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In Advertising, Communicate, Dubai, Marketing, Published journalism, Q&A on November 24, 2010 at 3:49 pm

OMG boss Elie Khouri says there’s a war shaping up in the media world

Originally published in Communicate, November 2009

As regional managing director of planning and buying agency Omnicom Media Group, Elie Khouri has his finger on the pulse of the region’s media industry. He sat down with Communicate recently to tell us how media looks today, and what we can expect to see tomorrow.


How is the industry changing?

Look at holding groups, the big four; they have ad agencies, they have media companies, and they have the other specialty agencies – PR, digital, etcetera. This was the way it was structured in the 80s and 90s, and it lived for a while because every category was focused on doing its own thing.
Over time, there has been a transformation of the media, with the consumer being in control, the consumer being ahead of the client, and being ahead of us, basically. The consumers are playing the game; they are dictating, today, how we should communicate with them.
Now agencies are competing. The PR agency is competing with the media agency, and the advertising agency is competing with the digital agency. They are competing for clients’ attention, competing for leading the relationship, for saying, “This is how it should be done, so let’s all do it.” This is where the problem is for clients.

What do clients want?
At a lot of meetings and seminars, clients were saying, “Come on guys, get your act together. I don’t want to have four agencies competing for my attention, and over who is going to drive my business forward. I want an orchestrator. I want you to appoint somebody within your holding network to be the orchestrator, who will work with those different disciplines and companies and provide me with the best talent and the best opportunities that will service my needs. “

Who should that orchestrator be?
I am not going to say that it should be a media person. Or an ad person or a PR person. It depends on the client’s needs and the nature of their business. If it is a client that relies on things like business-to-business online services, then it could be a direct marketing or CRM company that leads the relationship. If it’s a business that’s highly reliant on public opinion, then maybe a PR person should be leading. If it’s an FMCG with many consumer segments, with many touch points, many intricacies in terms of media overlapping, then a media person should do it. There’s no one answer.
There will still be arguments, and if there’s no agreement between the disciplines there should be somebody who decides, based on the client’s interest.
Otherwise, everyone is looking at his own profit and loss, everyone is saying, “I want to make money, I want to do it my way.” You have egos to manage, so somebody should cut across all that and say, as a holding company, for the long-term interest of our clients, that’s how we should be doing things. We’re not there yet.

How do advertisers see media agencies?
As an industry, over the last six or seven years we’ve been investing in the quality of our product. As an industry we’ve been struggling for credibility, we’ve been struggling for attention from clients. We’ve been saying, “We’re serious partners, we are somebody who really understands your business, your consumers, and we have really good models to give you the best return on investment, the best solutions.” We’ve been struggling with that because the perception of media is that these guys buy cheap, it’s bulk, it’s commodity, lets go and squeeze them.
People confuse media buyers and consultants with those who sell media. I think these guys are great, but we’re different industries. They sell, but we don’t just buy, we give a whole communication planning recommendation. Based on that, we go and do the trading. We have two sides of the business within our companies: the consulting side and the trading side. And the trading side is based on scientific planning methods. You don’t trade because its cheap, you trade because it gives you a higher effectiveness.
So we’re struggling for attention, struggling to invest and to change perception and to do a fantastic job. And then you’re hit by recession, and everybody now wants cheap, cheap, cheap. Clients want a discount; clients today are driven by procurement guys who are there to negotiate. They compare advertising and media to buying paper and buying tables and buying computers. So these guys are sitting at the table saying, “Give me a discount, I want it cheaper,” without really understanding the dynamics of our business.

What effect does this have?
There’s a war. We’re back to commoditization. In a commoditized world, what’s important is price. People are losing market share, people are losing clients, regionally and globally, and they want to survive. So they go out and just go crazy, offering discount on prices, offering things that just don’t make sense, working for peanuts. This creates a war, a pricing war.
These are battles at the end of the day, and the war in my opinion long term will still be fought on quality and not on price. On the quality side it’s established already. If you ask people who is the highest quality media company, who is more serious, much more strategic, and much more creative, people will know.

Do clients pitch too much?
I understand that clients need to pitch, and they should pitch. It’s part of our business, pitching is part of the culture. Pitching for us is winning, it’s adrenaline, it’s exciting, it’s passion.
You work hard, and you do something and you achieve and you are happy. The pitching process is fantastic. What is unfortunate is losing. C’est la vie, that’s life. That’s the business dynamic. You have to win and you have to lose. And if you don’t lose you will not win, so it’s OK to have a mix of both. As long as winning is much more.
Unfortunately, pitching is misunderstood by many clients, and they pitch for the sake of pitching, sometimes without really understanding why are they pitching, and what’s in it and how it is going to drive their business forward.
If in the media world you’re looking to pitch to reduce the price then fine, I respect that. Much more today you see in the trading world, in the commoditization world, clients doing it on a regular basis. You might have short-term gains as a client, because you’re putting different companies in competition so there’s a lot of squeezing. However, the drawback is that if you keep bidding and pitching on an annual basis, what does that mean? There’s no loyalty to your partner, there’s no consistency in the service. It means that we will not put the best talent on this account, because every six months we’re going to get into a process. It means that the relationship will never be optimized. It means, in my view, that the client’s business will be undermined.
So I would never advise a client to pitch for a media company on an annual basis; I would advise them to do that on a three-year basis, because that gives you longevity in the relationship, that gives you commitment and, at the end of the day, you take the pulse of the market and you always know that what your agency is giving you is fair value for money.

How healthy is the region’s talent pool?
Talent is talent. Everybody talks about talent in our industry. It’s important to develop, retain, and breed talent. What has helped us in the recessionary period is that the pressure on talent has cooled down. During the boom days, agencies were just trying to get people to manage their business at any price. There is growth, nobody is counting, and you are growing at 40 or 50 percent year-on-year, so you just need people to do the work. You go out there and you say, “OK, this guy’s available; what’s your salary? That’s a 50 percent increase; come on board.”
Today the recession is cooling down all of this. There’s less pressure on head hunting, on poaching talent, and people are much more realistic about what they should be getting for their position. This gives us much more breathing space to look at the right talent and to invest in them and grow them.
This year we are not cutting on training; we do a lot of that. And we’ll continue our investment in both internal and external training. We bring people on board to our agencies for seminars, and we go outside and book ourselves speakers. We have been very active in master classes and the OMD Predicts seminars. They are training our people, but also trying to inject our culture and values into the industry and into the clients. We’ve always believed in bringing a new dimension to the business.

How healthy are media owners?
It’s important to know who in the media world is going to be here in the long-term.
There is MBC group, there is Rotana group, and one from the UAE will emerge as the third leg, and I think everything will fall in place under these groups in a couple of years time. That’s going to be everything, across all media, even content. Digital, outdoor, radio, TV, print, the whole range. By content, I mean development, and production of content. Content for mobile phones, content for Internet, content for TV, music, sports.
Those who invest in content in the future will prevail. Those who keep on buying content will fail. There is definitely room for a UAE player to emerge here. By mid next year we will know who’s going to be the emerging force. If you invest in content, if you do content properly, you will win long-term.

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