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Last year, an ad from the Middle East won the region's first Cannes gold Lion. "Paperclip", for Sony's Wega Engine Plasma TV, by the Dubai-based agency Tonic, demonstrates the thinness of the TV screen by showing a note attached to it with a paperclip. The ad also won gold at the One Show, the first One Show gold Pencil to be won by a Middle-Eastern agency in 30 years.

Heady stuff for a region that normally barely registers on the international advertising creativity awards radar. Yet ad executives in Dubai and Beirut are talking it up and predicting a creative blossoming in the market over the next few years.

There's plenty of well-founded business optimism in the region. The region's economy is growing at a rate of knots, and Dubai is a phenomenal boom town, encouraging media companies as part of its high-profile expansion plans. Dubai Media City allows companies to be 100 per cent foreign owned.

Adspend in 2005 is estimated to have risen by 17 per cent across the whole Middle East, with a 43 per cent rise in the United Arab Emirates and 27 per cent in Saudi Arabia. ZenithOptimedia estimates that the Saudi/Pan-Arab adspend has increased from $418 million in 1995 to $2.8 billion in 2005 - about an eight-fold increase in ten years.

The growth of this oil-rich economy is driving the development of advertising, as more brands compete in a dynamic market.

Out of JWT's 140 offices worldwide, the Dubai office is now at number five in the agency's international creative league table. Bahrain is not far behind at number eight. John Foster, the executive creative director at JWT in Dubai, says: "The region is playing catch-up with the rest of the world. Dubai and possibly Bahrain are making inroads into a very good standard of work.

"Dubai is boom, boom, boom. It's a great environment, growing at such a rate and full of opportunity - the advertising is no different."

Foster cites a couple of recent campaigns from JWT that he believes reach the higher international levels of creativity - one for Lion Bar and another for Amnesty International. "You wouldn't think the ads had come out of the Middle East," he says. "That's a testament to the work."

Dubai has rapidly become a hub of advertising activity in the region, taking Beirut's traditional role as the creative centre, where Lebanese admen took most of the initiative. Saudi Arabia is by far the largest market, but the strict religious and cultural environment has meant fewer agencies have based themselves there and it is not renowned for creativity.

Other countries showing creative flair include Bahrain, Egypt and Morocco.

The region has a number of local awards shows, although many in the business are less than convinced about the integrity of some. Two of the more respected shows are the Phoenix Awards for TV commercials and the International Advertising Association's biennial above-the-line awards, which take place later this year.

And two new shows have arrived in the past year: Le Cristal de la Mena is one; the other is ±±¾©Èü³µpk10 ME's own awards, which were held soon after the May 2005 launch of the weekly Middle-Eastern title, licensed by Haymarket to ITP.

Leo Burnett and Impact BBDO both made a strong showing at Le Cristal de la Mena, with JWT and Euro RSCG also taking top prizes. The Grand Cristal went to H&C Leo Burnett, Lebanon, for its "sun" ad for the Lebanese brand Banque Audi.

Leo Burnett and Impact BBDO are unequivocal in their support of the regional awards and their role in raising local creative standards. Dani Richa, Leo Burnett's chief creative officer in the region, thinks the local awards can give creatives a stepping stone to international recognition.

"You can't win internationally, before you do well locally," he says, comparing the process to getting through to the finals of the Fifa World Cup.

Leo Burnett is one of the stronger creative agency networks in the Middle East. Richa is guardedly optimistic about a better creative future. But he rehashes all the problems that beset the creative process in the Middle East, before making more positive comments about an "avalanche" of good work just around the corner.

Much of the advertising in the region is created for the strong, pan-regional media. Naturally, this means the work has to reach a very mixed audience with marked cultural and religious differences. "There's a problem the minute you start to do regional work," Richa says. "The Egyptians are different from the Lebanese, who are little like the Saudis. So you don't have the local culture to play with ... the advertising literacy levels are not the same. You don't play to the lowest common denominator - you try to elevate the whole level."

Of course, the need to find an acceptable line within cultural restrictions can lead to imaginative and witty executions. Richa points to Impact BBDO's recent work for Durex flavoured condoms. The religious and cultural sensitivities of the region precluded the use of any overtly sexual image, so the creatives came up with the witty and colourful concept of condoms as confectionery.

Leo Burnett's Middle East chief creative officer, Farid Chehab, describes the colourful, but different, creative natures in Cairo or in Beirut, before addressing the biggest market in the region. "Saudi Arabia is a different beast. Living under Islamic fundamentalist rules, there's a lot of dos and don'ts. But, at the end of the day, I don't call it a problem.

It's an opportunity. It has allowed us to come out with a new breed of creativity. The Saudis appreciate intelligent advertising - they love strong, witty concepts. There's not a lot of entertainment, so the entertainment value of ads is important, but you need to think laterally."

Chehab describes a recent Saudi campaign by Leo Burnett, designed to address breast cancer. "You can't talk about checking breasts overtly, it's totally unacceptable," he says. "So we used ambient. We put stickers on the oranges and lemons in the markets, saying: 'Please check your breasts.' When the woman went to buy lemons, she touched the ad. It led to huge awareness for breast cancer."

Another of the agency's ads, which will be going to Cannes this year, is for the garden centre Exotica. Winner of the Grand Prix at the local outdoor awards, Picasso d'Or, it features a balcony with a red curtain at the top and a cedar tree in the middle, which made it look like the Lebanese flag. It touched a national chord, becoming a significant viral campaign.

Recruiting creatives to come up with such salient and powerful creative ideas has been a big issue for the region. Low creative standards have in the past kept top international talent away. But more recently there has been an influx of talent, largely drawn by the extraordinary world of Dubai. Creatives have arrived from Asia, Europe, all over. According to Ed Jones, the regional creative director of Saatchi & Saatchi, people now turn up every day at the agency's door in Dubai, looking for work as creatives.

Saatchi & Saatchi's multicultural creative teams in the Middle East have produced some award-winning work. The agency won a ±±¾©Èü³µpk10 ME award with its "lighthouse" ad for Crest, showing a beam that turns out to be the dazzling smile of a Crest toothpaste user. Jones also points to its strong work for Olay and for LVQR's La Vache Qui Rit cheese brand.

One agency that was kick-started by a creative arriving from another part of the world is the Cannes-gold-winning agency Tonic. Before coming to the Middle East, its creative director, Vincent Raffray, worked at the celebrated South African creative agency Lowe Bull Calvert Pace. As well as the Cannes and One Show gongs, Tonic won the ±±¾©Èü³µpk10 ME Grand Prix with another Sony ad, this time for its Microvault storage device.

Another independent agency that is bolstering the creative output in the region is Face to Face, which was named as ±±¾©Èü³µpk10 ME's advertising agency of the year in 2005. As well as doing strong work for its clients Air Arabia and Barbican, the agency has a working relationship with Bartle Bogle Hegarty in the UK on selected Unilever clients. Ralph Roden, the agency's joint creative director and managing partner, says: "Some of our most recent campaigns - particularly for Air Arabia and Barbican - have been regarded as category innovators and even received positive recognition from the brands' competitors."

Phil Lynagh, the managing director of Fortune Promoseven Dubai, part of the region's biggest agency network, says that, despite working with lower budgets than more developed advertising environments, clients are looking for cut-through. "Consistently, we hear clients demanding more creativity," he says.

Although the region is used to unexciting ads and not all clients are rushing for something a bit out of the ordinary, the business imperative is growing and even clients using tactical, promotional ads can be persuaded to think laterally. Impact BBDO's recent promotional ads for the lighting retailer Debbas, using the idea of crime scenes to demonstrate extreme offers, prove that it's possible.

But there is still a long way to go if the region is going to establish any sort of international creative reputation. In 2005, there were just 149 entries at the Cannes Lions from the Middle East out of a total of 22,101 entries overall, less than 1 per cent. That said, Middle Eastern adspend is only 1 per cent or 2 per cent of global adspend.

Despite its current energy and youth, the region has inbuilt cultural disadvantages. In Saudi Arabia, there is little history of pictorial art, and cinema is banned. As Jones puts it: "There isn't the huge compost heap of culture that, in the West, you can use as a springboard."

It will take a critical mass of good work from the region to really change attitudes internationally. Juries at international awards may not be predisposed to Middle-Eastern work, but it will take more than Tonic's success to change existing preconceptions.

But local agencies' optimism is infectious and will no doubt go some way towards increasing the creative standards. And there's no shortage of fighting talk in the region. "The creativity is becoming as good as anywhere," Chehab says. "We are working slowly to get people to look at the Middle East in a new way."