Ad agencies seek limit on pitches


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Such codes have become increasingly common in more developed markets from South Africa to Europe. Last month, Belgium's advertising agencies launched a virtual strike, replacing their web sites with an open letter to clients in an attempt to get them to sign on to a rule limiting the number of agencies being asked to pitch, or make detailed proposals, for each job.

The call to bring such a code to the Middle East emerged during a debate on the opening day of the Dubai International Advertising Festival and the Dubai Lynx Awards. "It's perhaps time for the industry to dig its heels in and take a stance," said Ashish Banerjee, the vice president of brand at du. "But only as long as everybody who is part of the industry is prepared to go along with it, because the moment one agency breaks the ranks the whole thing will fall apart, as it has several times before."

He said the current culture of clients asking many agencies to pitch, sometimes as many as 15, has emerged because "the industry has allowed this to happen". "It's really up to the principals of the industry to figure out if there is a reasonable place to go with this, if there is a code of conduct that is robust enough that everybody would respect it," he said. Dr Lance de Masi, the president of the UAE chapter of the International Advertising Association (IAA), expressed support for such a code, adding that it had not been a part of previous attempts at regulation that Mr Banerjee was referring to.

"The IAA does support the idea that there needs to be guidelines in terms of pitches and pitch conducting," he said. "We have done some work on that, but we need to do more work on that." Malek Ghorayeb, the creative director at Leo Burnett Dubai, said his agency pitched 18 times last year. "That's two to three times per month," he said. "Imagine the amount of work." If more clients in the Middle East adopted policies of paying agencies for pitches, similar to those used in the field of architecture, the problem would be greatly reduced, he noted. Clients would be less tempted to tap so many agencies for each pitch and agencies would lose less time and money chasing after long shots.

No clients in the Middle East pay for pitches now, he said. Part of the problem comes from the transient culture of the UAE, where most of the big agencies and regional companies have their headquarters, several industry leaders said. Marketing executives who plan to be in the emirate for only two years are under pressure to make their mark on their company's advertising strategy and one of the easiest ways to do that is to call for a review of the strategy through a call for pitches.

"It's a money-driven thing," Mr Ghorayeb said. "By changing agencies, they can make new deals and lower their fees. If you don't want to take it at 10, I can't go to this guy and he will take it at eight. It's no longer about creativity and creative product, it's how much you are able to go down on your fees." @Email:khagey@thenational.ae

How Tesla’s price correction has hit fund managers

Investing in disruptive technology can be a bumpy ride, as investors in Tesla were reminded on Friday, when its stock dropped 7.5 per cent in early trading to $575.

It recovered slightly but still ended the week 15 per cent lower and is down a third from its all-time high of $883 on January 26. The electric car maker’s market cap fell from $834 billion to about $567bn in that time, a drop of an astonishing $267bn, and a blow for those who bought Tesla stock late.

The collapse also hit fund managers that have gone big on Tesla, notably the UK-based Scottish Mortgage Investment Trust and Cathie Wood’s ARK Innovation ETF.

Tesla is the top holding in both funds, making up a hefty 10 per cent of total assets under management. Both funds have fallen by a quarter in the past month.

Matt Weller, global head of market research at GAIN Capital, recently warned that Tesla founder Elon Musk had “flown a bit too close to the sun”, after getting carried away by investing $1.5bn of the company’s money in Bitcoin.

He also predicted Tesla’s sales could struggle as traditional auto manufacturers ramp up electric car production, destroying its first mover advantage.

AJ Bell’s Russ Mould warns that many investors buy tech stocks when earnings forecasts are rising, almost regardless of valuation. “When it works, it really works. But when it goes wrong, elevated valuations leave little or no downside protection.”

A Tesla correction was probably baked in after last year’s astonishing share price surge, and many investors will see this as an opportunity to load up at a reduced price.

Dramatic swings are to be expected when investing in disruptive technology, as Ms Wood at ARK makes clear.

Every week, she sends subscribers a commentary listing “stocks in our strategies that have appreciated or dropped more than 15 per cent in a day” during the week.

Her latest commentary, issued on Friday, showed seven stocks displaying extreme volatility, led by ExOne, a leader in binder jetting 3D printing technology. It jumped 24 per cent, boosted by news that fellow 3D printing specialist Stratasys had beaten fourth-quarter revenues and earnings expectations, seen as good news for the sector.

By contrast, computational drug and material discovery company Schrödinger fell 27 per cent after quarterly and full-year results showed its core software sales and drug development pipeline slowing.

Despite that setback, Ms Wood remains positive, arguing that its “medicinal chemistry platform offers a powerful and unique view into chemical space”.

In her weekly video view, she remains bullish, stating that: “We are on the right side of change, and disruptive innovation is going to deliver exponential growth trajectories for many of our companies, in fact, most of them.”

Ms Wood remains committed to Tesla as she expects global electric car sales to compound at an average annual rate of 82 per cent for the next five years.

She said these are so “enormous that some people find them unbelievable”, and argues that this scepticism, especially among institutional investors, “festers” and creates a great opportunity for ARK.

Only you can decide whether you are a believer or a festering sceptic. If it’s the former, then buckle up.

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Skilled worker visas will require a university degree, and there will be tighter restrictions on recruitment for jobs with skills shortages.

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