FirmDecisions in the press: Transparency in the Middle East
Stewart Morrison, Managing Director, FirmDecisions MENA, discusses the state of transparency in the Middle East.
The MENA region is a fragmented collection of over twenty countries, has a growing population of 400 million, a multitude of languages and more than twenty dialects. This alone makes it difficult for marketing teams to segment and target effectively.
However, there is also a rapidly growing literate MENA population, sixty percent of which are aged between 15-29 years old, and increasingly demand locally relevant content in their language or dialect that resonates with them. This means the need for locally produced advertising, such as creative executions and production of assets, is in high demand at both a regional and, even more so, country level. Besides the challenge of ensuring ad quality and on-brand messaging, the commercial models for such non-media work can be bewildering; ranging from fixed fee, to retainer, full time equivalent (FTE) or commission-based. The need for creative agencies at a country rather than regional level can add layers to the supply chain, and in turn this can lead to a lack of transparency on who is doing what and the costs involved.
Likewise, the number of media channels in the region and the media supply chain has also grown more fragmented and complex, particularly in the digital space. What used to be a relatively straight forward client-agency–publisher relationship now includes trading desks, programmatic buys via Demand Side Platforms, Supply Side Platforms, ad exchanges, ad networks and Data Management Platforms as well as a variety of ever evolving commercial models and percentages charged, and a variety of rebates, discounts, free media inventory and value pots available.
These are also challenging times for the industry, and the companies involved in providing these services are undergoing transition and financial pressures themselves. The industry used to be dominated by the Big Five agency holding groups including WPP, Omnicom and Publicis, providing everything from market research and creative to media buys and PR, but are now facing new competition. The traditional Big Four consultancy firms have now entered this space with their own advertising services offering, and are gaining traction, with Accenture now being the fourth biggest advertising agency group. Additionally the growth in in-housing of advertising services by some of the biggest pharma and consumer goods companies such a Bayer and Unilever, whether that be creative development or digital media buying is taking money away from the pot of potential revenue available to agencies. The growth in marketing procurement teams scrutinising commercial deals is also on the rise. In the MENA region specifically, the size of available ad spend has dropped from an estimated $5 billion six years ago to an estimated $3.5 billion in 2019 (although getting accurate numbers is challenging). There is more agency competition for a smaller advertising pot, which some say could lead to non-transparent agency practices for those looking to maximise their own earnings at the expense of the client.
So what does all this mean for the MENA marketer and the precious and limited marketing budget?
With deflation in the region in the first part of the year and downward pressure on margins, brands are trying to extract maximum value from every dollar spent. There’s therefore a bewilderingly complex and evolving mix of countries, media channels, agencies, commercial models and charges to navigate in order to make sure that every Dirham, Riyal or Dinar is spent efficiently to reach consumers. Additionally, with traditional auditors now going into advertising, there is arguably a conflict of interest; competing for advertising accounts whilst auditing, many would question whether they can truly be an independent auditor. There is also the added conflict with existing agencies; WPP and Omnicom have already gone public in saying they would not allow Accenture to audit agencies in their group, which means the choices for maintaining integrity of client-agency contracts are also restricted.
As a result, more work has to be done to ensure true transparency in the supply chain of marketing services, both media and non-media related. Advertisers in MENA have more data than ever before on their consumers purchasing habits, and array of tools and suppliers at their fingertips to reach them. The challenge they still face is making sure they can do it cost effectively and ensuring they truly get what they pay for.
The first step to ensure this is to have a robust and transparent contract in place that ensures transparency in all commercial activities, and, importantly, gives clients the right to check how their money is spent. However, enforcing those rights is just as important. There is no point negotiating every detail of the contract if no one is checking it is being adhered to. Invariably, there are a great many complexities in the marketing supplier landscape which require specialist knowledge. Many brands are also concerned about how enforcing these rights will impact their relationship. In truth the agencies they work with are most likely already being audited by other advertisers. It is these other advertisers who are ensuring hygiene in their marketing investments that ultimately hold stronger relationships with their agencies based on trust and integrity. In my time on the client-side the highest quality client-agency relationships were those that were audited. Pitching and immersing new agencies in brand guidelines is an arduous task that is time consuming and disruptive, so it’s far better to proactively manage the relationships.
As more pressure is put on advertising budgets, the need to know where and how money is spent and what the return on investment is, also grows. As a result, more local organisations are also following the examples set by the global multinationals and looking to ensure transparency in their client-agency relationships. Agencies who are found to have deviated from agreed terms or be engaging in non-transparent marketing practices risk fracturing the relationship with their clients and eroding all important trust between the parties.
This article was featured in Business Chief.