South America the next growth target for ad agency Ogilvy & Mather

Looking for further opportunities there after raising its Middle Eastern stakes.

Miles Young, the worldwide chairman and chief executive of O&M, left, who expects the firm’s business in the Mena region to grow at a rapid pace this year, is seen with Eddie Moutran, the chief of MemShow more

Ogilvy & Mather, the New York-based advertising, marketing and public relations company and a subsidiary of WPP, is seeking fresh opportunities for growth in South America after the firm increased its investment in the Middle East.

“There are some opportunities in central South America. It is not an area to be sniffed at and is still quite interesting. At some stage we will probably do something in the larger markets, in Guatemala, Panama and Costa Rica,” said Miles Young, the worldwide chairman and chief executive of Ogilvy & Mather.

Ogilvy will be looking at local companies to partner with and eventually acquire rather than opening an office from scratch.

“We’re number one in China, in India so we have particular strength in developing markets,” said Mr Young. “[South America] represents one of the most important areas for the future of many of our clients and not to be in it wholeheartedly would be counter-cultural to us.”

The company also upped its stake last week in its Middle East operation Memac Ogilvy, but did not specify the new shareholder structure.

“It has always been a partnership based on the perception we would come closer and closer together,” said Mr Young. “We have a global agenda so we want to see the benefit of that evidenced in further expansion [and] further growth. Our clients believe this is an important region in the world and it reassures them we are taking it seriously.”

Mr Young expects Ogilvy’s business in the Mena region to grow at a rate of 10 to 15 per cent this year, one of the fastest in the world. Its business in China is expected to grow at 7 to 8 per cent.

The Middle East has overcome many of the hurdles associated with developing markets to become among the top centres in the world. The region’s PR industry is valued at US$500 million to $600m according to industry estimates.

“At one level it is much more sophisticated and the reason for that is to do with Dubai,” said Mr Young. “It’s a very, very strong global hub. To me, Dubai is on a level of parity with Singapore, which 10 years ago, it wouldn’t have been.”

Creative talent from Beirut, which Mr Young described as “absolutely outstanding and some of the very best in the world”, has also pushed the Mena region to the forefront of the advertising industry in particular. At the recent Dubai Lynx creative festival, Memac Ogilvy was awarded agency of the year while its “Mobilising the 12th Man” campaign for a Tunisian football club won two grand prix prizes and four gold awards.

Overall, the region continues to perform well despite the political instability in some countries.

“If people want an excuse for why things are not happening, then the Arab Spring is a perfect excuse,” said Eddie Moutran, the chairman and CEO of Memac Ogilvy. “The Arab world has been in turmoil since 1948. This is nothing new, it just intensifies in some places and we have to live with that.”

Mr Moutran says that Ogilvy’s Syria office is still open and turning a profit based on the work it receives to localise and translate content for its clients in Dubai, which is one of the more competitive markets alongside Abu Dhabi and Saudi Arabia. Egypt remains its only weak country, and “has a long way to go”.

For Ogilvy, the next area of growth in the region would be Iran.

“There are no hard and fast plans. We have to depend on the policy of US and British governments to guide us, but I think if all else was equal, we would be there in a shot,” said Mr Young. “We have a lot of clients interested and a lot of local operators interested. It would only be advantageous to the health of the world and the people of Iran.

Total advertising spending last year is estimated at $5 billion in the Middle East and North Africa, with less than 10 per cent of that spent on digital advertising. By 2016 digital ad spending is set to reach $2.8bn across the region, according to the technology researcher Gartner.

Public relations companies based in Dubai are also increasingly looking towards Africa for new opportunities amid political unrest in parts of the Middle East. Grayling Middle East is planning to open two new offices in Africa including one in Angola as the company seeks to expand its reach abroad. Asda’a Burson-Marsteller recently opened an office in Kenya to take advantage of the continent’s booming economy, which grew by 5 per cent last year.

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