NEW YORK (AdAge.com) -- The Middle East has dominated news coverage for the past week and a half. Now business leaders, marketers and agency executives are asking: What happens next?
The truth is, few know. The biggest concern is contagion -- a popular uprising that started in Tunisia and spread to Egypt has leaders in other countries in the region reshuffling their governments in an effort to ward off protests and spreading instability.
"The issue is what happens if some of the leaders leave," said Richard Pinder, chief operating officer of Publicis Worldwide. "Does it calm things down or exacerbate the problem? That's what everyone fears."
The protests have halted business and may affect revenue projections for the regional networks serving the Middle East and North Africa that several major holding companies have acquired over the years. The biggest operations for these Middle East networks are usually in regional advertising and media hub Dubai, the large and relatively affluent consumer market in Saudi Arabia and business-minded Lebanon.
But Egypt was considered a Western-friendly country that was a good entry point for the Middle East market, and its double-digit ad spending growth was forecast to continue in 2011. Now, the country's $1 billion a year ad industry is shut down.
At WPP, the Middle East represents about $350 million in annual revenue. Most of that used to come from Lebanon, and now the leader is Dubai, and increasingly Saudi Arabia, said Chief Executive Martin Sorrell. "Egypt was growing more rapidly in latter years. In the last four or five years it had become a much stronger market," he said. "[At WPP we are] not changing our stance toward investing in the region."
In other countries, such as Jordan, whose king just fired and replaced his government, and Syria, the ad industry is relatively tiny. Jordan's three biggest advertisers -- France Telecom, PepsiCo and Zain Telecom -- spend about $6 million each, according to Ad Age's top advertisers' ranking, compiled with data from Pan Arab Research Center. In Syria, where global agencies mostly operate through nonequity affiliations, only two advertisers, MTN Group and PepsiCo, spend as much as $1 million each.
In Tunisia, where the region's protests began and the president was forced out of office last month, calm has been restored but the ad industry isn't fully back yet, said Minyar Mansour, media manager at research firm Sigma Conseil in Tunis.
Middle East executives say no one knows what will happen next, or in what time frame. One regional ad exec said his local Cairo CEO is optimistic, saying every day that his agency will probably be able to re-open in two days.
TBWA Raad Chairman-CEO Ramzi Raad, who left his native Lebanon when civil war broke out in 1975, puts that optimism in perspective as he remembered his own experience: "You're in a state of denial. You refuse to accept that your country is going to be destroyed."
A look at what Mr. Raad's TBWA Raad network is doing provides some insight into the nimble, constantly changing contingency planning that is going on now in Egypt and the Middle East. When agencies first closed, TBWA Raad's Cairo staff formed neighborhood networks, gathering for a few hours each morning with colleagues who lived nearby to carry on with major projects at a busy time for clients that were in the early stages of launching their 2011 campaigns. Whenever friends or relatives went abroad, they were asked to carry work out of the country to other TBWA offices.
The neighborhood meetings became too dangerous, and now each department head tries to call every member of his team daily to check on them.
TBWA Raad's regional managers are working on an evacuation plan for staff who have passports -- not all of the 112 employees in Egypt hold one -- and are preferably single and without dependents. The plan is to transfer those staffers immediately to TBWA offices in Dubai, Abu Dhabi, Jeddah, Riyadh and Doha, where they will collaborate with those agencies' teams on local work.
Weighing the Middle East situation, Howard Draft, executive chairman of DraftFCB, said, "The growth will be there [in the Middle East] but you've got to ride the roller coaster and every few years you know it'll blow up there."
While Egypt was exploding last week, a Middle East ad festival was held in Lebanon at ski resort Faraya Mzar near Beirut. Among the 25 short-listed entries from Egypt, JWT won the Grand Cristal award in the integrated-marketing category for a campaign for Vodafone Egypt.
~ ~ ~
Contributing: Abbey Klaassen