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Billboards empty as Iran’s ad sector mulls sanctions

LONDON: Iran’s advertising agencies are struggling to find new business as international brands start backing out of the country following US President Donald Trump’s decision in May to withdraw from the Iran nuclear deal and reimpose sanctions on the country.
Staff numbers at agencies are being cut due to lack of work and billboards are often left empty on the sides of Iran’s roads, said Sam Cordier, managing director at PGt Advertising in Iran, as major brands reconsider whether or not to maintain a presence in the Iranian market.
While Trump reimposed some sanctions in August, tougher measures, including those involving oil exports, will be implemented in November. “You can already see that it has affected a number of the agencies here,” he said.
“The pulling out of international companies means the investment into this country falls. That investment literally pays the salaries of the young talented Iranians that work here. And over the course of last month or so a number of agencies have had to cut staff.”
“It is really tough,” he said, adding that PGt has not had to lose any employees yet.
The lack of business contrasts sharply with the surge in enthusiasm for the Iranian market following the lifting of international sanctions in January 2016.
With Iran finally able to sell its oil freely on international markets, and coupled with the large and youthful population of more than 80 million people, the country was touted as the “next big thing” in advertising for both the local and international agencies. Potential clients such as oil companies, car producers and plane makers began to pile into the country.
Iran was even included in the top 30 up-and-coming advertising markets that could threaten the dominance of traditional players, according to a report by advertising firm Zenith Media in January.
While Iran’s advertising market was “underdeveloped” the report said, due in part to large state involvement in the economy, the country has “long-term potential”.
“We estimate that ad market was worth about $1.4 billion in 2017, which was 0.3 percent of GDP. We expect this proportion to rise as Iran reintegrates into the global economy, ” it said.
Iran’s advertising expenditure would reach $2.1 billion by 2020, the report forecast.
Buoyed by thawing international relations between 2015 and 2016, there was a flurry of international ad agencies signing deals with local companies as they looked to carve out a share of the nascent market.
“You have a country where perhaps traditional marketing practices are still in their infancy, but at the other end there is a growing tech industry,” said Barry Dudley, a London-based partner at Green Square, a media and marketing advisory firm.
London-based Japanese-owned Dentsu Aegis signed a partnership with Iran’s International Communications Agency in May 2015.
The following year, UK-based Grayling secured an affiliation agreement with Iran’s PGt Advertising.
By November 2016, the UK’s WPP had also signed an affiliation deal with digital marketing company PPG in November 2016.
Trump’s move has quashed hopes that such deals would bring in a profitable new stream of business for international ad agencies, with many of them pushing pause on their Iran strategy.
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