The FINANCIAL — GAA Holding has been operating a union of business and marketing companies in Georgia since 1991. It was the first advertising company on the Georgian market with whom American and international companies started cooperation. Year after year the company integrated different international companies.
The companies united under GAA Holding today, are: Torrent FZCO Dubai, SENA MOTORS, McCann Erickson Georgia and Armenia, Advertising Group BAGEBI, MPG Georgia and Armenia, Star Group and MSG – Internet Media Marketing Agency. All the companies cooperate with local as well as international companies. In total 200 people are employed in the Holding.
The President and founder of the Holding Gia Alikhanashvili talked to The FINANCIAL about the developments, strategies and future plans of the company.
Q. 20 years have passed since you first appeared on the Georgian market. Tell us how your company has developed over the years?
A. We started our activities in a small studio which created its own age in advertising. It was one of the pioneer studios of the time, producing and airing advertisements. In 1995-1996 the business started to grow and lots of similar agencies to ours appeared.
It took 5-6 years to persuade businessmen of the benefits of having an advertisement. Advertising was a new field on the market in the post soviet area and that was the reason why businessmen didn’t understand the need for our agency. In the very early years, we were making and airing advertisements and only after finding out that it really was positive for their business did businessmen pay us for our work. After this, they continued cooperation with us. It was a very big risk for us, but this was the only way to have clients. Some of our clients grew with us, some of them have increased so much that our agency alone isn’t enough for their advertising campaign anymore and now several agencies work for them in total.
Then international companies started cooperation with us. We studied work with foreign clients which was very different from local ones. After this, in the years 1998-1999 American international agency McCann Erickson appeared. The company requested a representative in the Georgian market. It took 8 years of researching our market until they at last decided for our company to represent McCann Erickson in Georgia. Other companies came to Georgia as well following McCann Erickson.
When you make something important for your client and the client sees that it’s effective, trust appears from their side. We were oriented on having customized service from the very beginning. Your opinion and the client’s should be similar to each other and meet the format that the advertising requires.
We made a new office for McCann Erickson in Armenia. That office is under my management as well. There is McCann Erickson Armenia’s sister company Media and Event Marketing Agency operating in Georgia as well. In total I made 5 agencies for McCann Erickson agency. We have a head office in New York and a European head office in London.
Q. Your slogan is “Creating Modern Standards”. What kinds of standards are modern nowadays?
A. During a certain period we were the first to do some things. We did things that were innovations on the Georgian market. We have had cases of starting from zero and then developing. We sometimes had initiatives, very good, useful and profitable initiatives which were lost because the Georgian market wasn’t ready for them. So we really created modern standards.
Q. What were the effects of the financial crisis on the Georgian advertising market? What are the tendencies right now?
A. We went through three crises. Now we are being told that the fourth one will be because of the European crisis, and should be over by 2013. I think that all the crises are created and then solved by the same people. When told of an impending crisis, my strategy would be not to invest in new businesses and spheres, but strengthen those ones which I already have. For example, we had a journal before the crisis but we stopped producing it as soon as the crisis began. Now we’re trying to strengthen those organizations in the holding that have a chance to survive the future crisis. Those organizations, however, which have no chance, we need to stop for a while.
Q. SENA Auto has been selling Suzuki cars in Georgia since 2007. Please give us some sales statistics. Also, how would you evaluate Georgia’s auto market?
A. From 2006 to 2008 we had the most successful sales. It was a peak in sales. We saw that it was a business with perspective even during the crisis and we added new organizations such as Polaris, Nokian Tyres, Nipparts and ENOC.
In general, because of the low price, American cars are more in demand in Georgia than European ones. It doesn’t mean that American cars are cheap. Nowadays, there is a difference in terms of specification. The same car has a different price in American, European and Asian markets.
Q. What organizations or companies would you establish today or in the future? Do you think the Georgian market needs some new directions which it doesn’t yet have and would you consider establishing them?
A. I established a circle in my holding. Every business unity helps the other. If we start thinking about new developments, we would need deep changes in our strategy. In those economical and political conditions which I expect there to be in the future, I wouldn’t risk it. I wouldn’t consider a situation where a new partner brings some investments and we just help to develop the business.
Q. Is Georgia a good place for GAA’s partner companies to do their business in successfully?
A. Every country has a different point of view. For example, countries like China, Korea, and Japan are very cautious about where to start their business and where to invest. Central Asia and Eastern Europe are a little more risky. Americans are faster in making decisions and in researching the market. They are trusted here and that’s why their business has developed so easily in Georgia. A business has to be at the right place at the right time to succeed. Georgia is the right place for Americans and they are using that to their advantage. They even invested in the Georgian market during the crisis. The Georgian Government correctly calculated which country to focus marketing on and with whom to cooperate.
Q. You have said that successful business means a successful country. Do you think that Georgia is a successful country and do you think you have helped the country to be successful?
A. Without companies like ours, how can a country be successful? We don’t only work for us, but for the country as well. We work to give income to the country, to ourselves, to employ people. This is common work. The state can’t exist without business and business – without the state. We need to be partners.
Q. What can you tell us about Georgian-American economic relations?
A. The economic relations between these two countries have a big future. It has been increasing investment securities in Georgia. There is very little European business here even today and American companies will be the first companies to appear next in Georgia.
McCann Erickson Georgia, established in 1998 in Tbilisi, was the first international network advertising agency to appear in the Caucasus region. It started to work with the biggest international client companies, such as Coca-Cola, Japan Tobacco International, Nestle and other McCann-Erickson network clients.
UM Georgia provides market innovate strategies services in media planning and buying as well as a full spectrum of media communications services. It is one of the top media companies in Georgia. UM Georgia is dedicated to use communications to build their client’s business. It provides creative, accountable media solutions which are based on real consumer insights.
Eka Khundadze, McCann Erickson Client Service Director, Maka Tsikoridze, Director of Momentum Georgia and Nana Janjgava, Director of UM Georgia, shared information about their companies’ operations in Georgia.
Q. Your goal is to help the businesses who are in the process of development. How does this goal work here in Georgia?
Eka Khundadze: It is in the interest of newly developed businesses which are starting up to have an advertising campaign. They must plan from the very beginning to have a successful advertising campaign. In Georgia it’s a little bit difficult to make a good advertising campaign because it needs financing. Local businessmen don’t have enough finances for the start-up period. Foreign companies, on the contrary, can put investments in to advertising. Advertisement is an investment for them that can return their money and increase their business.
Maka Tsikoridze: The education and knowledge of our clients is much better now than it was for example 10 years ago. They know what they need much better than they did 10 years ago. The service of our agency has become clearer for our clients. This indicates that the market has evolved.
Q. What kind of service do you provide to start-ups?
Eka Khundadze: For example, for start-ups research is necessary; an action plan developed based on research. We are guided by international standards and based on these standards we develop an action plan. This distinguishes our company from other companies. A little more globally we are pertinent to this issue. We have long experience and we know the market. We can easily advise them when, where and how to start their business.
Maka Tsikoridze: The primary plan for start-ups is very important, because the first impression is always important. That’s why companies should order a start-up with experienced companies and create an action plan after consultation with them.
Q. Your goal is also to help not only start-ups, but the companies who are already developed. Which one is more difficult to work with?
Maka Tsikoridze: Both of them have similar difficulties. For us a start-up is much more interesting. What’s very important is how the clients trust you. The difficulty is to make your client sure to believe you and make investments according to your advice. As the first impression is very important, working with start-ups is more interesting.
Q. McCann Erickson Georgia was the first international advertising agency to operate on the Georgian market. How has the advertising market changed since that time?
Eka Khundadze: Our agency was opened on the basis of experienced company, Kedi TV. It was the first agency in Georgia and was a monopolist on the market. Then came McCann Erickson, who brought their clients, their management with them and we started our development here. Now companies have well developed marketing. Their demands are more subtle. Other countries’ advertising markets can be more developed, but ours is improved as well. As McCann Erickson was the first international advertising company here, it has been hugely responsible in developing the local market. We were responsible for this along with McCann Erickson as well. As we needed to bring to the Georgian market all the standards that McCann Erickson has, it caused the improvement of the local market. To be more specific, I can mention that McCann Erickson was the first to make strategic plans. We were the first to make a communication plan; we were the first to use international tools and so on.
Q. McCann Erickson operates in Armenia as well. What are the similarities or differences between these two countries and what are the advantages these countries have compared with each other?
Eka Khundadze: We are post soviet countries and we have lots of similarities. We began developing at the same time. We had the same level, same problems, and same situation. For example issues like media monitoring, research etc, came earlier to the Georgian market than the Armenian one. The Georgian market has little advantages compared to the Armenian market. We brought Georgian clients to the Armenian market. We have close relations with Armenia. As for Azerbaijan, it’s a much more developed country in terms of advertising. The finances, budget and investments are bigger there and the market developed faster.
Q. What investment opportunities were there this year and what will they be next year?
Nana Janjgava, UM Georgia: The investments will grow and not just because they are growing in general, but because of inflation. Before the August war in 2008 there was a peak of investments here. Then suddenly there was a large fall in investments. From the end of 2010 prices have been rising, that means demand is increasing, that means investments are growing. Investment growth is dependent not only on raising prices but also on the appearance of new companies.
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