If Iran Sanctions Lift, Will Ad Companies Rush In?

Sir Martin Sorrell, the WPP chief, has called Iran the last great, untapped market for growing his business. With a potential nuclear deal set to end some embargoes and perhaps begin integrating the Middle East power in the global marketplace, are big industry holding companies plotting moves into the country? In fact, one is already there. Dentsu Aegis, the London-based, Japanese-owned holding company, entered the Iran market early this year in partnership with International Communications Agency. The relationship was formalized in May, creating Carat-ICA. Based in Tehran, the office has 35 media, creative and digital staffers handling media planning and buying for clients like Reebok, Dr. Wolff, Native Union and Telda. Dentsu Aegis execs declined to discuss their move into the country with Adweek. But in May Michael Nederlof, CEO of Dentsu Aegis Network for the Middle East, North Africa issued a statement: "We have been doing business with ICA under the parameters of the pre-existing sanctions and regulations.... The newly formed Carat-ICA partnership has the on-the-ground capabilities and a Generation Y team of digital and media experts." Also, French network Havas Worldwide manages client campaigns in Iran out of the agency's Dubai offices. The agency declined to discuss its decision to work in the market. But U.S. players like Omnicom and Interpublic are bound by sanctions, unrelated to the nuclear issue, that preclude them from doing business in the oil-rich country. And while Sorrell's U.K.-based WPP Group is not subject to the U.S. sanctions, he argues that for companies like his, with large U.S. operations, the timing is still premature. He has said that multinationals should abide by existing U.S. restraints, which bar most trade with Iran. In addition, Sorrell believes the Islamic Republic should formally recognize the State of Israel. Paris-based Publicis Groupe, run by Maurice Lévy, another supporter of Israel, has not opened in Iran, either. Foreign-based companies like WPP that deriving a large percentage of revenue in the states could be expected to act in accordance with American-imposed sanctions. The U.S. government, for instance, has made a concerted effort to request that foreign banks not do business in Iran, even though legally they're able to do so. "There's been a desire on the U.S. side to choke all economic activity in Iran," said Erich Ferrari, founder of Ferrari & Associates, a Washington D.C. law firm specializing in economic sanctions. "The government likes foreign entities to respect the sanctions of the U.S." In a marketing communications industry in constant search of business opportunities in emerging economies, Iran's prospects offer one of the world's last great opportunities. Aside from possessing the world's fourth-largest oil reserves, Iran also has a diverse, strong industrial base. Its young population of 77 million tech-savvy people with high levels of education has a pent-up demand for Western consumer goods. "Maybe Iran and America's government don't like each other, but Iranian people love American products," mobile phone retailer Hooman Masumi told NBC News last week. "This could be a new beginning for both of us.... Everyone wants an Apple phone. Iranians like good things." In the coming year, they may well have the means to indulge those tastes. Last week, economists at Bank of America Merrill Lynch forecast Iran could show real short-term GDP growth of 6 percent to 7 percent, following the relaxation of sanctions and stronger oil production. The bank said that if stability and a lack of sanctions had followed Iran's revolution in 1979, the country's economy could be bigger than Saudi Arabia's, instead of half the size as is now the case.

Brand Marketing

If Iran Sanctions Lift, Will Ad Companies Rush In?

Dentsu is already there, WPP and Publicis are in no rush

Noreen O'Leary

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Noreen O'Leary