Integration, talent and the changing face of the Arab consumer will make their mark on 2013, believes Ghassan Harfouche, Group CEO of MCN. Article from Campaign magazine, January 13:

As much as we try to deny the impact of time onto our life, the reality of things is that time remains the biggest challenge for human beings and the most uncertain variable to predict. The end of each year and the start of a new one bring with it legitimate questions with no definite answers but it also give us the opportunity to review what we do and the way we do it, to strive to do better, to pursue our dreams and to re-question our purpose. As we are stepping into 2013, let’s have a look at how this New Year would most likely impact the advertising business in our region.

Growth: the world economies continue to struggle in achieving growth and finding solutions for their financial problems and high unemployment rates. The GCC economies are forecasting an average growth in their GDP of 4%. The political situation in the region remains highly volatile in markets such as Egypt, Syria, Bahrain, Lebanon, Iraq and Libya. Marketers are under pressure by their management to improve efficiencies and will therefore continue to demand “More for Less”. Given such an environment, I foresee an average top line growth rate of 3% to 5% in the MENA advertising industry during 2013.

Despite the potential top line growth, advertising networks will continue to witness a substantial pressure on their margins mainly driven by a) the required investments in new capabilities, b) the cost of retaining talent, c) the procurement pressure on the agency remuneration and d) the lack of emerging categories.

Ad networks will seek growth opportunities by diversifying their offering into the digital space especially into viral content creation and various engagement opportunities across social media platforms. Although at an infancy stage in the region, this space brings fresh revenue streams and is set to grow much faster than the traditional business.

Arab consumer: the Arab spring is much more than a season; it has marked a major shift in the way Arab consumers voice their preferences, select their choices and accept to be talked to. It has also showcased the major role of technology in influencing people’s behavior and the high degree of its adoption. We are witnessing a different type of conversation, an open dialogue, an emergence of media platforms and a consumer that is more engaged than ever.

This change has a direct impact into our business and dictates rapid adjustments to our purpose, culture, product, consumer understanding and talent. It is an ongoing process of transformation that will require more focus and time from the advertising networks during 2013.

Integration: Clients will continue to demand integrated communication solutions to their businesses. Solutions that are relevant, simple and able to work across multi platforms. Ad networks are forced to integrate innovation into their products and to design their organization structure to deliver on such a demand. The recipe for delivery is not a standard one but what is clear is that digital capabilities are at the centre of each agency that cares to retain its clients and ensure its continuity.

This means further investments in 2013 behind new technology and digital capabilities through acquisitions or alliances with digitally independent units in an attempt to integrate knowledge and learning. It also implies that digitally savvy talents will be highly demanded and agencies will be forced to replace the talent that is not able to adapt to the criteria of the new world. The management of this transformation entails special skills in transforming cultures, managing people and persuading them of this new vision; managers and HR professionals will have to work closely together. Automating routine processes will be necessary in order to relief margins pressures.

Performance: measuring the performance of communication and its contribution to the clients’ businesses is a trend that we will see increasing in the future. The focus on results and ROI will remain a priority in the investment strategy of our clients. Moving forward, we will witness more flexibility from the ad networks to accept pay per performance models. The model will work with clients that have brand metrics tracking and are ready to reveal market share and sales data. The agencies will accept to correlate part of their remuneration to the campaign results and risk part of their revenues at the premise that they will be paid more for over achieving and less for under achieving.

Talent: we are in the business of people; they are our main asset and the essence of our product. Acquiring and retaining the right profile of talent given the way we see our business moving forward are key factors to the success of the agencies in responding to the upcoming challenges. I see an increasing demand to attract young talents that are intellectually curious, digitally savvy, passionate about their work and able to think out of the box. Leaders are responsible to stimulate an open culture and a healthy work environment for our people to dare more and produce outstanding work.

For those of us who love their jobs, I call you to celebrate the opportunity of being part of the transformation of our industry at a time where the Arab world is shaping its future. Our role is more important than ever before, we are at the centre of the conversation and have a unique position to understand the consumer of tomorrow and facilitate its engagement with the brands of our clients. Success will come to the networks that are early adopters and change always favors the brave, let’s strive in 2013 to attract the best talent to produce amazing work that deserves world recognition and acknowledgement.