With the regional market edging towards another decline, Eleanor Dickinson asks whether Dubai’s budding independent agencies will be the first casualties or have their time to shine?
It’s lunchtime in Dubai Media City’s Concord Tower and around 30 tech whizzes have gathered in a tiny glass-walled room to eat together. The cacophony of chatter and laughter can be heard throughout independent agency Hug Digital’s office – a place bustling with activity and bursting at the seams. “We’re out of space and we need to move,” co-founder and chief executive Tim Baker tells me from his own tiny office. “We’re looking at the moment. There’s no space left in Media City so if you want to get anywhere bigger, you have to move outside.”
Hug’s likely move – potentially to Dubai’s Design District – marks a clear testament to its growing success. And should it go ahead, the agency could find itself neighbouring fellow independents – Australian Penso and Scotland’s 20/20 Productions – who look set to open their new Dubai offices there in 2016. Is this a sign of a new boutique boom?
Given next year’s bleak outlook for the Middle East and North Africa region’s industry – a predicted 10 per cent contraction by the end of 2015 – this seems unlikely. The global economic crisis in 2008 swept away a number of newly-opened Dubai offices – many of those branches of outside agencies. Recovery was slow and fettered by the political turbulence of the Arab Spring. And now any growth reclaimed following the waves of revolution looks set to be overturned once again through a combination of low oil prices and the geopolitical unrest throughout the Middle East. CEOs Raja Trad, of the Leo Burnett Group, and Omnicom Media Group’s Elie Khouri have both expressed their concerns to Campaign for the coming year. So if the heads of two of the MENA region’s biggest agencies fear for the industry why are small, independent agencies still flocking here? And could they withstand another recession?
Hug Digital, which has expanded to more than 65 people across Dubai and Egypt in just five years, cer-tainly seems in no danger. Another office has recently opened in India to assist with the rapid pace of development. And according to Baker, the clue to Hug’s success is all in the name. “Digital is going nuts,” he says. “Yes the overall pie of communications is retracting. But we’ve seen clients’ budgets for digital doubling year-on-year. So if I was Elie, I would be concerned. For us, with what we’ve invested for the past five years, we’re in the right place. Digital is not easy and we’ve evolved as the platforms change and that’s why the big agencies are definitely worried; they’re just not ready on digital. And they don’t know quite how to handle it.”
Formerly general manager at Initiative, Baker founded Hug with MCN’s then chief operating officer Oussama Jamal after becoming disillusioned with what he calls the “commercially driven” agenda of big agencies. “It’s all about where agencies can make money, not about what’s best for the client,” he adds. “And we want to deliver what’s best for the clients’ brands and not just what makes the most money. I guess that’s the spirit of any independent; you want to do what’s right, you want to do good work, you want to try and break the mould of what’s going on in the market.”
A similar story can be seen in the origins of Jumeirah Lake Towers-based Red Blue Blur Ideas (RBBi). Spurred on by a desire to do ‘something special and find a niche’, two big agency hotshots – Amol Kadam and Devesh Mistry – jumped ship to set up an agency devoted entirely to ‘user experience’ – essentially turning clicks into buys. Cut off from Media City by Sheikh Zayed Road, the agency has grown from just the two to 32 people in just four years. “In the last two years we have seen a huge growth in the number of brands understanding these concepts and asking for these services,” says Kadam. “There are now other agencies doing what we do but the unique thing about us is only what we do and we do it right. My philosophy is ‘stick to what you do’. I see many times that when agencies try to offer everything under one roof they lose focus.”
Having such a niche skills set has made both Hug and RBBi hot picks for big agencies looking to poach talent. “Being an independent is expensive to run as a business here,” admits Baker. “It’s expensive for people to live here, so to retain them you’ve got to look at salaries and all of that.” Kadam adds: “There are now bigger agencies looking at user-bility and user-experience and they are trying to poach our people. I think the biggest challenge [for independents] is sustainability in terms of cash flow, attracting talent and retaining them is one of the biggest smaller agencies have. We fortunately haven’t faced such a challenge because of the unique offering that we have.”
Nevertheless, not every agency that has succeeded in Dubai has done so off the back of a niche. In fact with Zed Communications, it was simply a case of just picking up the phone. “We look at areas that haven’t been explored yet or have fallen into the shadows,” explains Adam Pitt, Zed’s senior public relations manager. “We won AIG Insurance because the marketing manager called all of the agencies in Dubai and nobody picked up the phone. We did, we called her back and we have developed quite a healthy relationship with them. They start giving us bigger and bigger
projects, which is good for us because it means we can grow naturally, instead of this stop-start when you get a big client.”
Overlooking Dubai Creek in Deira, Zed Communications has weathered more than 15 years worth of tides. Having a strong parent
company in the form of real estate giant Wasl Properties probably helps. But, having a realistic set of expectations of working in a globally aligned Dubai also seems to have worked. “Competing with big agencies isn’t something we focus on,” says Pitt. “We tend to look at it as withdrawing from the competition. There is no point us going head-to-head with some of the bigger agencies because, while we have a lot to offer, we don’t necessarily have the brand name that some clients look for. Construction, shipping, logistics are all very big businesses in the Middle East but not necessarily globally aligned, so there tend to be big regional opportunities to get big money and big names without having to tackle those obstacles.”
Global alignment in Dubai has likewise posed little difficulty for Hug, which counts Danone and Toyota Lexus among its clientele. “We’re the first time Danone has chosen to work with a local agency,” Baker explains. “The rest of the world, they work with a globally-aligned agency. Here they work with us because they like the creativity, the content we produce, the speed with which we do things and that we don’t overcharge them. Big brands are absolutely fine to work with independents. There is tonnes of growth here. All of our clients work with us because we are honest with them and I don’t think they get that with a lot of the big multinationals. I think they’ve heard the same rubbish from the big agen-cies for the past 15 years and I think they’ve kind of got a bit bored of it.”
On whether the current industry climate is of concern, Baker adds: “I think the bigger agencies will weather it but will see people being laid off. Within the smaller agencies, the good ones will remain. There are tonnes of small social-only agencies cropping up – and for me that’s never been our strategy – and they’re all doing the same thing. They write some posts, they put some pictures and off they go. That for us is not using social in the right way. So I think you will see some of those social-only agencies being swept away.
“I think what happens when times are tough is that those who have jumped on the bandwagon get screwed. If someone does not have multiple clients and good relationships with those clients, then they will lose them. You just have to keep working harder and harder; if you’re not going to do it, someone else will.”
Kadam for his part likewise remains optimistic for the future. However, other agencies may feel the pinch: “I see the (declining industry) as an opportunity,” he says. “Clients and brands will be a lot more conscious with their spending. Or with the same amount of marketing budget, they will want to get better desserts. Because of the niche that we have, we would hope to play a bigger role. But, in these times though, small and independent agencies should be more careful because that is when we see the consolidation happen. Agencies which are focussed are able to sail through this. But there are those who do not make it through.”
And should the MENA region hit another global recession, well that’s a time when everybody needs good PR, says Pitt. “When things are going well, companies often don’t need agencies. It is usually when things are not quite working out, which is why I think there will still be opportunities there. Dubai is the kind of place that can change very quickly – politically, economically, so you have to prepare for those shocks. But, if you have the foresight and if you use that in your strategy then you can com-pensate for that during times of famine and times of plenty.”