Letter From Bosnia: After The Fall

In Postwar Bosnia, help has come from an unexpected ally-advertising. "Advertising is very important because our people see that the biggest companies are coming," explains Jusuf Arnautovic, general manager of the Ossa ad agency in Sarajevo. "Common people and businessmen alike find this important moral support. When they see advertisers like Coke, Wrigley's or Siemens, everyone understands the war is really over and it's time for business." Under normal circumstances Ossa, with only 17 employees and 1997 billings between $3-4 million, would barely register on any European or American network's radar. But a tour of Sarajevo, which is controlled by the NATO-led stabilization force (SFOR), reveals that circumstances remain anything but normal, despite the Dayton Peace Agreement signed two years ago. The idea of an agency in a ravaged country cranking out Coke jingles seems oddly paradoxical. To understand the current business climate, it's important to know the realities of life in Sarajevo. First impressions of the city are like viewing black-and-white newsreels of Europe during World War II. The airport and surroundings in the Sarajevo suburb of Dobrinja, where some of the fiercest fighting between the Bosnian army and Serb nationalists took place, reflect near-total devastation. The drive into downtown Sarajevo along the main thoroughfare, dubbed "Sniper Alley" during the war due to its deadly proximity to nationalist Serb sniper positions in nearby hills, is populated by bombed buildings pock-marked with bullet, mortar and artillery holes. Few structures escaped damage. Here and there, however, construction cranes indicate slow rejuvenation. International aid is capricious, depending in large part on the progress made on the complicated Bosnian political front. SFOR troops are everywhere; they will try to ensure that the guns stay quiet throughout the country, now that President Clinton has committed U.S. troops beyond the June 1998 deadline. During the siege of Sarajevo, approximately 10,000 city residents were killed and hundreds of thousands were wounded. Yet many say the city's spirit is intact. "I didn't expect to see such energy," admits Jernej Repovs, director of Studio Marketing J. Walter Thompson in Ljubljana, Slovenia. Repovs, who is putting the finishing touches on opening an agency in Sarajevo, visited in October, his first trip since the war ended. "People are doing business," he emphasizes. One indication of this is the ads. The first ones noticed are billboards, planted along Sniper Alley. Here, Benetton, Renault's Twingo car, Marlboro and Pirelli tires vie for attention. And where there are advertisers, at least in Sarajevo, there is Ossa, which claims to buy about 70 percent of all major TV, print, radio and outdoor media in the city, as well as throughout much of the Moslem-Croatian Federation. The Republika Srpska comprises the other portion of divided Bosnia and Herzegovina. Prior to the breakup of the former Yugoslavia in the 1980s, Ossa (which stands for Oslobodenje Sarajevo), the publishing company from which it split off in 1983, was one of the three biggest ad agencies in the country. Clients included the Sarajevo Olympic Committee, a client it worked for throughout the war, as well as domestic companies such as Sipad, a giant wood and furniture producer, and Energoinvest, an industrial conglomerate ˆ la United Technologies. "There were a few huge groups and most were our clients," says Goran Jovanovic, an Ossa executive. "But they were more or less destroyed. Now, most of our clients are international." In fact, Ossa's client list today would turn many multinational networks green with envy. Though they still work for domestic companies, Ossa's future, and the future of Bosnian consumerism, rests largely in the hands of foreign companies, such as Coca-Cola, Wrigley's, Henkel, Electrolux, Wilkinson, Pirelli, Levi's, L'Oreal, British Airways, Johnson Wax, Benetton and Converse. Indeed, some of these companies will begin advertising in Bosnia this year. Since Ossa has been the only game in town, agency networks, including JWT, BBDO and Publicis, service their clients here through Ossa. Potential conflicts have been ignored, since the overriding desire of multinational clients coming into the country is to battle for position in a re-emerging market. Well before Clinton's troop announcement, Arnautovic says he was convinced that war in Bosnia was over. "My clients' words and my own information led me to believe that SFOR or some other force will stay in Bosnia for a long time." Clients agree. "With Coca-Cola, the issue isn't whether we want to go into a market," says Coca-Cola representative Mark Preisinger. "The question is: How do we do it?" Coke's confidence is typical of other marketers now entering the country, many for the first time. Establishing a bottling plant in Sarajevo in 1975, Coke sold 3.3 million unit cases at its peak in the early 1990s, an amount similar to that in Jordan, Iceland or Estonia today. Though the war interrupted operations, "We immediately started selling Coke through wholesalers following the Dayton agreement," says Preisinger. "Bottling is currently not operational. Volume today is higher than it was before the war," he boasts. Coca-Cola Amatil, the second-largest Coke bottler in the world, is planning to build a new plant in Bosnia. "The one in Sarajevo was controlled by Serbs who dismantled it when they retreated," explains Roger Brown, external relations manager for Amatil. "We should be in production by first quarter '98." Despite the outward enthusiasm of Coke and other marketers, not all clients are willing to enter a volatile market. "Talking with Ford or other international clients, they are not sure the situation is very stable," admits Repovs. "As a marketing man, I agree the situation is a bit risky. But we are saying, 'let's go,' because it's better to be first. When you're there when the situation is difficult, you are a winner later." Ossa would agree. Its future looks bright, though some significant challenges lay ahead. Arnautovic predicts billings will double this year. The agency also signed a nonequity affiliation with Groupe Publicis last summer. That decision came after failed courtships by other networks, including JWT and BBDO, says Arnautovic. "When we saw the list of Publicis clients from Ljubljana (Publicis Virjo in the Slovenian capital is the lead agency for the Adriatic region), we realized the biggest benefit would come from working with them," he says. Ossa and Publicis' current venture is to open a Publicis office in Sarajevo to manage such Publicis clients as Coke, L'Oreal, Renault and Johnson Wax. A roughly 50-50 equity deal is being hammered out, says Jovanovic, which Publicis confirms. Ossa will continue to work for both domestic clients and competing network accounts, though Arnautovic will oversee both groups. "Coke and I will select the account manager for their business together," he adds. "The entire Balkan region is an area where both Coke and Publicis are investing heavily," confirms Jean-Paul Morin, Groupe Publicis' chief financial officer in Paris. Investment in advertising, however, means investing in people. Both Arnautovic and Jovanovic say a major problem is staffing; they need to add employees immediately. Finding them in a country where skilled people are in short supply is difficult. Two million refugees fled Bosnia during the war. "The middle class and younger people have gotten out," says Jovanovic. Arnautovic adds that Ossa has agreements with local graphic design and business schools to identify young talent. "We give the best scholarships. In return, they do internships here," he says. "This is the only way to find good people." His sense of urgency is understandable. Multinationals are beginning to award Ossa a full range of creative and marketing responsibilities. In the past, Arnautovic says, most work for international clients was adapting graphics and redoing commercials in the local Bosnian language. Now advertisers, such as Meggle, a German dairy company, are turning over their entire creative brief. "Wrigley's is so happy with us, they just announced they will work with Ossa directly and not via BBDO," adds Arnautovic. Wrigley's declined to comment on its operations in Bosnia. Media in Bosnia Herzegovina are also evolving rapidly. There is only one national TV network, BiHTV, which covers both the Moslem-Croatian Federation and the Republika Srpska. There are also local stations-most controlled by the three main ethnic factions and their corresponding political parties-housed in both halves of the country. According to recent figures provided by Studio Marketing JWT, a 30-second spot during prime-time news or sports on BiHTV in late '97 cost about 900 Deutsche marks (over $500). Reliable pricing data on smaller stations in Bosnia was not available. The currency of choice in Bosnia is the German mark. Moreover, rules regarding ad time are being tightened. Previously, commercial blocks could last 15 minutes, explains Jovanovic. "Now, the maximum length is two minutes, and there is no breaking in on movies, which is problematic for us," he admits. He also says commercial production values have improved significantly. "Before, anybody could produce their own commercials. Now you see only serious clients on national TV." As for print, circulation of the three main dailies, including Oslobodenje, the only paper to continue publishing throughout the siege, was cut drastically during the war to about 20,000. Given the economic hardship gripping most of the country, buying a newspaper has become a luxury. Ad print prices range from approximately $200 to $830. Weeklies such as Svijet, circulation 20,000, cost about $1,666. Billboards, becoming popular in Sarajevo, have a one-month rental rate of about $200. Outside of the Moslem-Croatian Federation, the state of advertising and marketing is murkier. Both Arnautovic and Jovanovic say their clients have no dealings in the Republika Srpska, given the political situation. Indeed, international efforts at reconstruction have largely ignored the Bosnian Serb sector of the country; the economic situation there is even worse than in the Moslem-Croatian half. Arnautovic does say, however, that some clients such as Wrigley's have expressed hopes of opening markets in parts of Srpska. Amatil's Brown says Coke was smuggled into Serbia and Republika Srpska during the war, typically via Hungary. "It was ingenious how they got product during the worst period of sanctions," he says. Despite the unavoidable division of labor with Coke, both Arnautovic and Jovanovic believe the tendency to cut Bosnia in two will eventually weaken. "The economy will erase borders," Arnautovic predicts. "You can't have a factory in one village, the workers in a second and supplies in a third," Jovanovic adds. There also remains potentially troubling commercial questions in Bosnia as multinationals, assisted by ad agencies such as Ossa, rush headlong into a market once dominated by domestic brands. In a country where estimates of unemployment range from 50 percent to 80 percent, few people can afford the products sold by companies such as Sony and Benetton. Many who can are believed to be criminals or war profiteers. Observers in Bosnia acknowledge that social polarization between haves and have-nots could pose a serious problem in the future. In addition, as foreign brands replace once-dominant homegrown products, the risk of a backlash against what Europeans refer to as Western (especially American) corporate imperialism is real. Arnautovic acknowledges this concern, but argues that Bosnia has no other option if it hopes to rebuild its economy. "You are right about American domination," Arnautovic concludes. "But this is our only way out. We have no time to think about domination. We have to work. We have to survive. This is our only choice." Daniel Tilles can be reached at 100442.1706 compuserve.com

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Letter From Bosnia: After The Fall

Daniel Tilles

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Daniel Tilles