THE advertising industry in Saudi Arabia is still young. It began in the 1970s and much of its business is handled by the major international agencies, all of whom are present in one guise or another in the Kingdom. Initially the sector was dominated by Britons. Now clients joke about the Lebanese "Mafia" who seem to run it. During the past 10 years, however, a handful of small Saudi-owned and Saudi-run companies have appeared on the scene — companies such as Focus, Results, 3 Points and Media Graphics. These independent agencies are proving remarkably successful, picking up clients who are market leaders. To find out what makes these companies different, Arab News spoke to Tariq Istanbuli who set up Media Graphics in 1991.
"The multinationals have the resources and the money; they have the lion’s share of the market. And it is not easy to break into it. But they don’t have a real understanding of the culture," explains Istanbuli. The reason, he says, why his company and other similar small independents are doing so well is precisely because they are local, with an insight that the multinationals lack. "We sell ourselves as local talent — with a flair! Advertising translates the local culture to the public. We are young, intelligent and well-traveled but we believe in our own traditions. We know the Saudi market."
These small independent operators are carving out a sizable niche for themselves, using their local knowledge and connections as the selling point. It has enabled them to pick up several market leaders. When Istanbuli started his company 10 years ago, he had only two employees; he now has 20. Growth in turnover is steady. The company’s portfolio now includes products such as Goody mayonnaise, Golden Crown cream, Al-Hada drinking water, Al-Baik and the Internet provider, Trinet. "Our clients are basically Saudi companies and they want to deal with Saudis," Istanbuli said.
There is major scope for growth, he says although for independents like himself, it will never be easy. "The competition is getting tougher. The multinationals are increasingly employing local talent. They know they need them and are bringing them on." That is bound to make life difficult for the independents. It is not helped by what Istanbuli identifies as a reluctance among young Saudis to work in advertising. "They don’t consider it a worthwhile career. We have to get them to open their eyes and see how financially rewarding it can be." A big part of the problem, he says, is the absence of a training school for advertising in the Kingdom — which seems strange given the size of the Saudi market.
But even if there were such a school, there is another related problem to be overcome. It is not just a matter of training, it is a matter of training the right people for the job, he says. In a comment that goes to the heart of Saudization and job creation in the Kingdom, Istanbuli insists that people’s interests and talents have to be judged before they are accepted on a training program. People need to be trained for a job they want to do. Otherwise the training is a waste of time and money. "You need to have a passion for advertising," he says. Istanbuli certainly has that. "Ideas come while eating, while driving the car." That is the kind of person he is looking for.
The strength of the multinationals has forced some independents to rethink their position and go into partnership with them as local agents, he says. Focus, one of the early independents, is now affiliated to global player Euro RSCG. Istanbuli sees other developments on the horizon that will change the industry and with it the position of the independents. Already the Kingdom is starting to witness the split seen elsewhere between the creative aspect of advertising on the one hand and, on the other, media buying and advertising distribution. This has led to the rise of media buying units or MBUs who buy media placement in bulk and are therefore able to do so cheaply. The end result, he believes, will be that advertising agencies will do purely creative work. Saudi Arabia will not be an exception. There is also a move toward "pay for performance" where agencies will be paid less than at present for their creative work but if the product does well, will be rewarded with a substantial bonus.
All this will make for a tougher, meaner environment. But despite a recession in the industry, which he estimates at 20 percent over the past four months, Istanbuli is confident. "It has been a good year for us," he says, and the future picture remains "basically good with underlying growth." Sept. 11 may have caused "a blip" but he is convinced that independent operators like himself are on to a winner. One area where he sees permanent and profitable activity is the food and services sector. This suggests a more general area of growth for small, niche market operators: Servicing companies of much the same size as themselves.
That is not so strange. Elsewhere around the world, small and middle-sized companies have a certain reluctance to go to the large multinationals for their creative work. Rightly or wrongly, they feel that they will not be taken seriously or given proper attention; they also often think that the big agencies are too expensive. Being smaller outfits themselves, they like working with companies their own size, where they feel they have a one-to-one relationship. There is no reason why small and middle-scale Saudi businesses should feel any differently. As they grow and expand both in size and sophistication, the home-grown advertising industry is likely to grow with them. "The advertising industry is in its infancy as far as small and medium-sized clients go," Istanbuli explains.
But that is only part of the future picture. The opportunities in the Saudi advertising industry have developed "tremendously" and will continue to develop, Istanbuli believes. The future is good for local niche market operators, he says but adds a note of caution: They have to stop being jacks of all trades. "We need to focus more."
That, however, is a two-way street. Clients will have to focus as well. Not that there is any reason to believe that they will not. Competition will force them to.