To advertise or not to advertise

THE Saudi market is second only to Egypt’s in the Middle East and the largest by far within the Arabian Peninsula, accounting for 70 percent of regional business. Its sheer size poses tremendous challenges to business. It is one thing producing or having a product — be it a service or a more tangible item such as a car or fruit juice. It is another selling it. Word of mouth is no good. In such a competitive market, with such a wide choice of goods on sale, potential customers have to be made aware of what is available. And not only just aware. They need to be attracted to a particular product.

The bigger the market becomes, the more difficult it is. Advertising is the key. But do small and middle-ranking Saudi businesses make the best of advertising? Conversely, is marketing and promotion within the Kingdom as good as it could be? Is the advertising industry geared up to sending a Saudi message to Saudi consumers, a message they will understand and respond to? Or is it still run by international agencies that imagine a TV commercial produced for the Lebanese or Egyptian markets will do for Saudi Arabia?

Like anywhere else there are the big boys — the international agencies like BBDO, Leo Burnett, J. Walter Thompson — every one of which has a presence in Saudi Arabia, either in a joint venture or through a local affiliate. BBDO, for example, operates through its joint venture subsidiary, Impact BBDO. TMI-JWT covers the entire Arab world, from Casablanca to Dubai, for J. Walter Thompson. The Leo Burnett presence is known as Targets/Leo Burnett; this summer, it upped that presence by opening a new office in Riyadh — a sure indication of increased advertising activity. And then there are the independent operators — in this case small operations set up by Saudis who invariably studied marketing in the United States, and who have seen that they can carve a niche for themselves, their prime asset being their knowledge of the local market.

From both groups, the considered opinion as regards the local business community is much the same. It is that it has a lot to learn about the use and value of advertising. "Too many see advertising as an expenditure, not as an investment," said Toufic Majdalani of TMI-J. Walter Thompson, whose clients include Saudi Telecom, Shell, National Commercial Bank, the Juffali Group, the Aujan Group, and MBC TV.

This, he says, stems from the Kingdom’s merchant culture. Because so many Saudi companies were set up as distributors, they did not need to focus on advertising. Brand building — the advertising of a particular product — was taken care of by the principals. In so far as advertising played any part in the distributors’ thinking, the emphasis was on short-term revenue-generating activities such as sales promotions to shift stock.

However, things have improved in the past two years, according to Jon Harrison, who has worked in advertising in the Kingdom for several years and is now with Jeddah-based independent niche market operator Media Graphics. "Until a few years ago, only the multinational businesses realized the value of advertising. Now, many more Saudi companies do. They realize they have to advertise. Otherwise people won’t come to them."

Majdalani attributes the changing approach to the arrival of a local industrial base. "It was only with the development of Saudi brands — foodstuffs and services — that a better understanding of the advertising function came about."

Although Saudi companies increasingly use advertising, agencies worry that clients still do not really understand the medium and what it can do for them. "They tend to use advertising agencies for everything and anything — for TV commercials, designing and fitting out stands at exhibitions, corporate design, posters, Ramadan cards and producing brochures about their business," said Harrison.

Agencies report a lack of clear thinking on the part of middle-ranking and smaller Saudi companies as to what advertising can achieve. "They know that they should advertise, but haven’t thought out what advertising should be doing for them," said Harrison. "They want a website, but haven’t thought out their corporate identity. They want brochures but don’t think about what the brochure should be saying."

All too often, Harrison says, brochures in Saudi Arabia are not designed to make the customer feel good about the company or the product, they are devised to make the company feel good about themselves. "They don’t look at the consumer’s point of view and what he wants to hear. That is what advertising is all about. Too many Saudi clients have yet to understand that. They treat advertising like buying a take-away pizza," he said. "They think they need it, so they phone up, and expect an ad campaign to be sent round. But they don’t do their bit of the job — which is to think about what the ad should do. They don’t fix their mind on what they want to present. That is because they don’t see the difference between branding and advertising. Their mind is stuck on branding. But that is only part of what advertising does."

A company may want to project that it is a stable company, Harrison explained; it may want to shift stock; it may want to show that it is an expanding company. Because too many businesses do not think about the message their advertisement is intended to convey, they fail to provide a proper brief. "They don’t give information about the company and they don’t provide photos. They don’t want to spend time telling the agency what they want to achieve with an advertisement, and what message they want to send out. They think the ad agency should do all the work. Then they are unhappy with what the agency comes up with. Companies have to get serious about advertising. If they are going to advertise, they have to know what it is they want to say about themselves or their product."

Majdalani says a major problem is that when businesses think of advertising, too many of them still tend to think in terms of a tangible product — a poster or an advert on TV or in a magazine. For those businesses, he says, advertising agencies are purely suppliers of the creative ideas that result in such tangible products. "Our biggest difficulty is to convince people that advertising goes beyond presenting and supplying creative ideas."

This leads to the realm of below-the-line activities such as providing marketing advice, devising promotional campaigns, direct marketing and other non-traditional forms of advertising. "This is very much an intellectual product of advertising. It does not have to have a tangible format like newspaper advertisements, presented in A4 format."

The difficulty, Majdalani says, has been to convince Saudi businesses to accept and pay for products — such as marketing advice — which cannot be used in something as straightforward as media placement.

Furthermore, there is still a view, claims Majdalani, that advertising should be linked to immediate past or future turnover; most advertising budgets are pegged to last year’s sales or next year’s projected ones. "There are too few businesses with a long-term vision, that understand that building a brand image is an investment that can take several years to yield results."

But perceptions are changing. So far there has not been a revolution in the business communities’ perception of below-the-line advertising. But there has been an evolution, and it is "speeding up", notes Majdalani. Above-the-line advertising, worth over SR1.5 billion, is more or less what it was three years ago. But below-the-line advertising is up in value. That is the "biggest" area of growth, says Majdalani.

The driving force, explains an executive with Impact BBDO, is competition. Not just from other firms within the Kingdom. Businesses realize that with the coming of WTO membership the markets will open up to competition worldwide. "Companies know they must evolve, develop and think differently — and they are," he said. Increasingly, he added, they are looking at all the available opportunities to market themselves and their products. They are not looking simply at the conventional above-the-line advertising. Yet, although the approach to advertising is a great deal more thoughtful than it was five years ago, the agencies still speak of an uphill struggle.

There is also a tendency to underestimate customers’ intelligence. "One client said to me the other day ‘We are only selling to housewives,’" said Harrison. "But housewives are the bread and butter of business. If they don’t want to buy a product, it will not sell. They know what product they want to buy. They look at a packet of soap powder and aren’t stupid when it comes to whether it washes well or is good value. If they don’t buy the product, it’s doomed."

Another problem pinpointed by the agencies is that companies do not always back up their advertising with performance. Saudi Arabian Airlines (Saudia), for example, developed the slogan "Proud to serve", explained one advertising executive. "But it was undermined by the arrogant attitudes of some staff toward passengers, both on the ground and in the air." The campaign rebounded on Saudi Arabian Airlines, he claimed. Some people stuck the word "too" in front of the slogan so it became "Too proud to serve". "You can’t allow that to happen. If you advertise a product, it has to be available; the service has to be there."

But there are interesting and encouraging developments. "Standards of account handling and creative work have improved — and advertising has become more strategic," says Harrison. That is due, he believes, to an increased number of educated Saudis coming into the business. That links in to the other big change — the swing toward a Saudized industry. It has happened not because of pressure from on high, but because the clients want it. "Five years ago, the actors in TV commercials had a Lebanese accent; now they are expected to have a Saudi accent," said Harrison.

And over the last two years, TV ads have become a lot more entertaining. "They have to be," says Harrison. "People surf from station to station during commercial breaks. Commercials have to grab their attention." Moreover, the environment has changed. The level of acceptability has moved on. Advertising presents images and ideas that would have been perceived as unacceptable five years ago, says Majdalani.

But there are difficulties due to specific conditions in the Kingdom. Because of the way the postal system works, with so many people using, even sharing, post boxes, direct mailing is almost non-existent. In the United States and Europe, potential clients can be identified by their addresses; assumptions are made as to their income or their interests from the areas in which they live. It is impossible to define potential clients by their post box numbers. As for direct e-mailing, it is still in its infancy in the Kingdom — with the result that people have not got used to ignoring it. One major agency tells of a prominent client who decided in mid-November to e-mail a Ramadan greeting to all his customers and suppliers. "Unfortunately he hadn’t thought that they might e-mail him back. It was easy sending the e-mail out. The tidal wave of responses snarled up the system for three days."

Despite the uphill struggle, the Saudi advertising industry has a large, collective grin on its face. The only way is up as far as it is concerned. Business is getting more shrewd, competition is getting sharper and going to get even more so, especially as the private sector expands and WTO membership approaches. Whatever bumps the economy may encounter, it is the size of the Kingdom’s market that counts.

Advertising is set to grow and grow.