Clients, Non-Payments and Slow Growth – Is it time for the Middle East’s PR Industry to work together?

A couple of stories broke over the past couple of weeks in the Middle East’s PR industry. This wouldn’t be unusual if it weren’t summer, when little happens. The first piece was the news of additional job losses at Edelman Middle East. The second was the restructuring of FleishmanHillard in Saudi Arabia due to final losses. And the third, which didn’t register in the media, was the closure of a one-person PR agency in Dubai.

There are two issues at play here. The first is management. Edelman’s layoffs aren’t a one-off; the company has made repeated redundancies over the past couple of years, and I feel for all those who joined what is the world’s largest independent PR agency, only for this to happen. Edelman has struggled in the UAE and the wider region, even after the purchase of one of the country’s largest privately-owned agencies, Dabo & Co, in 2015.

The second issue is payment, or a lack of. To quote from the Gulf News piece on FleishmanHillard:

The non-payment of fees, apparently due to a lack of invoicing clients, has impacted their operations forcing the company to reduce their headcount in Riyadh.

The issue also caught the eye of the head of one of the largest agencies in the region. Writing on his LinkedIn feed, Sunil John shared his view on the need for cross-industry action to address non-payment, particularly by governments.

SunilJohn

Slow to No Growth

Let’s give a little context to the PR industry across the Middle East. Over the past two years economies in the Gulf have struggled. Saudi has been in recession for a number of quarters. The UAE’s economy is growing slowly. The fastest growing economy over 2017 was Qatar, with a GDP growth of just over 2 percent. While this may not look particularly bad for those in Europe, many of us in the region can remember a time a decade back when economies were growing double-digit. Slow to no growth is the new norm in the region, and we (and management outside of the region) have got to get used to this, and budget accordingly.

Government Spending Grows

Ironically given lower government spending over the past two years on the back of falling oil prices, the driver of PR spending has been government. Saudi in particular has been spending heavily to transform its reputation globally. I’ve seen a host of medium and large agencies flock to Riyadh to work on Saudi’s Vision 2030, as well as other projects. Political circumstances have resulted in significant sums being spent in both London and Washington. For agencies starved of growth from business, government spending has been a boon.

Payment Terms and Governments

The challenge with government accounts is payment – both payment terms and collection. Government accounts are rarely small, and I’ve heard of terms that can be as long as six months. That’s a long time to wait for payment. And then, there’s the issue of payments being made on time. In my knowledge, it’s rare for a government to pay a bill on time. And if they don’t, what’s the recourse? There’s no higher authority to appeal to, no court you can go to. You chase and chase and chase. And hope you get paid, sooner rather than later.

Is Industry Action Going to Happen?

Sunil John’s call to action is interesting, but it’s not new. I and others have discussed the idea of having non-payment lists with industry bodies such as the Middle East Public Relations Association several years back. My heart desperately wants the large agency heads to come together to agree on what action to take when it comes to black-listing accounts (the WPP agencies could easily take the lead, given the size of their business here). But, despite the hurt the industry is going through, my head say this won’t happen. For every agency that drops a non-paying account, there are ten lining up to pitch. Everyone thinks they can do better on payment.

Sadly, I think there’s a bigger issue at play which doesn’t just affect the PR industry (to give you an example, Saudi’s construction industry has faced payment delays of up to 18 months). The answer is collective action. And it’ll require true leadership from everyone on the agency side, as well as leaders on the client side calling out this behavior. Is anyone ready to make the first move?

The End of An Era as the D’Abo sisters and Jason Leavy leave Edelman Dabo

Dabo Picture

The D’Abo sisters, Jason Leavy and the whole team at Dabo took on, and often won against, global agencies in the region (picture source: Pinterest)

Many in the region’s PR industry will have learned over the past 24 hours that Camilla and Lucy D’Abo are leaving the agency they founded 13 years ago. Jason Leavy, who headed up the agency and then led the brand team after Dabo was acquired by Edelman.

It’s fair to say that the D’Abo sisters and the agency which still bears their name transformed  the PR industry in the Gulf. Whilst Dubai has always been a hub for the comms sector – there’s at least a hundred agencies in the city – there’s always been a stark gap between locally-established firms and global names.

What the sisters were able to do, and what Jason Leavy was able to build on when he joined in 2010, was to establish an agency which grew in size thanks to the quality of the work produced by the entire team. Dabo regularly won business from and against global agencies, and the firm’s headcount grew to over a hundred. They showed that it was possible to build an agency from the ground up that didn’t compete on price, but on the quality of their work. Others have followed them, but they’ve always set the standards as to how an independent agency should run.

After the acquisition by Edelman in 2015, there was also going to be change; it’s rare for founders to stay on for a lengthy period of time. Likewise, Leavy will also be missed. His drive and passion, and his experience and knowledge of the publishing and public relations sectors set him apart from many agency heads.

I’ve leave the last word to one of the founders. I wish them and Jason all the best in their new adventures. “We leave a combined business that offers the very best integrated brand service in the market,” Camilla d’Abo told the Holmes Report. “Our teams and clients are in great hands. This is not a decision we have come to easily, but we both feel that now our commitment to Edelman is complete it is time we explore new opportunities.”

 

 

The Dabo-Edelman deal and what it means for the Gulf’s communications industry

What does the Dabo-Edelman deal mean for the region's PR industry?

What does the Dabo-Edelman deal mean for the region’s PR industry?

It’s rare to see any big changes, any mergers and acquisitions, in the region’s public relations sector. The region, especially Dubai, is the home for hundreds of PR agencies and communications consultants. But every now and then a piece of news shakes up the status-quo. The last big acquisition of a Dubai-based agency was in 2008, when Grayling Huntsworth acquired its regional partner Momentum.

Edelman, the world’s largest independent communications agency with 5,000 plus employees and 2014 revenues of 780 million dollars, announced last month that it would acquire Dabo & Co. Founded by sisters Camilla and Lucy d’Abo, the agency has around 65 staff and its clients have included the likes of BMW, Unilever, Canon, DHL, HSBC, Hilton Worldwide, Qantas, Nokia and Rolls-Royce.

The media coverage has focused on what Dabo brings to Edelman. Here’s what Matthew Harrington, global chief operating officer, Edelman, was quoted as saying.

“Globally Edelman looks to invest in firms that are committed to reshaping the focus of the communications marketing industry, and Dabo & Co demonstrates this vision through its highly creative, client-centric approach. As the industry develops in the Middle East, this partnership will position us to create engaging and innovative communications programs that support our clients’ needs.”

For Dabo, the acquisition is the next step in their development. The agency has done a number of things which have set it apart from other regional agencies:

1) The investment in local talent – Dabo has focused on developing the skills of its staff, including everything from regular opt-in lunch and learns to offsites for the whole agency. Dabo does more than this, and provides young, talented executives with the opportunity to stretch their abilities. They’ve had one MEPRA young communicator of the year, Jamal Al Mawed, and another who was the runner-up last year, Rijosh Joseph.

2) Self-promotion – Despite us being in the business of communications, PR agencies are not well-known for promoting their successes. Dabo has bucked this trend and has focused on showcasing its successes through awards and nominations. The agency has won MEPRA, Dubai Lynx, and Campaign ME awards for its communications work, as well as other recognitions such as Great Place to Work.

3) Full-service provision – Dabo was quick to spot the opportunity presented by working with clients to offer a range of services including both digital and events thus making themselves a one-stop shop for all of their clients’ communications needs.

What I’m still trying to understand is what this will bring to the table for Edelman. This isn’t a case of Edelman entering the market – they’ve been in the UAE for a number of years with some high-profile accounts such as Mubadala. Plus, Dabo is UAE-based and so won’t give Edelman a foothold in new geographies. However, the argument being made in the media is that Dabo will allow Edelman to expand its consumer reach – Dabo’s clients are primarily B2C brands which are household names. But again, Edelman globally works with the likes of Unilever, Starbucks, Samsung, and Johnson & Johnson. Has Edelman under-delivered on its business potential in the Middle East to date?

It’ll be interesting to see how this pans out for both agencies. Dabo are the rising star, and they’re an example of how those with experience in the industry and some regional know-how can establish an agency in an already-crowded market that will grow and be successful. As for Edelman, will Dabo give them the momentum they need to become one of the top three agencies in the Middle East? I can’t wait to find out!