The slowdown in the advertising industry has led one of the region’s biggest agencies to transfer some staff from Dubai to Beirut to trim costs.
Omnicom Media Group is shifting staff from its Dubai Media City regional headquarters to Beirut as big brands slash marketing budgets and corporates across the region cut back on spending.
The agency, whose clients include McDonald’s, hopes to save as much as 8 per cent on its payroll costs when between 20 and 30 positions are initially transferred to Beirut next year. More are expected to follow in 2018.
"We have to adapt to the changing dynamics of our industry," said Elie Khouri, the regional chief executive of Omnicom Media Group, in an interview in Dubai.
"Now you can be in a remote place and do a lot of things in our business. Of course you have to have the centre team that are client-facing, but you can do a lot of the back office work in other places. We were looking at India in certain aspects before and now we are looking at Beirut to do some of the things we do in Dubai to save costs."
Mr Khouri expects the offshoring of jobs to lower-cost destinations to become a theme across a number of industries in the year ahead.
Global advertising agencies are responding to a slowdown in spending by clients as rapidly changing media consumption coupled with economic and political uncertainty in many of the world’s biggest markets leads to an upheaval in the industry.
An increased focus on data and analytics is also allowing agencies to hire in countries where those skills are to be found, such as the Indian subcontinent.
Beirut, historically the capital of the region’s advertising sector, is a natural choice for agencies seeking lower-cost offshore alternatives to Dubai.
It has a large pool of graduates in advertising, graphic design, digital marketing and audiovisual disciplines, with media companies providing 2 per cent of total employment in Lebanon, according to a 2014 BankMed report.
About 20,000 people work in Dubai Media City, which has about 2,000 local and international media companies. It also possesses the third-highest office rents in the city, according to the latest data from Cluttons, with quoting rents of up to Dh225 per square foot per year.
David Godchaux, the Dubai-based chief executive of CORE, said there was strong tenant demand in Media City from existing occupiers looking to expand but limited available office stock to allow companies to scale up.
"Prime office rents in Beirut are unsurprisingly much lower than Dubai Media City, with typical rents ranging between Dh100 to Dh120 per sq ft per annum," he said. "Although these figures may seem attractive, quality of the talent pool, regional instability and a migration influx faced by Beirut over recent years may deter a few players."