In advertising, Lebanese flourish abroad
Dana Halaw/The Daily Star/July. 08, 2015/BEIRUT: Many Lebanese proudly point to the success stories of their compatriots around the world in the fields of banking, tourism, real estate and telecommunication. However, one particular industry which probably did not receive fair media attention is advertising. The advertising business in Lebanon and the region grew rapidly, with many of these companies winning international acclaim and even reaping outstanding awards for creative and innovative ideas.TBWA/RAAD, headed by Group Chairman Ramzi Raad, is one good example of the many Lebanese advertising agencies that have succeeded in making it big outside their home country. Raad currently operates his business in over 14 markets including Dubai, Saudi Arabia, Morocco and others with plans to expand to other countries as well. For Raad, Lebanese have more potential to succeed in the advertising industry outside their homeland for many reasons. For instance, he believes that Lebanese creative directors produce more successful advertising campaigns in markets outside Lebanon than locally. “Lebanese advertising agencies deliver high-quality campaigns when they work with foreign clients who are more professional and capable of giving proper briefs about their products,” he said. “If I want to do a successful campaign I have to meet with my clients to give me full details about the products they wish to advertise. On the contrary, most campaigns in Lebanon nowadays are done simply by writing a witty headline that is memorable,” he said. “This is not enough and more should be done to develop a sustainable brand image,” he added. Raad praised Lebanese advertising people for their creativity but he emphasized the need for strong cooperation with clients to achieve brilliant results. “The good campaigns are those that are created in partnership between the client and the agency. The client himself needs to have a vision and he has to know what he wants. Also, if the client wants a high-quality campaign he should be willing to pay for it,” he said.
Raad noted that companies can buy talents from the U.S. or Australia but these people think according to insights from their own markets. “They have to come and live for a long period in the Arab world to understand the culture and what can be said and what not in this region,” he said. “This is why the ideal heroes of this industry continue to be Lebanese.”Raad spoke in an exclusive interview with The Daily Star about the challenges facing the advertising industry in Lebanon.
Among the challenges facing the industry, Raad said, is the fact that advertising agencies in Lebanon are competing with each other by slashing their prices which prompts clients to opt for companies with less expensive services and thus sacrificing on the quality of their ads.
“This syndrome snowballed and the Lebanese market is now labeled as the discounted market where one cannot trust whatever is being said,” he noted. “There is no appreciation for the good quality work.”
Raad said that talent has also moved to other places such as the Gulf region in search for better salaries. Despite the challenges facing this industry in Lebanon, advertising spending rose to $535 million in 2014 from $518 million in 2013, according to rate card figures, with digital media making inroads into the market.Digital advertising in Lebanon has started to take a share of the market but it is still slow at this moment.
Among the main factors behind the slow development of online advertising in Lebanon, according to Raad, are the low-speed Internet connection and the lack of expertise within most advertising agencies.“We need advertising agencies to hire digital experts whether in terms of design or strategy,” he said. Raad believes that digital media in Lebanon has a great future but startups working in the field should be more professional and realistic about their profits. He said that Lebanese usually think of themselves as experts and they refuse to climb the success ladder one step at a time. “Graduates nowadays are not patient enough to learn and startups aim to become billionaires very quickly, which is not feasible.”Global statistics show that a lot of money is being moved from TV and printed media to digital media.
According to the global media trend report issued in 2014, digital advertising saw a Compounded Annual Growth Rate of 15.6 percent globally between the year 2008 and 2013.The report added that digital advertising spending grew from $123 million in 2013 to $144.2 million in 2014 while it is expected to rise to $167.7 million in 2015.As for the CAGR for the period ranging from 2013 to 2018, it is expected to stand at 15.1 percent.The study said that just as digital spending has driven the overall media market, it has also propelled consumer spending.
It also continued: “Digital consumer spending will overtake traditional consumer spending in 2015 and will be 26 percent larger by 2018.” In addition to the previously mentioned challenges facing the advertising sector, Raad cites the excessive power cut as one factor impeding the operation of businesses in Lebanon including advertising. “Advertising industry in countries like Dubai is more successful because they have high-speed Internet and they don’t have to rely on generators to be able to operate,” he said. Raad also attributed the success of this industry in Dubai to the great number of multinational companies operating there. “These companies pay huge amounts on advertising which makes the sector in Dubai more professional and profitable,” he said. “In contrast, Lebanon should work hard on developing its infrastructure to attract multinational companies,” he added.Raad noted that Dubai was also capable of developing its own brands, which are successfully competing on the international scene. “These successful brands are heavy advertisers and any creative director would dream to work for them,” he said. “Why don’t we help our industries in becoming brands that are [exported] worldwide?” he asked. According to Raad, one very clear sign for the industry’s deterioration is the tendency to create campaigns for charities.
“The easiest thing to do is to create a campaign with no client while it’s more challenging to advertise for real clients,” he said.
Lebanon/Fiscal reforms needed to avoid Greek scenario
Osama Habib| The Daily Star/Wednesday, 8 July 2015
BEIRUT: One of the main lessons Lebanon should learn from Greece’s economic “tragedy” is that the country should avoid sinking deeper into the debt abyss and devise new ways to boost revenues and cut unnecessary spending. This was the general view of all economists and experts interviewed by The Daily Star as the embattled Greek government negotiates with international creditors to prescribe a less painful medication to economic and financial woes. Although the financial and monetary situation in Lebanon is still far better than Greece, the economists stress that the country should not sleep on a silk pillow and pretend that the country will not encounter such a storm. “We need to improve tax collection and rationalize public expenditures. We also need to end tax evasion, which according to our estimates is close to $3 billion a year,” Marwan Barakat, the head of Bank Audi research department and senior analyst, told The Daily Star. This view was also supported by Nassib Ghobril, the head of research at Byblos Bank, who advised the government to reduce its borrowing needs. “We don’t have a contagion effect but we still need to reduce the borrowing needs of the government, and tackle tax evasion in the country instead of imposing new taxes,” Ghobril argued. He also called for improving the pension system and cutting waste in the National Social Security Fund.One of the more serious issues facing Lebanon in recent years has been the failure of all successive governments to end or even reduce the size of tax evasion.
Experts note that the gray economy, or the parallel economy, has always evaded taxes and this is depriving the treasury of billions of dollars in revenues. The parallel economy is based on black money, or unaccounted money as some merchants and unlicensed industrialists run businesses in certain areas that are not subject to taxes. There are no official figures on the size of the parallel economy, although it is estimated at 30 percent of the actual size of the Lebanese economy. Barakat said improved tax collection could provide sufficient funds to the treasury. “Imagine that we had a $3.2 billion deficit in 2014 and we had $3 billion annual tax evasion. This is the sum of income tax evasion, electricity bills evasion, property tax evasion,” Barakat said. But he noted that Finance Minister Ali Hasan Khalil has started to improve tax collection, particularlyin the real estate sector. But despite the pressing need for reforms, all economists agreed it was wrong to draw a parallel between Greece and Lebanon in terms of the size of the public debt and the financial crisis, noting that Lebanon has not exploited its resources to properly adjust the fiscal deficit. “Many Lebanese ask, ‘Are we in the same situation as Greece?’ The answer is no,” Barakat said. Citing available statistics, Barakat indicated that Lebanon’s debt to GDP is lower than Greece by a good margin. In Lebanon, debt to GDP is 134 percent while in Greece it is 180 percent. Furthermore, in the last 10 years, the debt-to-GDP ratio has fallen by 50 percent, while in Greece this ratio went up by 74 percent. “The most important thing is that most of Greece’s debt is external [around 87 percent] while in Lebanon the foreign debt does not exceed 10 percent of the total debt,” Barakat said.
In 2014, Lebanon’s public debt reached $66.5 billion while in Greece this debt exceeded 320 billion euros ($350 billion). Lebanese banks and investors still hold the bulk of the public debt and this has enabled the country to remain relatively immune to volatile international financial markets. Experts stress that the domestic debt means Lebanon is not at the mercy of international creditors. “Lebanon also benefits from a good external position. The Central Bank’s foreign currency reserves, excluding gold, is $39 billion and if we add the gold reserve, this figure will reach $50 billion, almost two times the size of our foreign currency debt,” Barakat explained. Other statistics show that Greece’s real GDP growth since 2008 was minus 25 percent, and in Lebanon the real GDP growth was plus 30 percent.
Remittances to GDP in Greece are less than 2 percent and in Lebanon this figure is 18 percent, one of the highest ratios in the world. Primary liquidity in Lebanese banks has also exceeded those of Greece. The primary liquidity in Lebanese banks has reached 40 percent and in Greece this figure did not even exceed 10 percent. Experts and bankers also boast that even during the peak of war in Lebanon, there was no run on the banks to withdraw money in panic as was the case of Greece.
The Greek Central Bank has closed all banks in the country until Wednesday and put a small limit for withdrawals from ATM machines. Ghobril saw some positive benefits for Lebanon in the foreseeable future if the crisis in Greece persisted. “Oil prices fell by 8 percent yesterday and the euro currency depreciated in face of the U.S. dollar. This means that the allocations to buy fuel oil for Electricite du Liban will fall further than this, and the import bill will also drop if the euro remains low,” he added.