Why Omnicom Media Group Remains Optimistic In A Bad Year

Elie Khouri firmly believes that ‘culture eats strategy for breakfast’, so much so that he prefers to describe himself as a chief culture officer rather than CEO. But the media industry in the region is yet to see a more powerful combination of strategy and character than him. It is perhaps a hobby of sorts for the Omnicom Media Group MENA boss to anticipate internal and external challenges, and then set the course forward for the group, all with the purpose of forging ahead with his people.

The year 2018 is yet another vindication of this.

Even if headwinds have blown stronger than anticipated, Omnicom Media Group MENA has managed to have a good year so far. In addition to winning businesses such as du, Landmark Group, Tim Hortons, Huawei and Mai Dubai, its agencies have retained accounts like Jumeirah Group, and actively participated in international wins including HSBC and Barclays.

The year isn’t over yet, as Mr Khouri highlights, with the last quarter representing as much as 40 percent of any year’s performance. He also asserts the media holding company will enter 2019 with an optimistic outlook, regardless of the softer economic growth forecast.

Each of Omnicom Media Group MENA’s agencies –– OMD, PHD and Hearts & Science –– has played its part in leading to this bullish attitude. The holding company has also transformed itself to create a central nervous system that is fueling agency and overall growth. Optimizing its resources, gunning not only for efficiency in human capital but across its operations, Omnicom Media Group MENA has been investing in areas that are becoming mission critical for marketers.

The fact that economic challenges did not stop its agencies from expanding into new markets, its focus on efficiency did not come at the expense of culture, and the company will end the year with a double-digit growth in revenue, indicates that the group’s long-term and short-term strategies have been on point. “We’ve certainly been busy over the last few months. We’ve launched new operations in Lebanon and Egypt, while in Dubai, we’ve introduced the OMG Explores cultural program to enhance our diversity and inclusion efforts. We’ve also marked the second year of the Omniwomen UAE Chapter,” Mr Khouri recalls.

Formidable Formation
In MENA, Omnicom Media Group’s oldest agency brand, OMD, won over 20 local and regional businesses across several categories in the last 12 months. These include Landmark Group, Baladna and Savola. This performance made the Middle East the largest new business contributor in EMEA in 2018 so far. The agency claims these gains more than made up for the loss of the McDonald’s account in the GCC earlier this year.

“OMD is the most established brand within Omnicom Media Group. The network has a brand in almost every category. Its level of growth naturally will be lower than that of PHD or Hearts & Science. Nevertheless, in MENA, OMD is still doing very well, with new business and other forms of recognition. OMD was the most awarded media network at this year’s Dubai Lynx and Cannes Lions. Industry analysts rank it as the biggest media agency network both globally and here in MENA,” Mr Khouri explains.

While OMD kept its foot on the accelerator, PHD capitalized on its ‘smart thinking’ and ‘creative innovation’ positioning. Adding businesses both global like HSBC and local including Huawei and Dubai World Trade Centre, it strengthened its MENA footprint by bolstering its presence in Lebanon and Egypt. It was also named the Most Effective Media Agency Office at the 2017 MENA Effie Awards.

Omnicom Media Group’s newest media agency brand, Hearts & Science, which turns two this year, brought a distinctive offering as a data-driven marketing company. Some thought it ambitious of Omnicom Media Group MENA to introduce the agency to the region in 2016. The market was facing a deceleration in marketing investments, so the scope of growth was anything but evident.

Hearts & Science’s Dubai office was the second outside of North America. If Omnicom Media Group hadn’t made this move, it may not have won the coveted du account earlier this year. “As well as du, Hearts & Science has won Mai Dubai, Barclays and is on to other businesses. It has been a phenomenal launch. In less than two years, it has found its place within the holding’s portfolio alongside OMD and PHD. There is no doubt in my mind that it will continue to grow,” Mr Khouri remarks.

Upping The Long Game
Omnicom Media Group’s task in hand has not as much been about racing ahead, as it has been about building for the future. Data-driven marketing may be the shape of things to come but to Mr Khouri, data is already old news. “We started investing in data years ago, when it was essential to media planning. Today, we have upped the game and gone beyond just data. Data on its own is nothing,” he argues.

The group’s big bet is marketing technology, illustrated by the global launch of Omni in the summer. Omni is a people-based precision marketing and insights platform, designed to identify and define personalized consumer experiences at scale across creative, media, CRM and other Omnicom practice areas. Omni impacts the way Omnicom teams work, collaborate and deliver value, from insights generation to audience building, channel planning, creative development and message distribution. All the activities are continuously measured and optimized with attribution tied to advertiser performance at every step of the consumer journey.

“We have been investing in Omni for the last three years. It continues our group’s strategy of neutrality with no ownership interest in data or tech partners. We don’t regard the likes of Google and Facebook as a threat; quite the opposite as we collaborate closely with them. I am very excited about the launch of Omni and the solutions it will provide,” Mr Khouri states.

Transformation is on everyone’s agenda and while this means a great deal of technology, it also requires a new type of talent and human capital throughout the industry.

“The need of the hour –– for ourselves and our clients –– is the ability to adapt to rapidly changing conditions. Every industry is facing major pressures. Especially client companies. In our industry as well, we must explore several options to maintain our margins. This doesn’t mean we’re going to compromise on the quality of our services. Instead, we optimize our efficiencies by hiring for new roles. Our talent pool now includes data engineers, analytics and tech experts,” remarks Omnicom Media Group MENA’s CEO, stressing on the discipline diversity that is steadily being injected into the organization.

Besides an evolving talent pool, the company has also implemented new structures and processes to improve talent efficiency, including automation and offshoring in Lebanon and India. This has contributed to a gradual halving of talent costs and a 10-15 percent improvement in overall efficiency. The company is going further and believes it is the first agency group with a Chief Automation Officer.

Room To Grow
Considering the challenges to growth in the region and the low base, as the region represents barely 5 percent of global revenues for all advertising holding groups, it would be easy to disregard MENA. That would be a mistake, Mr Khouri believes. He advises not to underestimate the region’s contribution to revenues and innovation. “MENA is a top three market for Omnicom Media Group EMEA and we’re able to invest in the best thinking, talent and ideas,” the regional CEO reveals, adding, “We have the scale to achieve great things and our innovations have an echo across our global networks.”

That being said, he does not foresee much change in terms of numbers in the short-term, given the larger economic factors required to make a real difference. Not even the expectations of additional investments from Expo 2020 or the reforms in Saudi Arabia are enough to turn the tide.

“Expo 2020 is expected to deliver a 15-20 percent growth in the market, but the impact will only be felt from the last quarter of 2019. Throughout 2020, it’s going to be driven by investments from companies associated with the Expo and related sectors like tourism,” he warns, explaining, “Women empowerment is good for business in Saudi, but further changes are needed to uplift the economy. We need to see more investments from the private sector for instance. The confidence in this area has been rattled by the delay in Aramco’s IPO, the war in Yemen and the dispute with Qatar.”

If the pie doesn’t grow, the only thing agencies can do is try and grow their slice of it. Driven by the opportunity to improve the service they get, its performance or its pricing, marketers have been busy pitching their business out. While some agency heads have vociferously criticized this, stating that such pressure is neither good for marketers nor agencies, Mr Khouri begs to differ.

He says marketers are under intense pressure from the prevailing slow growth, uncertainties from technology and changing business models. “In that state of mind, you want to ensure every dollar has a return. Pitches are a way to ensure companies are working with the best partner for their specific needs. The pitch activity has gone up, but we see it as a healthy sign. It keeps people on their toes,” Mr Khouri argues.

The Omnicom Media Group MENA CEO believes it also improves the product. “When we pitch, we go with the mindset we must win. We have been investing in our culture, talent and product in the last decade. Thanks to this, our pitch success rate is upwards of 90 percent. Arrogant as it may sound, it is the reality,” he states.

This year, media holding companies that dominate in other markets, such as GroupM, have made noteworthy strides in MENA. But Mr Khouri isn’t worried yet.

“We are happy that our competitors are finally upping their game. While anyone can invest in data and digital, not everyone invests in culture and talent. That can only be built over time. It takes years and requires great leadership. I have been in this company for 17 years and the core leadership in this company has been with us for 15 years. This has given us tremendous stability and a platform on which to build our culture. Our employee retention rate is very high. When people are happy, they achieve great things and clients are happy. That is why I am confident no matter what our competitors do, we will always be two steps ahead,” he states.

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