the brand activation programmes the group ran. It will continue to strengthen its brand activation initiatives, including a ‘beauty room’ at Beirut International Airport’s duty free zone, which offers a complementary facial or makeover for men and women. The concept was launched three years ago and is being rolled out globally.

But it is unlikely to reach Saudi Arabia, where such beauty booths are not allowed. However, Clarins reaches its target audience in the kingdom through gatherings in compounds and other private halls. Plans to expand in the region are yet to be finalised. For 2011, however, while brand activation remains strong, Rinno indicates “a good increase” in print media spend and a possible return to outdoor advertising, depending on the advertising content and the requirements of each brand under the group. “When you communicate something for outdoor, especially a mupi campaign, you need to have a straightforward message suited for the platform. Otherwise, it’s money down the drain,” he says, adding that if content isn’t suitable for outdoor the investment can potentially be put into a TV campaign. The group has also started a social media campaign, which is currently handled in-house. It has more 3,000 followers on its Facebook page from across

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the region. The page is linked to a Twitter page. The company is also planning to launch a dedicated Clarins Middle East website at the end of 2011. Asked about which product is strongest in which market, Rinno says that across the region, Clarins is the leading brand for the group. Focusing on the skin care category, Clarins usually ranks in the top three, while in make-up, it ranges from seven to 10. Thierry Mugler tops the fragrance category in the GCC and Lebanon, while Azzaro tops markets such as Pakistan, Iran, Bangladesh, Syria and Egypt, where the brand has had a long historical tie in manufacturing and brand awareness. Going forward, Rinno says there’s still a need for education and awareness about skin care among consumers in the region. While places such as the UAE and Lebanon are showing strong recognition for skin care needs, he says it is still behind compared to the rest of the world. In terms of market share, Rinno is unable to provide an overall figure, saying most figures available remain inaccurate because there are brands that are still hesitant to share data. Instead he offers an estimated market share of about 13 to 18 per cent in the skin care category in the UAE alone. When it comes to skin care trends, Rinno says the men’s category should not be overlooked. “It’s not just a woman’s market anymore. We launched our men’s skin care range about six years ago. It currently accounts for a range of five to 10 per cent of total sales in different countries,” he says, adding that it’s one of the fastestgrowing categories in the group’s skin care portfolio. These male consumers, he says, are looking for anti-wrinkle solutions and a skin care regimen that uses up to four products at a go. These range from moisturisers to eye creams. As for general consumer trends, Rinno says that despite the crisis and the cur-

Agency roster Media buying, PR and localising creative: Stratégies Internationale Online/DM: Jacobsons Social Media: Inhouse Company creds Clarins was created in 1954 through an initiative by Jacques Courtin to make skin care products offered in the Beauty Institute available for home use. Today, the Clarins Group keeps its cosmetics and perfumery the main business line, continuously creating natural and herbal creams through rigorous investments in research and development. In 1991, Clarins launched a strategy of diversification into other cosmetic segments, introducing its first make-up line. In 1992, the group entered the perfume market with the launch of Angel under the Thierry Mugler brand (finalising the acquisition of the company in 1997), followed by the acquisition of Parfums Azzaro in 1995.

rent view that consumers are looking for price-competitive choices, when it comes to skin care, they still choose to buy brands they trust and ones that will give them the results they expect. His biggest career high so far? Surviving the crisis. “At that time, get through the crisis with the company still standing on its own feet. The years 2009 and 2010 were very tough. There were a lot of changes. We had to adapt, and I’m proud to say we have got through those years and even gained market share.”

And with that we end the interview. Rinno says he’ll be in Dubai for a while, having bought a house in Arabian Ranches, living here with his wife of six years, Zeina, and their two young sons, four-year-old Karim and sevenmonth-old Ryan. Veering off into a conversation, his new love for deep-sea fishing and long-time hobby of diving and biking truly gives the impression that he is as relaxed at the office as he is at home – the confidence of a man who adapts well to the highs and lows of economic tides. n

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client servicing

fighting the digital divide

Are we any nearer to closing the online chasm between agencies and clients? Ibrahim Nehme thinks there’s still some distance to cover.

Bob Greenberg says when a new technology comes along in another 50 years people will speak of digital work with the same reverence reserved for TV works from the likes of Bernbach, Ogilvy and Burnett. Greenberg himself will most likely be remembered as the CEO of R/GA, the “agency for the digital age”, as it is billed, one of the most successful agencies in the world. So he should know. As consumers spend an increasing amount of time online, it is logical for marketers to move there, no matter how hard it seems. In the Middle East, agencies and clients are struggling to embrace this new reality, with each blaming the other for shirking their “digital responsibility”.

Mona Chammas, former digital strategist at Impact BBDO Beirut, who recently relocated to Canada to consult for Publicis, says clients in the region are, to a degree, aware about the new market challenges, but not enough to future-wise

Delivering: Mona Chammas, former digital strategist, Impact BBDO Beirut

Concern: Mark Butterfield, Unilever’s former media director for Europe; formerly at NAME

move major advertising dollars away from traditional media to digital. And, according to her, those who are actually doing work online are doing so without rhyme or reason. “Engaging a user simply because everyone else seems to be doing it isn’t going to cut it,” she says. “It’s about meeting business goals by delivering exceptional customer experiences online.” As a digital marketer, Rakan Brahedni, new media relationship specialist at Nestlé Middle East, says many regional agencies are still struggling to understand clients’ business objectives and how to achieve them online. He would like to see more agencies better understand the business side of the relationship.

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client servicing

New order: In the Middle East, agencies and clients alike are struggling to embrace the digital reality

Agencies are also ill-prepared or unwilling… perhaps because of the old-school mentality of their leadership… “We expect a bit more from our campaigns than high traffic and a report full of exciting buzzwords. We’re here to sell, and this shouldn’t be forgotten,” Brahedni tells GMR. Nestlé’s ad spend has increased substantially since it went online in 2005, he says. Although it constitutes a small percentage of the group’s total ad spend, Brahedni expects it to grow in the coming years. But Fawzi Rahal, regional communications director of PR agency G2 Dubai, and the editor-in-chief of The Next Web Middle East, says clients have little understanding of what digital means, although they all express interest in jumping on the social media bandwagon. “They are not even certain of whether they need to approach a digital agency or a PR agency,” he says. “And when

they do, their activities are restricted to creating a Facebook page, a Twitter account or, in rare situations, a pseudoviral TVC on YouTube.” David Allan, PR director, Ogilvy Dubai, uses the term “wary traditionalists” when describing many a client’s online approach. He says some clients are aware and diving in with fully fledged digital campaigns; others are aware and choosing to ignore it, while the rest are either unaware or unwilling to learn about (far less embrace) this new world. Clients prefer to take the traditional media route, as it is what they are used to and trust. But, on the other hand, agencies are also ill-prepared or unwilling, perhaps because of “the old-school mentality of their leadership”, Allan says. To Mark Butterfield, formerly Unilever’s media director for North Africa

and Middle East, and currently head of media for Europe, agencies are to blame. He told GMR before leaving the region that agencies in the Middle East are poor in terms of creativity, lack understanding of online media and have limited experience in the area. Unilever, which won the Global Digital Marketer of the Year Award in 2009, is spending “considerably more than most online”, Butterfield said. “Agencies’ abilities are proportionate to the level of investment most companies in the region are making in digital marketing,” Brahedni says. Not just financial, but also in terms of the results that clients demand. “I believe that we, the clients, need to push our agencies to deliver more, deliver better and be a bit more daring. In return, our agencies will grow and strengthen,” he says. Brahedni says all of Nestlé’s aligned agencies have made a substantial efforts and investments in their online divisions, and that “we’re very happy with their progress”. Speak to the different entities involved and ROI seems to be the recurring concern.

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According to G2’s Rahal, clients, whether multinational or local, do not have enough experience with this aspect of online, so they expect an immediate ROI and a buzz from day one. “It’s very easy to get caught up with the creativity and buzz surrounding digital activities, but budget holders are becoming a lot savvier when it comes to digital marketing, and they’re beginning to expect a lot more in return for their investments,” Brahedni says. But “it’s everybody’s fault”, Rahal says. “Agencies do not have sufficient information and stats to compare against because they don’t have sufficient previous experience. Media agencies are still catching up with ways to track these campaigns and justify the investment. It’s a catch-22 situation.” Ogilvy’s Allan says agencies lack foresight, and this is what’s holding them back from producing world-class digital campaigns. His agency, however, has embarked on a digitisation strategy whereby digital is a common language all employees subscribe to and speak. But that might not be the case with other agencies.

Chammas says agencies are not fully educating their clients on new media because they are not educated themselves, and digital agencies are too few to make an impact. Tarek Dajani, CEO of cleartag, a digital agency with offices in several Middle Eastern countries, says digital concepts need advanced technical know-how and engineering to come to life. He says even if ad agencies understand the dynamics of digital marketing, they do not have the technical capabilities of digital agencies. “We have the infrastructure, the engineering know-how and technibridging the gap

Know-how: Tarek Dajani, CEO, cleartag

Leader: David Allan, PR director, Ogilvy Dubai

cal ability, especially when it comes to search engine optimisation, search engine marketing, mobile, branded applications and content, which traditional set-ups don’t have,” Dajani says. To Rahal, it requires PR, marketing, and traditional and media agencies working hand-in-hand. He admits that it is challenging, but not impossible. “We’ve been through this before and we made the best of it. It’s a matter of time, trial and, certainly, lots of errors.” He says there is no magical solution. “We can produce great content; we just need to put in twice the effort at the beginning – clients and agencies combined.” From a business perspective, Brahedni’s views are a bit more critical. But, speaking as an Arab, he says: “I’m proud of the calibre of agencies that we have in the Middle East. We’re soon to become a region that the digital world will reckon with.” Well, they’d better if they’d like to line up with Bob Greenberg sometime in the next 50 years. n

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MARKETING

A coherent strategy

Growth plans must be capabilities-driven if they are to succeed. In business growth is valued above virtually everything else. That’s not inherently problematic, but the growth imperative frequently pushes chief executives to venture into new markets, launch new products and services, or acquire competitors. For some companies, this is exactly the wrong strategy, as their expansion is based on processes, activities, or functions far from what they’ve established as their critical capabilities. In fact, companies can best grow by identifying the few things they are really good at, and applying laser-like focus to ensuring they use those capabilities to drive all of their strategic decisions. This concept, called “capabilitiesdriven strategy”, sounds simple, but it’s extremely difficult to apply. CEOs

understandably tend to compare their company’s position to their competitors’, and they give market signals and other external metrics too much influence on their strategy. Ideas for growth flow from outside the organisation to the boardroom, and soon become strategic goals. But companies with the discipline to reverse that process and look internally for expansion perform better over time. The management consulting firm Booz & Company has assembled a growing body of evidence that capabilities-driven strategy leads to superior, sustainable returns. This is particularly true in mature, post-consolidation markets. Think of it as a coherence premium – the added value a company garners for sticking to its true strengths and

not being tempted to chase opportunities that seem initially promising but ultimately prove distractions. GCC companies have succumbed all too frequently to such temptations, and the problem has only been exacerbated in recent years. In pursuit of top-line growth, many companies in the region have ventured into a range of different businesses; a review of leading GCC conglomerates recently found that most were involved in three or more completely unrelated sectors. It’s likely that most of these businesses were not complementary or coherent with their traditional capabilities. The management and shareholders of these companies were taken in by an abundance of market opportunities. They looked to enter new markets instead of scaling their

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existing business lines to identify and improve their core strengths. Capability is less about function and more about the alignment of key processes. It’s the alignment of a company’s talent, knowledge, IT, tools and processes around something that it can consistently do better than its competitors. This could be demonstrably better customer service, or the ability to get products on shelves faster, or superlative analytics in tracking consumer behaviour. Once a company identifies its differentiating capabilities, it works on improving them until they become best-in-class and interlocking. All products and services leverage that system of capabilities to create value for customers. For example, a large food manufacturer in the region had established control over several key phases of production for some of its products, including manufacturing, distribution, branding and retail. Most critically, it had the ability to refine agriculture-based products in each of its geographic markets. But in its quest for growth, the company expanded rapidly into new territories where it would have needed work with agricultural raw materials, thus moving into new capabilities in agribusiness. This shift outside of its core capabilities prevented the company from establishing market dominance in those countries. It recently divested those operations, opting instead to focus on areas where it had a clear, differentiated market position and could out-execute its competitors. Capabilities-driven strategy boosts value in obvious ways. First, it forces a company to articulate its competitive position. What do we do? And how do we do it better than our competitors? Only companies with clear and differentiated answers to these questions have earned the right to win in a given market. Secondly, this strategy provides a framework for considering expansion opportunities, whether organic or inorganic. Anything that doesn’t clearly

Clear goal: Companies can best grow by capitalising on the few things they are really good at

Concentrating on capabilities requires an internal focus and discipline that some executives have not shown lately. support current capabilities isn’t worth an investment of time or money. At the same time, the growth opportunities that do pass this test lead to greater efficiencies of scale, because a company’s strengths will be applied to a wider universe of products and services. Finally, focusing on capabilities provides a bridge between the strategic thinking of the boardroom – which often can be abstract – and the barrage of day-to-day operational decisions an executive must make. Every decision gets filtered through the lens of capabilities, which clarifies options in a sometimes messy world. Concentrating on capabilities requires an internal focus and discipline that

some executives and CEOs have not shown lately. It also requires a long-term approach, which can be difficult when investors often have a hard time looking beyond the next quarterly earnings report. The companies willing to take these steps, however, will be rewarded with a clear market position, a set of differentiated strengths they can use to provide value for consumers, and stronger, more sustainable profits. n

Ahmed Youssef Principal, Booz & Company, Dubai

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MEDIA

Education, education, education UM Egypt’s Dina Hashem is on a steep learning curve as she tries to haul herself – and the rest of the country’s marketing professionals – into the digital age. Siobhán Adams caught up with her in Cairo. Some 700 communications professionals gathered in Cairo recently to attend Digital Boom: Are your consumers ahead of you? – a one-day conference organised by Dina Hashem, managing director of UM Egypt, along with Google, Nielsen Media Research and Digital Republic. Hashem’s career began 14 years ago with DDB Needham. She then joined Leo Burnett, before switching to media in 2003, and moving to Starcom Cairo before taking up her current role. What prompted this initiative? The need to have the right people telling us what we need to know about digital in Egypt. So far we have been attending forums and seminars talking about digital

elsewhere – in the GCC, Asia, Europe and the US. And we go away saying, “What great theories, what great examples”, and then that’s it. We don’t use it. We don’t know how to use it because we are not educated yet as either marketing people, media people or advertising people. Clients specifically are unwilling to explore that media because they lack information. key initiative

Spreading the word: Dina Hashem, MD, UM Egypt

You are not going to find a lot of clients investing in research. Research is one of the main issues in Egypt. That’s true of a lot of places in the Middle East. Yes, exactly. Clients are not willing to invest into knowing what the consumer is doing with digital. So the agency is taking that role. All of this inspired the conference. We shared the idea with Google, Digital and Nielsen and they came onboard right away. For us that was the challenge…to have a one-day event for the first time talking only digital. Not TV or print, only digital. We were hoping to get the right speakers and right topics. At the beginning there was a presentation by TE Data about the

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MEDIA

Taking notes: Industry professionals from across the region attended the seminar – the first digital in Egypt

Clients are not willing to invest into knowing what the consumer is doing with digital… government’s plans to develop internet in Egypt. It’s very expensive in Egypt. Isn’t that the main issue holding everything back? Yes, it’s very expensive. And that’s why piracy is coming up in Egypt. It’s following what happened with satellite. In the beginning it was very expensive to buy a dish, but now it’s not, thanks to piracy. One person buys a decoder and rewires through the whole street and they pay only $2 a month for all these channels. The same thing is happening with the internet, but the difference is satellite is FTA, so the government is not losing any money. But with internet they lose because they can get revenue from DSL subscriptions and so forth. We were hoping TE Data (Infrastructure/penetration/development and future of the internet: Ahmed Osama, MD of TE Data) would give us, one, information, and two, our clients some peace of mind that internet is growing. They need to hear it. If the government is giving so much attention to this

growth, it’s going to engage consumers. We have to tap into it and educate ourselves so we can communicate with them. We called this conference – Are your consumers ahead of you? – [but] we already know the answer. Do you have a separate digital division within UM in Egypt? We have a digital team inside UM and we work with our sister company, Digital Republic. Do you have a shareholding in Digital Republic? No. It’s just a sister company. How is it a sister company? We belong to the same group. So it’s part of MCN? There is no MCN in Egypt; it only exists in the Gulf. It doesn’t exist as a brandname in Egypt. It’s not registered here. But we belong to the same group. But ultimately you are part of IPG. Yes, of course. But Digital Republic is

not. The local partner in UM Egypt is also a partner in Digital Republic. OK. We work closely with Digital Republic and they work with other agencies and clients. We don’t rely on that only. We want to educate ourselves and other planners. I am not going to wait for another agency to tell me what to do. I have to understand what’s being offered, how do I do it, how can my brand benefit from it, how can I reach this consumer – and then I can recommend to my clients. So you think creative agencies in Cairo are behind the curve? On digital? On digital we are all behind. We are all way behind and the consumer is way ahead. And that’s exactly why we held this conference. What is the digital ad spend in Egypt? We have a problem with monitored data. But it’s four to five per cent, maximum. How much do you think this will increase in the next 12 months? Maybe another two to three per cent. This is why we need such conferences. We need education, education, education. For ad spends on digital to increase

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clients need to be convinced, and for clients to be convinced they have to attend something like this conference. This is the first time they hear this and they hear Coke saying this and Mobinil saying that, and they say, “Oh, others are doing it. We didn’t know that.”

egypt outlook

Do you fund research yourself? No. In-house proprietary tools? We have our own tools, yes. For digital we have Wave, a tool to measure online efficiency. We’re doing it in the GCC and now we are doing it in Egypt. And we are working with Nielsen because they have a lot in the pipeline. In radio, TV and print there is lot of syndicated research you can subscribe to, but not on digital. The only company that started giving it attention was Nielsen, so we are working very closely with them. They have internet profiling research from 2009. This is the first and, so far, the only research of such magnitude providing profiles of Egyptian internet users, what they are interested in, what they are doing. If, for example, they are on a promotion online, what would they like to win and so on. It gave us a lot of insights. But again, it’s very general. But you can get Arab-specific research from other places? Yes, but it’s still very general. Clients are looking for insights. Khallas. They are beyond data. They say to me, “OK, great”, but how do I know if I do this banner ad this will do the right job for me? What is my target audience interested in? What are the dos and don’ts? And that is something we didn’t answer today because we couldn’t find anyone to answer that for Egypt. Do you see this becoming an annual event? Yes. Already I have the agenda for the next events because afterwards you see what was lacking and it definitely was creativity. Online ads is an area we have to cover. The dos and don’ts is another area. And one I

• Household savings ratio nosedived from 18.6 per cent in 2004 to 5.5 per cent in 2009. Jobs losses since the global financial crisis mean there is less money to save, indicating declining consumption of big ticket durables, with available funds being spent instead on semi-durables. • In March 2010 the government announced $11.4 billion worth of agricultural and industrial investments into food factories and logistics centres. The new programme is anticipated to create 750,000 jobs. • As part of its recovery plan the government is seeking $10 billion in foreign direct investments from Asia to fund investment projects in telecommunications, financial services and software sectors. The government is also seeking to expand economic ties with Asia – Egypt and Singapore are looking at a bilateral trade pact for 2011 • Annual real GDP growth is expected to reach 5.5 per cent in 2011 (compared to 4.7 per cent in 2009). This will outpace most key economies in MENA other than Qatar. A rebounding economy will encourage consumer confidence and consumption, which will help fuel economic growth. • Consumer expenditure represented 86.5 per cent of total GDP in 2009, compared to 74.2 per cent in 2004. For consumers to continue long-term spending, consumer confidence from a strong economy must be present. Source: Euromonitor 2010

would consider is online and offline going together. Coke was very specific on that. (Coca-Cola: A digital success story by Omar Mandour, GM, Coca-Cola Egypt.) Yes, it was a very good paper. What we have now is digital-only campaigns that don’t work. That’s why we brought Coke and Mobinil to show that on and off can work together. The situation at the moment is that clients think online has to be something and offline has to be something else. And that shouldn’t be. They should be integrated. We will stress on this more in the next conference. Today we only saw Coke on integration and how that reinforces the message and

attracts the consumer further. Hopefully, next time we will have more examples from Egypt because I think by next year things will have changed as clients are starting to open up on this. I am surprised clients are so slow, if for no other reason than that there are so many multinationals based here whose counterparts are doing it all over the world. They are not convinced that the consumer is there yet. I hope, after our conference, they will be. The consumer is way ahead. It’s taking the risk to allot the big budgets, because now we get the leftovers. Thank you, it has been very interesting. n

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special report

Smart media

Reservations about econometric modelling among MENA advertisers are beginning to recede. Advertisers in the region are finally warming to the idea of econometric modelling as the pressure to grow business quickly intensifies. In an increasingly complex business environment, brand owners know the exact impact that marketing has on sales. They also need the ability to adjust and optimise to increase their return on ROI. This is where econometric modelling comes to the fore. It can be used to identify revenue streams and implement a holistic marketing evaluation framework, taking into account all factors that impact a client’s business. Econometric modelling is based on the analysis of historical data to isolate

and quantify the effect of drivers on a business’ KPIs. An example: A major hotel chain wanted to measure how successful its diverse marketing activities were in driving reservations. The company then wanted to apply this information to work out which pieces of advertising provided the best return, and also to gain an insight into how its different marketing activities were working together: the optimal weights per channel and which competitors’ activity was the most threatening. They applied an econometric model that looked at the patterns of hotel reservations. The model took into account many factors, including price

competitiveness, client advertising – online and off – and that of its competitors, movements in loyalty programme factors, the market, consumer confidence, seasonality and economic trends. Three years of data were analysed which is typical for travel/leisure industries. It provides sufficient variation in campaigns, weights of marketing activity, media vehicles and their combinations used, economic conditions, etc, without biasing results towards “days gone by” (when digital did not exist). The study revealed an increase from 12.5 per cent to 15.3 per cent in reservations as a result of media activities (2007 to 2009). If advertising positively impacts a hotel’s reservations, defining

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econometric modelling $15.00 $12.00 Profit

the correct media mix is essential in producing optimum results. Approximately 85 per cent of all bookings in 2009 were business as usual. This means these would have occurred without any marketing, relying on factors that the brand does not directly control, such as economic conditions, travel trends, loyalty and competitive activities. It is important to note that while this represents a large portion of the total sales, these are rooted in the previous marketing campaigns, which contributed to the overall reservations and repeat business. The model allowed for each media type to be split individually, getting a better perspective on how they each drove reservations over time. This, paired with corresponding media investment per channel, allows us to calculate revenue return on marketing investment (RROI). The single most important driver in reservations was search with an RROI of $14.40. The analysis was also able to examine the synergies between media channels. It revealed that without TV, magazines didn’t perform that well. Newspapers, on the other hand, seemed stable, showing a steady $1 increase year-on-year. Econometric modelling is helpful in determining the correct media mix for an optimum ROI. While the analysis shows that revenue almost doubled due to media investments during two years, this can increase significantly if the media mix is refined. Understanding the effect and impact of competitors’ activities is key to any business, and with econometric modelling we can derive a programme that minimises any negative impact on our clients’ business. Another benefit is to ‘test’ assumptions. For example, we could prove that doubling investments doesn’t necessarily mean doubling profits. If $1.4 million in newspaper advertising generated a profit of $8 million, doubling that only added a further $1.5 million. Econometric modelling, therefore, identifies what

$9.00 $6.00 $3.00 $0 $0.0

$2.0

Actual newspaper spend: about $1.4m Actual profit: $8m Marginal profit: $9.5m – $8m = $1.5m

$4.0 Spend

$6.0

$8.0

Two times actual newspaper spend: about $2.8m Profit generated from doubled spend: $9.5m Marginal spend: $2.8m – $1.4m = $1.4m

The optimal media weights by channel were identified as weekly minimum and maximum thresholds. From there, the annual rules were derived – examples below are for newspaper spend and for search (pay-per-click) spend – we advised the client similarly on all marketing communication activities (TV, magazines, online display, DM).

Average revenue ROI by medium Television Newspaper Magazine Display Search Direct mail Average

2007 3.00 4.40 5.40 0.90 14.40 0.00 1.50

2008 0.00 5.70 3.60 1.00 21.90 0.20 1.70

2009 0.00 6.80 4.10 2.00 16.50 0.00 2.10

Source: BrandScience, 2010

…doubling investments doesn’t necessarily mean doubling profits… percentage should be spent on which channel, monthly and annually, to avoid reaching the point of diminishing return. Clients found that econometric modelling provided 94 per cent accuracy. This is a definite analysis to provide media accountability and profitability and help marketers set and justify budgets. It also allows us to evaluate approaches through simulations. This analysis not only establishes ROI on a strategic level, but also on a tactical level, identifying what to do, what media mix to use, the amount of GRP to buy. In other words, it helps fine tune communication decisions. While econometric modelling is already popular in other markets, it is just taking off in the Middle East. With companies

becoming increasingly digitised, incorporating this approach will give brand owners a reassuring sense of accountability, providing information in near real time and tracking the effect of marketing and advertising on the overall business. Investing in such models is an opportunity for marketers to cash in as it is based on real, hard facts, allowing marketers to make data-supported decisions to deliver on both short- and long-term business objectives. n

Igor Skokan BrandScience manager Integral Dubai

January 2011 Gulf Marketing Review 53

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UAE

SAUDI ARABIA

KUWAIT

OTHERS

COMMUNICATIONS MANAGER

TRADE MARKETING ANALYST

MARKETING EXECUTIVE

MARKET RESEARCH MANAGER

Qualification: Degree in Marketing Experience: 2 - 5 years Experience Skills: Excellent command of English & Arabic Excellent management skills Strong decision making skills

Qualification: Degree in Business/Marketing Experience: 0+ years Experience Skills: Strong computer skills Strong communication skills Excellent command of English

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Qualification: Degree in relevant discipline Experience: 5+ years Experience Skills: Strong communication skills Strong analytical skills Strong leadership skills

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MARKETING MANAGER

BUSINESS DEVELOPMENT MGR

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Qualification: Degree in relevant discipline Experience: 3+ years Experience Skills: Excellent communication skills Strong negotiation skills Strong leadership skills

Qualification: Degree in relevant discipline Experience: 7+ years Experience Skills: Strong presentation skills Excellent command of English & Arabic Excellent communication skills

Qualification: Masters in Marketing Experience: 1 - 2 years Experience Skills: Strong brand management skills Strong project management skills Excellent leadership skills

Qualification: Degree in relevant discipline Experience: 5+ year Experience Skills: Excellent analytical skills Proﬁcient in MS-Ofﬁce Strong leadership skills

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MARKETING INTERN

MARKETING MANAGER

MARKETING EXECUTIVE

TRADE MARKETING ASSOCIATE

Qualification: Degree in relevant discipline Experience: 7- 10 years Experience Skills: Ability to work under pressure Excellent communication skills Strong command of English

Qualification: Degree in Marketing Experience: 5+ years Experience Skills: Excellent command of English Strong analytical skills Strong leadership skills

Qualification: Degree in Business Management Experience: 2+ years Experience Skills: Excellent command of English & Arabic Strong communication skills Strong presentation skills

Qualification: Degree in Business Administration Experience: 1 - 3 years Experience Skills: Strong analytical skills Excellent command of English & Arabic Excellent communication skills

Job Reference:JB1508533

Job Reference:JB1598038

Job Reference:JB1596162

Job Reference:JB1599263

BUSINESS MANAGER

MARKETING DIRECTOR

MARKETING ANALYST

INSURANCE PRODUCT MANAGER

Qualification: Degree in Business Administration Experience: 5+ years Experience Skills: Strong communication skills Strong command of English & Arabic Strong experience in a similar role

Qualification: Degree in relevant discipline Experience: 4+ years Experience Skills: Excellent management skills Excellent communication skills Strong analytical skills

Qualification: Degree in relevant discipline Experience: 2+ years Experience Skills: Strong administration skills Excellent command of English & Arabic Proﬁcient in MS-Ofﬁce

Qualification: Degree in Marketing Experience: 3+ years Experience Skills: Excellent command of English & Arabic Proﬁcient in MS-Ofﬁce Excellent communication skills

Job Reference:JB1598777

Job Reference:JB1597996

Job Reference:JB1586785

Job Reference:JB1596181

ONLINE MARKETING MANAGER

MARKETING & SALES DIRECTOR

MARKETING REPRESENTATIVE

BRAND MANAGER

Qualification: Degree in relevant discipline Experience: 3 - 5 years Experience Skills: Excellent communication skills Strong leadership skills Proﬁcient in MS-Ofﬁce

Qualification: Degree in Marketing Experience: 7+ years Experience Skills: Excellent command of English & Arabic Strong sales skills Strong negotiation skills

Qualification: Degree in Marketing Experience: 1 - 2 years Experience Skills: Strong computer skills Excellent command of English & Arabic Excellent analytical skills

Qualification: Degree in Business Administration Experience: 3 - 5 years Experience Skills: Excellent command of English & Arabic Strong communication skills Excellent analytical skills

Job Reference:JB1597463

Job Reference:JB1581469

Job Reference:JB1418267

Saﬁr Consultancy

Tiger International Armor

Bayt.com

Tahadi Games, Ltd.

elysian Real Estate

Job Reference:JB1597918

National Paper Company Ltd

ALSAMI Holding Group

Robert Walters

Global Retail Recruitment

Mawten Real Estate Co.

Proximity

Al Ahram Beverages Company (Egypt)

Al Mulla Group

Auotmak Taxi (Jordan)

Kuwait National Advertising Co.

Qatar National Import & Export Co. (Qatar)

ARABIAN BEVERAGE COMPANY LTD (ABC) Gulf Connexions (Qatar)

Pan Arab Research Center

Edita Food Industries (Egypt)

How to apply to jobs on Bayt.com 1. 2. 3. 4.

Visit our website at www.bayt.com If you are a new visitor, click on ‘Post a CV’ to create your Bayt.com CV Enter the job reference in the Search box on the homepage. Example, enter JB123456 When you view the job posting, click on “Apply to this job” and attach your Bayt.com CV.

Your CV will go directly to the employer and they will contact you if you ﬁt their job requirements

UAE

SAUDI ARABIA

KUWAIT

OTHERS

COMMUNICATIONS MANAGER

TRADE MARKETING ANALYST

MARKETING EXECUTIVE

MARKET RESEARCH MANAGER

Qualification: Degree in Marketing Experience: 2 - 5 years Experience Skills: Excellent command of English & Arabic Excellent management skills Strong decision making skills

Qualification: Degree in Business/Marketing Experience: 0+ years Experience Skills: Strong computer skills Strong communication skills Excellent command of English

Qualification: Degree in Business Administration Experience: 3+ years Experience Skills: Proﬁcient in MS-Ofﬁce Strong communication skills Strong command of English & Arabic

Qualification: Degree in relevant discipline Experience: 5+ years Experience Skills: Strong communication skills Strong analytical skills Strong leadership skills

Job Reference:JB1599269

Job Reference:JB1553248

Job Reference:JB1599266

Job Reference:JB1577013

MARKETING MANAGER

BUSINESS DEVELOPMENT MGR

MARKETING MANAGER

BUSINESS DEVELOPMENT MGR

Qualification: Degree in relevant discipline Experience: 3+ years Experience Skills: Excellent communication skills Strong negotiation skills Strong leadership skills

Qualification: Degree in relevant discipline Experience: 7+ years Experience Skills: Strong presentation skills Excellent command of English & Arabic Excellent communication skills

Qualification: Masters in Marketing Experience: 1 - 2 years Experience Skills: Strong brand management skills Strong project management skills Excellent leadership skills

Qualification: Degree in relevant discipline Experience: 5+ year Experience Skills: Excellent analytical skills Proﬁcient in MS-Ofﬁce Strong leadership skills

Job Reference:JB1597925

Job Reference:JB1416965

Job Reference:JB1598620

Job Reference:JB1596214

MARKETING INTERN

MARKETING MANAGER

MARKETING EXECUTIVE

TRADE MARKETING ASSOCIATE

Qualification: Degree in relevant discipline Experience: 7- 10 years Experience Skills: Ability to work under pressure Excellent communication skills Strong command of English

Qualification: Degree in Marketing Experience: 5+ years Experience Skills: Excellent command of English Strong analytical skills Strong leadership skills

Qualification: Degree in Business Management Experience: 2+ years Experience Skills: Excellent command of English & Arabic Strong communication skills Strong presentation skills

Qualification: Degree in Business Administration Experience: 1 - 3 years Experience Skills: Strong analytical skills Excellent command of English & Arabic Excellent communication skills

Job Reference:JB1508533

Job Reference:JB1598038

Job Reference:JB1596162

Job Reference:JB1599263

BUSINESS MANAGER

MARKETING DIRECTOR

MARKETING ANALYST

INSURANCE PRODUCT MANAGER

Qualification: Degree in Business Administration Experience: 5+ years Experience Skills: Strong communication skills Strong command of English & Arabic Strong experience in a similar role

Qualification: Degree in relevant discipline Experience: 4+ years Experience Skills: Excellent management skills Excellent communication skills Strong analytical skills

Qualification: Degree in relevant discipline Experience: 2+ years Experience Skills: Strong administration skills Excellent command of English & Arabic Proﬁcient in MS-Ofﬁce

Qualification: Degree in Marketing Experience: 3+ years Experience Skills: Excellent command of English & Arabic Proﬁcient in MS-Ofﬁce Excellent communication skills

Job Reference:JB1598777

Job Reference:JB1597996

Job Reference:JB1586785

Job Reference:JB1596181

ONLINE MARKETING MANAGER

MARKETING & SALES DIRECTOR

MARKETING REPRESENTATIVE

BRAND MANAGER

Qualification: Degree in relevant discipline Experience: 3 - 5 years Experience Skills: Excellent communication skills Strong leadership skills Proﬁcient in MS-Ofﬁce

Qualification: Degree in Marketing Experience: 7+ years Experience Skills: Excellent command of English & Arabic Strong sales skills Strong negotiation skills

Qualification: Degree in Marketing Experience: 1 - 2 years Experience Skills: Strong computer skills Excellent command of English & Arabic Excellent analytical skills

Qualification: Degree in Business Administration Experience: 3 - 5 years Experience Skills: Excellent command of English & Arabic Strong communication skills Excellent analytical skills

Job Reference:JB1597463

Job Reference:JB1581469

Job Reference:JB1418267

Saﬁr Consultancy

Tiger International Armor

Bayt.com

Tahadi Games, Ltd.

elysian Real Estate

Job Reference:JB1597918

National Paper Company Ltd

ALSAMI Holding Group

Robert Walters

Global Retail Recruitment

Mawten Real Estate Co.

Proximity

Al Ahram Beverages Company (Egypt)

Al Mulla Group

Auotmak Taxi (Jordan)

Kuwait National Advertising Co.

Qatar National Import & Export Co. (Qatar)

ARABIAN BEVERAGE COMPANY LTD (ABC) Gulf Connexions (Qatar)

Pan Arab Research Center

Edita Food Industries (Egypt)

How to apply to jobs on Bayt.com 1. 2. 3. 4.

Your CV will go directly to the employer and they will contact you if you ﬁt their job requirements

s e C t O R A N A LY s I s

FINANCIAL seRVICes We track the fluctuating fortunes of the region’s financial services sector as it begins to distance itself from the economic crisis. Due credit Female ﬁnance A fresh start Global currency shari’ah compliance PARC analysis PARC data

57 66 68 70 72 78 80

NeXt MONth teLeCOMMUNICAtIONs

56 Gulf Marketing Review January 2011

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not maxed out

Cash continues to rule supreme in the Middle East but card companies are starting to attract greater interest. As the GCC continues its petrodollar-backed evolution from an emerging to developed economy, the region’s credit card market is becoming ever more competitive. There were approximately 6.8 million credit cards in the Gulf in 2010, according to UK advisory firm Lafferty Group, and banks are scrambling to gain a foothold in an increasingly lucrative market. “The Middle East has shown higherthan-average spend on cards,” says Raghu Malhotra, general manager and business head for the Middle East at global giant MasterCard. “Penetration levels are obviously much lower, and there are issues with infrastructure and consumer habit. Growth rate, however, is high.” According to Malhotra, the Middle East matches the global average for penetration in the retail sector. However, its residents are lagging in the use of credit cards for bill payment, preferring cash, cheques or bank transfers. It’s frustrating, he says, but adds that at MasterCard there’s room for growth. “There are also areas of the Middle East that are not open and we can’t yet go there: for example, in Saudi Arabia you cannot pay for fuel with a card,” notes Malhotra. “So there are pockets across the region where penetration levels are low compared to developed countries.” MasterCard boasts a network to which some 23,000 banks are connected globally, and operates across three verticals – franchise, processing and advisory services. In terms of transactions, Saudi Arabia is its biggest market in the Middle East. However, in terms of spend, the region’s largest economy lags behind the UAE. “It’s to do with infrastructure,” explains Malhotra. “Saudi has its own domestic infrastructure and its own [electronic

Scoring big: Former Italian football captain Fabio Cannavaro recently re-opened a refurbished United Arab Bank (UAB) branch on Sheikh Zayed Road, Dubai. Cannavaro was presented with the bank’s latest Visa Platinum card for premium customers. UAB also launched its new Sadara Wealth Management programme.

payment system] which it runs; we don’t get to see those transactions. However, the Saudis do tend to spend a lot when they come out of the country.” Malhotra says the Middle East has “huge potential when you look at the consumer space”, and remains a key market for MasterCard moving forward. Meanwhile, chief rival Visa is also reporting a healthy growth in payment accruing credit

Tangible: NBAD’s Ahmed Al Naqbi

Growth: Visa’s Kamran Siddiqi

transactions in the GCC, claiming a 19.4 percent rise in payment transactions in Q1 2010, compared to the year-earlier period, and is determined to make further inroads into the region. “We continuously strive to enhance customers’ experiences by offering addedvalue promotions to our growing premium cardholder base,” says Kamran Siddiqi, Visa general manager, Middle East. It’s no surprise that providers are keen on fresh investment – the appetite for credit in the region means that banks in the Gulf will make an estimated $421 million in pre-tax profit on credit cards in 2010, a jump of $90 million from 2009. Moreover, that is set to grow dramatically over the next decade as the region’s population swells to 53 million by 2020 – a 30 per cent increase over 2000. “Customers in the Gulf have become much more knowledgeable and it is be-

January 2011 Gulf Marketing Review 57

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SE C T O R A N A L Y S I S

Mutual funds: NBAD recently unveiled its latest co-branded product in association with the money exchange arm of retail giant EMKE Group

Consumers in the GCC owe an estimated $7.7 billion in outstanding credit card debt… coming a much more mature market,” says Ahmed Al Naqbi, senior manager of Channels and Electronic Banking Services at National Bank of Abu Dhabi (NBAD). “People are taking credit cards more for necessities as opposed to frivolous spending, which might not have been the case in the past,” he continues. “They are also demanding more from their card providers, so banks are working harder and becoming more customer-centric.” Financial institutions are employing a range of tactics to reel in Gulf consumers. Preferential and reduced pricing plans, and loyalty schemes that earn customers points every time they spend, are now common in the region. And banks are even offering cards with no charges or fixed fees – although clients will still accrue interest on late or defaulted payments, of course. Co-branding is another increasingly popular method for banks looking to

differentiate their offerings from the competition. Cards bearing the names of airlines, retail outlets, hotels and automakers have become common currency in the Gulf, with everyone from Emirates airline to jewellers Liali boasting a tie-up with banks in the region. “From a consumer perspective there are two kinds of co-brands, the first being more of a gimmick,” says Al Naqbi at NBAD. “That’s where you get the name of a famous partner so the customer is attracted to that card because your house of cards

Infrastructure: Mastercard’s Raghu Malhotra

partner has some kind of sentimental value to them. “There is some benefit to the bank with that, but it’s usually very limited,” he continues. “The customer doesn’t get much of a benefit other than the fact that the card has a nice colour on it, a nice logo, and it might be something that they might want to be able to flash around in front of family and friends.” Al Naqbi contends that NBAD is more interested in co-branding where tangible value is added by both parties and translated to the customer. NBAD recently unveiled its latest co-branded product in association with the money exchange arm of retail giant EMKE Group. The UAE’s first co-branded payroll card, My Card, will allow workers to access their salaries through the bank’s Ratibi system. There are already 400,000 Ratibi cardholders with more than 2,400 companies in the UAE, and EMKE Group’s network, which includes LuLu hypermarkets, will allow NBAD to tap a wider market: every worker with a My Card will be making money for NBAD every time he shops in one of the EMKE Group’s stores.

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SE C T O R A N A L Y S I S

Taking a swipe: The region’s credit card market is becoming ever more competitive

You will stil see...banks not necessarily being as responsible as they should be... “The bank puts its strength into the card – our network, our experience, convenience and PoS terminals – while LuLu offers distribution outlets at their malls and shops,” says Al Naqbi. “Someone like LuLu, for example, has distribution outlets across the UAE, is in several different sectors in the market, and provides us with locations free of rent. “So there’s definitely value-added from the partner’s side, and that translates into less cost, which translates into better pricing for the consumer,” he continues. “In turn, that tends to mean an increase in usage of the card and purchasing with the card, which again means better returns to us as a bank as well.” Of course, that’s not to say banks can afford to be cavalier with regard to distribution of credit. Consumers in the GCC owe an estimated $7.7 billion in outstanding credit card debt, according to Lafferty’s World

Cards Intelligence unit, and banks are expected to write off close to $600 million in net-credit losses on cards in 2010. The credit crunch should mean that the era of easy money is over, and some Gulf banks know all too well the price of overexposure to bad debt. “We are being a lot more careful with the distribution of cards,” says Al Naqbi. “I think a lot of banks are moving in that direction and understanding that you can’t just put a credit card in the hands of any person who works in the market. “We want our products to be in the market, we want our customers to use our cards, but we also want to lend responsibly,” he continues. “We don’t put a card in the hand of a customer for the sake of it and then watch them default – it’s not our purpose and not what we’re here to do.” According to Al Naqbi, NBAD has always been “very conservative” with its

credit policy, which allowed the bank to avoid much of the worst of the credit crunch. However, it is an approach that not all financial institutions are following. “You will still see, on occasion, banks not necessarily being as responsible as they should be with the distribution of cards,” says Al Naqbi. “They look at it from a different perspective, as a way to attract customers. So they’ll offer a credit card to anyone on the streets, on the theory that they’ll pull the customer in with the credit card, and then crosssell them other products and get them to open an account.” In a market such as the Gulf, that can be a dangerous game as cards are being issued to residents who are not citizens of that country, which heightens the risk of credit defaults and people ‘skipping’ the country. Research by RAK Bank last year indicated that in the UAE alone up to 2,500 residents were leaving each month without settling their debts. “But there are competitors out there who would still give out credit to pretty much anyone who knocks on their door,” says Al Naqbi.n

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ENVIRONMENT EXHIBITION

SE C T O R A N AL Y SIS

Financial support

Arab consumers’ attitudes and behaviour towards personal finance vary considerably across the region.

The middle east has not been immune to the crisis affecting the financial sector. Regional institutions are, however, insulated to some degree by massive oil reserves and a strategic geographical advantage. At the same time, consumers’ attitudes towards the sector are undergoing a paradigm shift. The use of plastic money is increasing in key GCC markets where, on average, an adult owns 1.25 credit/debit cards. Non-Arab expats hold 1.45 cards per person; Emiratis, with an average of 1.31, lead other GCC nationals. The number of cards per person in the Gulf in 2009, however, was lower than 2006. Usage, on the other hand, surged dramatically in late 2009, with 10 per cent of adults in the UAE buying goods and

services on credit more than once a week, compared to six per cent in 2005. Usage is higher among locals and nonArab expats compared to Arab expats. In Saudi Arabia, the trend is showing an upturn – four per cent of the adult population uses credit cards two or three times a month. On average, adults in the UAE spend $402 a month on credit cards. Spending by UAE nationals outweighs spending by non-Arab expats by 46 per cent. Interestingly, men in the UAE spend, on average, five per cent more per month than women. In Saudi Arabia, the average monthly spend per adult is $314. Saudi nationals’ spend exceeds that of non-Arab expats by 34 per cent, and men use credit cards more than women.

With internet usage showing doubledigit growth in the region, 5.5 per cent of the adult population in the UAE now undertakes banking transactions online, compared to 2.74 per cent in 2005. Non-Arab expats in the UAE form the larger chunk; 7.31 per cent of them bank online. Saudi Arabia lags the UAE, with only 2.7 per cent of the adult population managing their finances online. Kuwaitis have a high affinity towards online banking. UAE locals have a very high affinity towards online purchase. In 2009, Saudi locals did not exhibit positive affinity towards online banking or purchase. The top socio-economic class exhibits high affinity towards both online banking and purchase.

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s e C T O R a N a lY s i s

higher online banking, higher online purchase

lower online banking, higher online purchase 200

level 1 (top 10%) upper class

180 Uae nationals 160

Non-arab expats

140

Online purchase >

120

level 2 (Next 20%) upper-middle class level 3 (next 30%) middle class

15-19

Kuwait nationals

20-34

100 arab expats

35+

saudi nationals

60 level 4 (reset 40%) lower class

40 20

lower online banking, lower online purchase

100

120

Online banking >

140

160

180

200

higher online banking, lower online purchase

Source: TGI GCC 2009/PARC

…men in the uAE spend, on average, five per cent more per month than women… In 2009, personal loans, car loans and home loans plunged in the UAE, while cash withdrawals using credit cards witnessed a significant increase. Saudi Arabia differed from the UAE, which saw a big drop in personal loans – only 2.5 per cent of adults took one in the past year. In 2005, 4.1 per cent of the UAE population took personal loans. In Saudi Arabia around 3.4 per cent of adults took personal loans in 2009, compared to only 1.3 per cent in 2005. Even car loans were hit badly in the UAE, with only one per cent taking one in 2009, compared to 3.2 per cent in 2005. Similarly, housing loans dipped to 0.23 per cent of the adult population in the UAE. In Saudi Arabia, 1.12 per cent of the population took home loans in 2009, an increase of 0.3 per cent from 2005.

Cash withdrawals using credit cards rose by 0.78 per cent to 1.33 per cent in the UAE; the trend was on a decline in Saudi Arabia. Reputation ranks as the top factor – ahead of personal services, personal experience, interest rates, locality, counter staff, recommendations, various offers and schemes, advertising, etc – for consumers when it comes to selecting a bank in the GCC, according to Target Group Index surveys. Around nine per cent of the adult population in the UAE has a life insurance policy, with an average estimated value of $25,600. In Saudi Arabia the percentage is much smaller, at 2.4 per cent. But private medical insurance is surging in the UAE, with 51.3 per cent of the population covered in 2009, compared to

17 per cent in 2005. This may be attributed to more employers paying premiums, as around 78 per cent of adults with medical insurance are covered by their or their spouse’s employers. A similar trend is visible in Saudi Arabia, where 34.2 per cent of the population was covered in 2009, compared to 12.5 per cent in 2005. Only 56 per cent of non-Arab expats agree they are spending more carefully than they used to Nationals in Saudi Arabia, the UAE and Kuwait disagree with the above statement. Various segments behave differently in the region and may exhibit dissimilar attitudes, but all are increasingly becoming sophisticated. ■ Data, other than the Quadmap, is sourced from Target Group Index 2010 surveys into consumer insights. PARC conducts TGI in partnership with Kantar Media Research. The views expressed in the article are those of the author, and not necessarily of PARC.

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Suppor t i ng

us er s

mor et han

us er s

S E CTOR A N A L Y S I S

Women only

Female finance represents a huge growth area for banking institutions.

Bags of potential: women controlled $500 bilion of the region’s wealth in 2009

According to a report by Boston Consulting Group, women in the Middle East controlled 22 per cent, or $500 billion, of the region’s total assets under management in 2009. In Saudi Arabia alone, women are estimated to be sitting on $11.9 billion in cash, according to Al-Masah Capital – and it’s a market segment that Gulf banks are desperate to corner. The majority of local banks offer women-only services to Gulf nationals looking beyond basic banking services to grow their wealth, while also complying with Islamic principles that include a ban on interest. The Gulf’s first women-only branch opened in Dubai in 2001; almost a decade later there are hundreds across the region. Saudi Arabia’s biggest lender by assets, National Commercial Bank, boasts 46 branches for women, while Saudi Hollandi Bank plans to increase the number of such outlets from 11 to 15.

And it’s not just on the shop floor that financial giants are angling for female funds. Al-Rajhi Bank, Saudi Arabia’s biggest lender by market value, launched its Ladies Wealth Management division this year – and this in addition to the Al Jawharah Ladies Fund, which targets Saudi women seeking diversified investments. expansion mode

Expansion: Saudi Hollandi Bank is planning to increase its women-only outlets from 11 to 15.

There have been false starts along the way, however. In 2007 Dubai World launched Forsa, meaning “opportunity” in Arabic, which was tagged as an investment company “created by women for women”. It was claimed that Forsa would operate for profit, and should not be perceived as a non-profit organisation just because it was a company for women. However, the unit’s decision to target investments in real estate means that three years later, it is out of business. Nevertheless, both local and international financial institutions recognise the potential of women customers. “Women in the Middle East have a lot of spending power these days,” says Raghu Malhotra, general manager and business head for the Middle East at MasterCard, which has launched a series of women-only cards in Saudi Arabia and Lebanon. “We see ladies’ banking as a major growth area,” he says, adding that the service provider is currently negotiating with a UAE financial institution to offer a women-only Shari’ah-compliant credit card in the Emirates. The growth in online shopping in the Gulf is expected to fuel demand for such products. A recent survey from Spot On PR found that while men are currently more likely to surf and shop, women are spending more than ever, in particular on clothes and accessories. “There are more products that give [women] the ability to spend online, and services such as Aramex’s Shop & Ship delivery so people can shop internationally,” says Spot On’s Alexander McNabb. “There are differences in the way women and men shop online – guys go for gadgets whereas women go for fashion – but they are certainly spending more online. It’s a huge opportunity.” n

66 Gulf Marketing Review January 2011

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S E CT O R A N A L Y SIS

banking on youth

©Corbis

The region’s robust young population provides the region’s banks with a head start on client recruitment – and hopefully retention.

In the money: HSBC is keen to encourage the savings habit among the younger generation

A significant portion of the Gulf’s population is illegible for the majority of banking services – but that will soon change. The youth of the region is growing up fast, and when it starts to draw a salary, the opportunity for growth in the banking sector will be tremendous. That’s why a number of banks are looking to make their mark on Gulf kids before they’ve even left school or college. International giant HSBC offers its Headstart account for children, a savings facility with no minimum balance that is funded by parents or guardians through standing instructions from their accounts with HSBC. The parents reserve the right to debit the accounts or transfer funds outwards, but ATM cards for depositing money can be provided for children above 14 years. “At HSBC we are keen to encourage the savings habit among the younger generation,” says Ishrat Kiyani, head of Premier Banking and Wealth Management, HSBC, UAE.

“Parents need to instil financial awareness and responsibility in their children at a very early stage, and the bank can help them by making the process attractive, easy and convenient for parents and children.” Aiming for the slightly older in-crowd, Kuwaiti financial house Gulf Bank launched its Red programme in 2004. Targeting higher education students, the account requires no minimum opening deposits or balance, and offers 24/7 access to Student loans

Loyalty plan: Gulf Young at heart: Bank’s Yaser Sulaiman HSBC’s Ishrat Kiyani

funds through alternative distribution channels, plus targeted incentives and loyalty programmes. The bank is looking to build customer brand loyalty even before young Kuwaitis draw a salary. “Given that the lifetime value of university and college students will greatly increase as we obtain their working salaries, we decided to launch a scheme that would introduce students to the banking world and build their loyalty [to Gulf Bank] to secure the transfer of future salaries when they take their first jobs,” says Yaser Sulaiman, executive manager of Gulf Bank. “Given the current challenges in targeting [customers who switch banks] and professional salary accounts, this segment is the main pipeline account into new customers for the bank,” he continues. “University customers are relatively easier to attract and acquire as they carry less commitments to previous banks.” A decree passed by Kuwait’s parliament in September 2007 ensures that each university and college student is granted a $356 monthly allowance, which the bank considers a new source of low-cost deposits. As long as the student pays his or her monthly allowance to Gulf Bank for the duration of the study period, the bank allows them a low-limit credit card, subject to parents’ approval. “We’re always keen to interact with university and college students who are always at the forefront of fashion, consume the latest technology, are very social, open-minded and fun loving,” says Sulaiman. “We want to provide them with the most iconic and fashionable financial programme, created with their spirit in mind, [so they can] have funds and enjoy their first banking relationship.” n

68 Gulf Marketing Review January 2011

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SE C T OR A N AL Y S I S

Homeward bound

Repatriating funds from the Gulf has been relatively smooth-sailing compared to the rest of the world, says WU’s Marc Aubry.

Exchange rates: While global remittances fell by 6 per cent, the Gulf rose by 8 per cent

The dollar’s fortunes have fluctuated over the past six months, which has meant uncertainty for migrant workers in Gulf states with currencies pegged to it. And nowhere is that uncertainty better reflected than in the world’s exchange houses. “With the way currencies are fluctuating at the moment, we are seeing people hold back their money until the rate looks more stable,” says Marc Aubry, marketing director for MEA at Western Union, which has more than 455,000 agent locations worldwide, and 1,300 in the Gulf. “For example, the Indian rupee is really up and down,” he continues. “As a result, people who used to send money home on a monthly basis are now sending it every two or three months.” But although Aubry accepts the remittance industry has suffered in the downturn, he says the “beauty” of the business is that there will always be a sizeable migrant population in the Gulf.

World Bank estimates suggest the GCC has about 12 million expats, most of them from Asia and Africa. And while the crisis undoubtedly had an impact on the industry, it has by no means been catastrophic. Nor does the Gulf appear to have been as affected as other regions by the predicted exodus of workers. While global remittances fell by around six per cent in 2009, outflows from the GCC rose almost by eight per cent – a trend the World Bank says will continue in 2010. Saudi Arabia is comfortably the region’s largest remittance market. And, on the money

Optimistic: Western Union’s Marc Aubry

according to the World Bank, it is the second largest in the world behind the US. In 2009, migrant workers in the kingdom sent home an estimated $26 billion. Saudi is the world’s fourth most popular migrant destination, while Qatar, the UAE and Kuwait take three of the top four slots in a ranking of top immigration countries relative to population. In the UAE, expats constitute about 80 per cent of the population, which means it is still a lucrative market for exchange houses and banks keen to take a slice of the estimated $20 billion a year sent home from the Emirates. It is also a competitive one: There are about 110 exchange companies, with more than 550 branches. “What we’re very strong at, and what we see as key, is our ability to interact as much as we can on a one-to-one basis with our customers,” Aubry says. “We have a loyalty card that plays a very active role in that because it offers extra convenience, and it’s been doing tremendously well across the Gulf. “We also have SMS services whereby you are notified when your loved ones accept funds back home. We’ve got discounts on future transactions, and we have gifts and stock promotions that happen on regular occasions.” The Western Union Gold Card, which earns reward points for every transfer, has also proved a notable success in the Gulf, Aubry says, adding that targeted ethnic marketing has allowed the company to talk to the diaspora “in their own languages, in multiple dialects”. “We want offers tailored to specific communities – Filipinos, Middle Easterners, Indians and so on,” Aubry says. “That helps us ensure that what we do is targeted, impactful and resonates with the customers.” n

70 Gulf Marketing Review January 2011

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S E C T OR ANA L Y S I S

Fully compliant

Worth close to $1 trillion, the Islamic finance industry represents a fast-growing opportunity for banks and customers.

Modern-day Islamic banking has come a long way since the opening of the first Islamic Bank of Dubai in 1975. Today, the Shari’ah-compliant finance sector is worth close to $1 trillion, and represents a growing opportunity for banks looking to tap into the Muslim market – as well as customers who want to benefit from its inherent conservatism. Islamic banks’ tendency to avoid excessive leverage and risk-taking allowed them to sidestep some pitfalls – including offbalance-sheet loans or derivatives – that snared their conventional banking peers. As a result, Islamic finance is fast gaining currency, even among non-Muslims. According to the International Monetary Fund, in 2007-2009 Islamic banks’ assets on average grew twice as fast as conventional banks’ in major Muslim markets. And while Islamic institutions weren’t necessarily more profitable than their traditional counterparts during this

period, they were able to extend credit to consumers at a faster rate. “There has always been captive or pentup demand for Islamic finance, especially for a large segment of the retail market, primarily driven by religious beliefs,” says Dr Mohamad Nedal Alchaar, secretary general of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), the global standard-setting body for Shari’ah-compliant finance. “Increasing awareness has further contributed towards this demand. There has also been a supply-led growth of Islamic setting the standard

Bright prospects: AAOIFI’s Dr Mohamad Nedal Alchaar

finance – the increasing number of Islamic financial institutions and products has helped it gain a greater share of the market over the past few years,” he continues. “ Last month, Deloitte Touche Tohmatsu‘s (Deloitte) Middle East chairman and CEO Omar Fahoum, emphasised the sector’s growth potential, noting 80 per cent of all Islamic finance firms are based in the GCC. “Islamic finance is here to stay. This is not a fad,” said Fahoum, adding that globally Islamic financial institutions hold $960 billion in assets, of which 60 per cent are in the GCC. Joseph El Fadl, of Deloitte’s financial services team, said Islamic finance activities have been growing at 20 per cent globally for the past five years. While he admitted the industry had seen a slowdown in 2009 and 2010, he said banks have started to create windows for Islamic finance products, as opposed to amending all their products to meet Islamic principles.

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S E C T OR ANA L Y S I S

Major account: Eighty per cent of all Islamic finance institutions are based in the GCC

...in 2007-2009 Islamic banks’ assets on average grew twice as fast as conventional banks’ in major Muslim markets. The challenge will be to ensure that Shari’ah-compliance is strictly adhered to while rolling out new products. To that end, AAOIFI has issued more than 80 guidelines on accounting, auditing, ethics, governance and Shari’ah. It is a standardisation that banks will have to pay close attention to if they are to prove successful in the sector. “We are working closely with regulatory authorities and Islamic financial institutions across the world on technical adoption – as part of regulatory requirement or internal guidelines – of the standards,” says Dr Alchaar. “We are also working with institutions to certify that the financial contracts between those institutions and their customers comply with AAOIFI standards and Shari’ah principles,” he continues. A “market screening” initiative was also launched to assess compliance, through this, new products and services are tracked. With these guidelines, western institutions, including Citibank and Standard Chartered, have broken into Islamic banking in the Middle East and Asia.

In November, HSBC Amanah, announced plans to open 125 branches in the region by the end of 2012. Razi Fakih, HSBC Amanah’s deputy chief executive, told Reuters that Middle East and Asian markets will fuel growth in the industry with compound annual growth rates of more than six per cent for the next five years. He added that a number of attractive markets, such as India and China, are beginning to explore Islamic finance and the company will aspire to enter them when the regulatory environment opens up. The bank is also looking to extend into Egypt, Turkey and Oman. “Being part of the overall economic and financial systems, Islamic finance is subject to the same business cycles as the rest of the systems,” says Dr Alchaar. “The continuing recovery in economic conditions points towards better prospects for the Islamic finance industry in 2011, and in the Gulf, we expect it to grow between five and 10 per cent in 2011.” Not that the industry emerged unscathed from the economic crisis; like the con-

ventional banking sector, it will have to adapt to tighter times. A recent report by AT Kearney suggested that Islamic banks, which are typically smaller than their conventional counterparts, could pursue mergers and acquisitions as an avenue towards sustained growth. “Some players are currently determining long-term plans, eyeing the opportunity to grow and become stronger players,” said Dr Alexander von Pock, principal at AT Kearney’s Financial Institutions Group. “Mergers and acquisitions offer a way to build more powerful players with better chances to compete, [and] we expect to see more M&A in the future.” If increased M&As mean fewer players in the market, then companies will have to work harder to get their share of the market in an increasingly competitive field. After 30 years of slow but steady growth, it seems the hard work starts now – and the Islamic insurance, or takaful, sector is expected to show the way forward. “We feel takaful has very exciting prospects over the next few years, especially since the penetration rate for insurance in general is still quite low in the region,” says Dr Alchaar. “In addition, trade financing is also a potential growth area given the increasing trade activities into and from the major Muslim markets around the world.” n

74 Gulf Marketing Review January 2011

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act local

UAE banks giving global players a run for their money.

A quick glance at the billboards on Sheikh Zayed Road – Dubai’s main highway – and I sometimes wonder if there are as many banks as cars in the emirate. Judging by the amount of bankingrelated advertising, the retail banking sector is obviously a highly competitive space, with many lenders – local and international – battling for attention. Looking at last month’s data on the top 10 websites and keywords, it is obvious the same is true online. There is a proportionally large number of searches for banking keyphrases compared to other industries we have reviewed, suggesting that potential clients are sophisticated, using the web to search for banks or banking services. The third-highest keyphrase, in terms of monthly searches, was ‘online banking’; 27,100 queries were made last month for online banking, the same for ‘credit card’, which obviously means there are a large number of people actively looking for banks that offer online services. The online medium offers banks a huge potential to get their brands in front of many new, potential customers who are at the research phase of their buying cycle, actively seeking services. With all these searches it is perhaps no surprise that the sector is highly competitive online. This shows many companies have sophisticated organic SEO activities on their sites, which enable them to compete for these search terms. Banking websites occupy seven of the 10 spots. Simply put, being at the top is worth a lot of online traffic and, therefore, a lot of business to retail banks. Even more interesting is how localised the search results are, with home-

Top 10 Keywords – UAE # 1 2 3 4 5 6 7 8 9 10

Keyword Banking Credit card Online bank Online banking Banking online Loans Internet banking Personal loan Bank account Savings

Local Search Google.ae 74,000 27,100 27,100 27,100 27,100 12,100 9,900 8,100 5,400 5,400

Search Engine Results Pages Research conducted on Google.ae. Top 10 keywords with the most searches last month based on local results from Google.ae.

Top10 10Search SearchResults Results–Google.ae (Global) Top UAE # 1 2 3 4 5 6 7 8 9 10

Coverage 100% 90% 90% 80% 80% 80% 80% 70% 70% 60%

Average rank 1.30 11.67 13.56 8.88 9.00 14.13 20.50 17.86 28.71 12.67

Domain en.wikipedia.org www.standardchartered.ae www.adcb.com www.hsbc.ae www.citibank.com www.mashreqbank.com www.ameinfo.com www.emiratesnbd.com www.zawya.com www.dubaibank.ae

Performance data based on Google.ae. Results show the top 10 performing websites which, on average, have the highest rank and the most coverage across all 10 keyphrases in natural search results from Google.ae. Source: Sekari SEO 2010

grown banks being given preference over international ones. Usually, one would expect large international websites to do better than smaller, local sites, as they are far bigger with many more links driving to their pages across the globe. However, search engines are looking to provide researchers with results that are relevant to their locations, and if the site is optimised properly by tak-

ing advantage of SEO innovations, it has a very strong chance of drawing level with, if not surpassing, the big international players. n

Lee Mancini head of Sekari SEO Dubai

76 Gulf Marketing Review January 2011

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s e c t o r a n a ly s i s

Back to black Ad spend from the financial sector shows healthy growth.

Leading the way: Visa ranks first for magazine spend

Cautious optimism returned to the regionâ&#x20AC;&#x2122;s financial sector last year. Ad spend climbed 18 per cent in the first three quarters of 2010 versus the same period in 2009, and could hit $600 million monitored spend by the end of the year. All the leading markets in the region are back in the black, with GCC spend rising 14 per cent. Pan Arab advertising is up nine per cent, with the Levant ahead by 28 per cent in the first three quarters. â&#x20AC;&#x153;Pan Arab Mediaâ&#x20AC;?, which refers to titles available in two or more regional markets rather than a single, local market, shares 23 per cent of total ad spend. Egypt, which replaced the UAE as the biggest spending market in the sector in 2009, surged ahead with 43 per cent growth to consolidate its top ranking. In the top league of regional spenders, four out of 10 brands are from the north African country. Lebanon ranks second with a 15 per cent gain.

The UAE follows in third with 13 per cent after experiencing a plunge of 48 per cent in 2009. Saudi Arabia bounced back strongly with 56 per cent growth, compared to a 46 per cent drop during the same period in 2009. Spend in Kuwait remained flat and Oman increased by six per cent. Qatar declined by six per cent for the same period. Loans and credit were hit hard and had a direct bearing on spend. Loans dropped by 53 per cent between January and September. Last year saw a huge rebound as spend on loans rose by 128 per cent, while credit cards surged by 71 per cent. General banking services gained 16 per cent, but investment services, which took a battering last year, fell 27 per cent during the first three quarters. Newspapers regained significantly in 2010 with a 26 per cent surge. TV is up 15 per cent, while magazines rose 19 per cent. Spend is evenly distributed for TV and newspapers at 43

per cent and 44 per cent, respectively. Magazines and Outdoor each share six per cent spend, while the rest is distributed among other media. The top three spenders in the region during 2010 are Banque Misr, Cairo Bank and Bank Med. Banque Misr tops the ranking in TV spend, while National Bank of Egypt is the regional top spender in newspaper for the sector. Visa ranks first for magazine spend. The banking sector is facing a transition period and increased consolidation is likely in the near future. Global cues are vital to any immediate trends. The debt issue is effectively being resolved in the region. A large number of banks in the region have already made significant provisions for bad debts. According to latest regional TGI surveys, conducted by Parc in partnership with Kantar Media, reputation is cited as most important factor in selecting a bank in Saudi Arabia and the UAE, way ahead of other factors such as service, interest rates, counter staff, recommendations, facilities and loyalty schemes. Based on available trends, 2010 is likely to see double-digit growth. Challenges, however, lie ahead. Spend is calculated on media rate cards and does not account for incentives and discounts that advertisers may avail from media owners. Analysis covers the period from January to September. n

Shaharyar Umar product manager Pan Arab Research Centre, UAE

78 Gulf Marketing Review January 2011

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SECTOR ANALYSIS

CATEGORY: FINANCIAL SERVICES Millions US$433

Markets Ranking & Media Split (000 US$) Television Rank Market Name & Abbreviation 2008 1 2 3 4 5 6 7 8 9 10 11

Pan Arab Media Egypt Lebanon United Arab Emirates Saudi Arabia Kuwait Oman Qatar Jordan Bahrain Other Markets** Total All Markets

PAN EGY LEB UAE KSA KWT OMN QTR JOR BAH OTH

2009

%Var’n 2010 YTD

101,560 90,669 99,201 60,299 57,055 81,529 51,129 49,698 57,386 84,658 43,433 49,072 55,702 29,976 46,791 34,106 33,154 33,173 20,315 17,703 18,684 20,193 19,635 18,682 11,258 11,918 13,821 8,300 6,647 8,778 6,768 6,159 5,597 454,288 366,047 432,714

9 43 15 13 56 0 6 -5 16 32 -9 18

Newspapers

2010

%Var’n YTD

2010

86,813 20,167 47,809 4,415 518 15,304 6,196 887 1,533 1,487 2,037 187,166

8 135 18 -32 145 -6 9 156 1 98 6 15

701 45,799 4,618 37,968 40,472 16,076 12,092 14,035 12,030 5,626 2,646 192,063

%Var’n YTD

Magazines

Radio

%Var’n YTD

2010

-6 11,687 37 2,613 31 2,624 20 2,104 48 1,901 13 1,371 5 396 10 501 19 258 16 549 -11 599 26 24,603

2010

20 25 11 33 82 -8 1 -41 4 58 40 19

0 4,375 123 577 489 389 0 589 0 1,015 315 7,872

Outdoor

%Var’n YTD

2010

Cinema

%Var’n YTD

0 8,575 2,212 3,302 3,411 33 0 2,670 0 52 89 -63 0 35 20,292

125 -61 -29 20 13 -100 26

+18%

%Var’n YTD

2010 0 0 0 706 0 0 0 0 0 12 0 718

-23 -22 32 229 -95 -100 -49 -100 4350 -14

-33 73

**Other markets: Combined - Syria, Yemen & Arasian

Ranking of Markets & Media Split (000US$) 100%

Category split by market 13%

19%

75%

23%

4% 4% 8%

11% 12%

50% 25% 0%

Total GCC LEV PAN EGY LEB UAE KSA KWT OMN QTR JOR BAH OTH 432714 277886 154828 99201 81529 57386 49072 46791 33173 18684 18682 13821 8778 5597

Television

Newspapers

Magazines

Radio

Outdoor

Cinema

Pan Arab Egypt Lebanon UAE KSA KWT OMN QTR JOR BAH Others

SPLIT BY PRODUCTS – 2010 All Markets 11% 16% 9%

48%

Banks Credit cards Investment services

9% 7%

Loans Bank accounts Others

Pan Arab Media 6% 6%

48%

12%

58%

Banks Investment services Credit cards

7% 11%

Loans Credit cards Others

GCC Markets 17% 10% 9%

Banks Credit cards Bank accounts

9% 7%

Loans Investment services Others

50%

Levant Markets 14% 3% 12%

Banks Bank accounts Mutual funds

9% 12%

Loans Credit cards Others

TOP BRANDS – ALL MEDIA (000 US$) – 2010 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Brand Banque Misr Cairo Bank BankMed Nat`l B.Egypt Visa Alexandria Bank Byblos Banque Audi HSBC Samba Kuwait Fin. House Oman Int`l Bank Fransa Bank Abu Dhabi Islamc Credit Agricole Standard Chart. NCB Qatar Nat`l Bank ADCB Riyad Bank

Pan Arab Media Value 27,194 23,097 16,361 12,837 11,300 9,469 8,458 7,823 7,508 6,440 6,422 6,329 6,224 6,105 5,968 5,697 5,624 5,572 5,146 5,076

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Brand Cairo Bank Banque Misr Visa Standard Chart. BankMed Credit Agricole Alexandria Bank Qatar Nat`l Bank Nat`l B.Egypt Samba Islamic Devlpmnt DIFC Mubadala Dev.Co. Al Baraka Egypt HSBC NBAD Standard Bank Abu Dhabi Islamc Kuwait Fin House Master Card

GCC Value 15,463 8,783 4,334 3,994 3,965 3,921 3,573 2,516 2,475 2,178 1,776 1,760 1,718 1,712 1,648 1,616 1,593 1,491 1,475 1,459

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Levant Brand Cairo Bank Visa Banque Misr Samba KFH Oman Int`l Bank Abu Dhabi Islamc HSBC NCB Standard Chart. Qatar Nat`l Bank ADCB Riyad Bank NBK SABB Al Rajhi Bank First Gulf Bank Bank Muscat Union Nat`l Bank BankMed

Value 15,463 10,345 8,783 6,440 6,419 6,329 6,036 5,863 5,613 5,582 5,500 5,143 5,076 4,819 4,641 4,333 4,123 4,092 3,969 3,965

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Brand Banque Misr BankMed Nat`l B.Egypt Byblos Cairo Bank Banque Audi Alexandria Bank Fransa Bank Blom Bank Egyptian Arab L. Housing Dev. Credit Fin.Inv. Housing Bank Arab African Int Comm.int`l Bank Libano-Francaise Loterie National Credit Agricole Egypt Post NSGB

Value 18,411 12,396 10,223 8,378 7,634 6,981 5,896 5,215 3,905 3,617 3,300 2,925 2,510 2,429 2,379 2,323 2,227 2,025 1,770 1,722

Source: PARC

GCC & Levant

80 Gulf Marketing Review January 2011

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CATEGORY: FINANCIAL SERVICES Advertising Expenditure for Top Products (000 US$) 2008 – 2010 (Jan - Sep) Media Split % 2008 2009 181,740 179,912 45,474 21,182 31,300 23,265 30,069 32,828 76,675 38,786 89,030 70,074 454,288 366,047

BNK LNS CCT BAC INS OTH

2010 209,448 48,244 39,849 37,494 28,357 69,322 432,714

%Var’n Y10/09 16 128 71 14 -27 -1 18

Sh% 48 11 9 9 7 16 100

2010 Media Split %

TV 51 39 37 26 34 38 43

NP 35 52 52 65 56 47 44

MG 5 4 5 4 8 8 6

Top Brands 2010 (000 US$)

RD 1 2 3 3 0 3 2

OD 7 3 3 2 0 3 5

CN 0 0 0 0 0 0 0

Product Growth 2008 - 2010 (000 US$) 250000

BNK

200000

LNS CCT

150000

BAC

100000

INS

50000

OTH 0%

20%

40%

60%

80%

100%

BNK

Newspapers Television Magazines Outdoor Radio Cinema

LNS

CCT

2009

2010

BAC

INS

OTH

2008

Overall Media Split Analysis (000 US$) Media

Value 161,971 228,542 33,839 6,937 22,752 247 454,288

Television Newspaper Magazine Radio Outdoor Cinema Total

2008

Sh% 36 50 7 2 5 0 100

Value 162,701 152,909 20,606 5,824 23,591 416 366,047

2009

Sh% 44 42 6 2 6 0 100

Value 187,166 192,063 24,603 7,872 20,292 718 432,714

2010

Sh%

43 44 6 2 5 0 100

Var'n % 2009/2010 15 26 19 35 -14 73 18

Monthly Spend Analysis (Millions US$) 2008 – 2010 100 90 80 70 60 50 40 30 20 10 0

Month Jan Feb Mar Apr May Jun Jul Aug Sep Total Jan

Feb

Mar

Apr

May

2010

Jun

2009

Jul

Aug

2008 42 42 43 40 50 54 49 44 90 454

2009 31 31 36 36 41 44 41 46 60 366

2010 34 36 48 45 49 53 39 74 55 433

Sep

Total Category – Media Split %

(000 US$ - Semi Logarithmic)

250000

43%

200000

44% 2%

150000 100000

50000 0

Var’n % Y10/09 8 15 33 24 20 19 -4 63 -8 18

2008

Overall Media Split 2008 – 2010

2008

2009

Newspapers Television Magazines Outdoor Radio Cinema

2010 Television Radio

Newspapers Outdoor

Magazines

+18%

Television Top Spenders Rank Brand 1 Banque Misr 2 Cairo Bank 3 BankMed 4 Byblos 5 Oman Int`l Bank 6 Fransa Bank 7 Banque Audi 8 Visa 9 Credit Agricole 10 Alexandria Bank

2010 22,595 19,432 14,744 7,463 5,973 5,667 5,640 4,434 4,369 4,060

Newspaper Top Spenders Rank Brand 1 Nat`l B.Egypt 2 EFG-Hermes 3 Visa 4 NCB 5 Samba 6 Riyad Bank 7 Bank Muscat 8 HSBC 9 Al Rajhi Bank 10 Egyptian Arab L.

2010 8,216 4,592 4,538 4,498 4,115 3,922 3,872 3,818 3,616 3,358

Magazine Top Spenders Rank Brand 1 Visa 2 HSBC 3 ADCB 4 SABB 5 NBK 6 Banque Audi 7 Fransa Bank 8 Al Rajhi Bank 9 Fidus 10 Alexandria Bank

2010 1,736 1,154 832 533 464 414 385 366 338 333

Radio Top Spenders Rank Brand 1 Bahrain Islamic 2 Alexandria Bank 3 Comm.Int`l Bank 4 Visa 5 Arab African Int 6 Master Card 7 Cairo Bank 8 Credit Agricole 9 Faisal Isl. Bah. 10 United Bank

2010 461 393 383 381 375 372 362 316 264 256

Outdoor Top Spenders Rank Brand 1 Alexandria Bank 2 Nat`l B.Egypt 3 Banque Misr 4 Abu Dhabi Islamic 5 Taajeer Insta.Co 6 IBQ 7 ADCB 8 Doha Bank 9 NSGB 10 Alinma Bank

2010 1,790 1,464 1,349 1,150 1,051 830 744 678 613 600

Source: PARC *Please note figures throughout this section are rounded up.

Product & Abbreviation Banks Loans Credit Crds/trvc Bank Accounts Investment Serv. Others Total

Millions US$ 433

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February The Bride Show, Abu Dhabi IIR ME Date: February 2-5 Venue: Adnec T: +971 4 336 4227 W: thebrideshow.com/ abudhabi

Event of the month

When the Arab Health Exhibition started 36 years ago it was dominated by suppliers. Over time it has seen the regular participation of specialist groups and gobal teaching institutions such as Johns Hopkins and Cleveland Clinic. Highlights for 2011 include more than 2,700 exhibitors and 30 country pavilions, with the addition of Japan, Hong Kong, Argentina and Singapore. It will also include a healthcare congress with 18 conferences and more than 500 speakers. Arab Health Exhibition & Congress 2011 IIR ME Date: January 24-27 Venue: Dubai Intl Convention & Exh Ctr T: +971 4 336 5161 W: arabhealthonline.com

January Health & Wellness Bahrain Expo 2011 Bahrain Exhibition & Convention Authority (BECA) Date: January 12-14 Venue: Bahrain Intl Exh & Convention Ctr T: +973 17 558 800 F: +973 17 556 142 W: healthexpobh.com Agencies and Franchise Trading Exhibition MICE Arabia Group Date: January 16-19 Venue: Jeddah Intl Exh & Convention Ctr

T/F: +966 2 667 3211 www.atex-ksa.com World Future Energy Smt Reed Exhibitions Date: January 17-20 Venue: Abu Dhabi Natl Exh Ctr (Adnec) T: +971 2 444 6113 W: worldfutureenergysummit.com Future ICT Summit 2010 Turret Middle East Date: January 23-25 Venue: Abu Dhabi Natl Exh Ctr (Adnec) T: +971 2 444 6011 W: futureictsummit.com

3rd Annual Food and Hospitality Expo 2011 BECA Date: February 8-10 Venue: Bahrain Intl Exh & Convention Ctr T: +973 17 558 826 W: foodexpbh.com World Cards and Payments Summit 2011 Fleming Gulf Date: February 14-16 Location: Dubai T: +971 4 609 1555 W: fleminggulf.com Middle East Exclusive (The 8th Duty Free, Travel Retail and Luxury Goods Exhb. Channels Exhibitions Date: February 20-22 Venue: Dubai World Trade Ctr. T: +971 4 282 4737 W: middleeastexclusive.com Spring Consumer Festival KIF Date: February 23-March 5 Venue: Kuwait International Fairs Ground T: +965 2 538 7100 W: kif.net March Festivalworld Middle East Epoc Messe Frankfurt GmbH Date: March 7-9 Venue: Dubai Intl Convention & Exh Ctr T: +971 4 338 0102 W: festivalworldme.com

Playworld Middle East Epoc Messe Frankfurt GmbH Date: March 7-9 Venue: Dubai Intl Convention & Exh Ctr T: +971 4 338 0102 W: playworldme.com AJWEX – Al Ain Jewellery & Watch Exhibition Al Bader Exhibitions Organisers Date: March 14-16 Venue: Al Ain Convention Ctr, Abu Dhabi T: +971 3 766 6780 F: +971 3 766 6790 W: baderuae.com/ajwex Commercial Vehicles Middle East Streamline Marketing Group Date: March 7-12 Venue: Dubai Intl Convention & Exh Ctr T: +971 4 447 5357 W: commvehicles.com Gulf Print & Pack 2011 F&E Ltd Date: March 14-17 Venue: Dubai Airport Expo T: +971 4 286 7755 F: +971 4 286 6166 W: gulfprintpack.com Global City, Abu Dhabi Reed Exhibitions Date: March 15-17 Venue: Emirates Palace, Abu Dhabi T: +971 2 444 6113 F: +971 2 444 3768 W: reedexpo.com Big Boys’ Toys 2011 Artaaj Exhibitions Date: March 16-19 Venue: Adnec T: +971 2 449 0011 F: +971 2 449 0808 W: bigboystoysuae.com

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