DUBAI: Omnicom Media Group is one of the most successful and prolific media organizations in the world and the Middle East and North Africa (MENA) region.
It is the parent company of three agencies namely OMD, PHD, and Hearts and Science. 2020 has been an unprecedented year for the industry and Arab News spoke to the group’s chairman and CEO, Elie Khouri, to discuss the challenges and changes of 2020 and the industry forecast for 2021.
Tell us about the start of 2020 before COVID-19 hit.
We were looking to an amazing 2020. Last year was a strong year, and we anticipated 2020 to be one of our best years.
I’ve been in the business for 32 years and this is the worst year ever in terms of impact and damage. We’ve had Gulf wars and the recession of 2008-09, but I have not seen anything as dramatic as this in terms of client pullback and confusion when it comes to investing in marketing communications.
The impact was not consistent across all industries because certain industries, such as CPG (consumer packaged goods) and e-commerce did very well. Naturally, what didn’t do well were the tourism, retail, automotive, and luxury industries.
By the end of the year, we’re looking at a drop of anywhere between 18 to 20 percent of total market marketing investment.
How did the group deal with the COVID-19 crisis? Were there any salary cuts or downsizing?
Everybody had to cope and take certain measures across the industry from letting go of certain people to furloughing and salary cuts. But all of those things have been reversed as of October this year and I think there’s strong momentum in the last quarter, leading up to 2021.
Can you tell us about the departure of several employees, notably Nadim Samara who was the CEO of Omnicom Media Group MENA and was with the company for 17 years, as well as Waseem Afzal, deputy GM of OMD UAE who was with the company for more than 10 years?
Nadim and Waseem’s departure from the company was a structural change that was agreed upon by both parties amidst the outbreak of the pandemic and its effect on the business. They have both gone on to do brilliant things within the media industry since leaving OMG.
Nadim is leading the development of MMS and Waseem is Head of Services Business Partnerships at TikTok. In addition, we have had to sadly bid farewell to multiple great people and talent this year whose contribution to the group’s development cannot be overstated.
Agile organizations achieve growth through having the ability to reconfigure and retool when faced with challenges and the pandemic has created a challenge like never before for the entire industry. Restructuring is always unpleasant. When you look at restructuring you look at what is the best structure to take the company forward.
What does that restructure look like? Are there any areas you are focusing on more?
When your business is healthy, growing, and at the full capacity you are naturally fully structured and fully resourced; when revenues drop you have to think differently and see how you can make synergies in the company and try to club departments or move certain revenue streams under different leaderships.
You restructure to implement cost-saving measures, to become leaner and more adaptable to the next phase of development.
On digitization and e-commerce, what has the response and requirement from clients been like and, as a group, how have you supported that?
Globally, we have launched the e-commerce function and in the MENA region it is led by our regional e-commerce general manager, Stefanie Cunningham.
It’s more of a consultancy practice wherein we advise clients on strategy and also work with them on executing some of those strategies. In fact, this is one of the areas where we are seeing the most growth.
How did the blasts in Lebanon and the consequent economic impact affect the business?
Lebanon is a great place to source talent; however, Lebanon as a market is very tiny, so it doesn’t represent more than 2 percent of our total investments in MENA. So, the fact that Lebanon is undergoing tremendous financial and economic pain does not have an impact on what we do in terms of results in this part of the world.
How do you foresee the UAE-Israel peace agreement affecting business? Do you have offices in Israel already?
I don’t want to get involved in politics, but from an economic point of view, undoubtedly this will help the UAE economy, to a large extent.
We are already seeing an inflow of investments happening on both sides but what matters to us is naturally the UAE and what is happening here.
We do have an office as part of our global footprint, which has been reporting to Europe for a long time and this will continue to be the case. It’s too early to talk about bringing them to the fold of the Middle East.
Moving forward, what do you forecast for the industry?
We forecast that the economy is going to grow by roughly 2.5 percent specifically led by Saudi Arabia, and the investment in the marketing communication space growing by 10 percent.
Hopefully, we will grow by another 10 percent in 2022, which will more or less bring us back to the levels of 2019.
Naturally, the growth will be driven by Saudi Arabia and its Vision 2030 (reform plan). There are lots of events and investments in the Kingdom coming up, such as Formula 1 and golf tournaments. The Dubai Expo 2020 is happening next year and although it is not going to be the same expo that we anticipated, it will draw a lot of investment.
Egypt was not affected in a larger way by COVID-19 and its implications, so I think it will continue the momentum next year. We believe, despite the uncertainty around COVID-19, the vaccine, and the price of oil, that 2021 is going to be a great year.
In terms of impact on the industry, it’s a no-brainer to talk about increased digitization. With the coming of 5G, we see that digital investments will go up to 60 percent from about 55 percent today. E-commerce will also continue to thrive and grow.
How are you as a group adapting to these trends and changes?
We are moving more upstream toward the consultancy space and we’re already known for our execution of campaigns.
We are making a lot of effort to invest in technology and data, which will better position us to be consultants, rather than just marketing communication experts.
- This version of the article has been changed upon the request of Omnicom Media Group MENA.