PR industry ‘cautiously optimistic’ about growth in election year, integrated PR best bet against static retainers
GST, demonetization, India's business environment has been hit by a flurry of change. This has naturally impacted the PR business in India. But for the financial year, 2018-2019, as some of these factors stabilize, what does the growth forecast look like? Will the bullish sentiment and early revival signs be enough to overcome the uncertainty of an election year?"What is needed is a clear realization that our work has changed and so have our clients. Today brands are constantly in motion. They are affected by the economic and political turmoil", says Nitin Mantri, Group CEO if Avian WE India and president, PRCAI.
Mantri also pointed out that, "Culturally we are seeing a dramatic shift in different markets due to digital transformation. At the same time, economies are still growing, consumer expectations are increasing, and technological innovation continues to reshape our daily lives. In this scenario, we have to do integrated work and make ourselves relevant to CMOs, policy heads, CCOs, and the new media."Sharing his forecast for growth in 2018-19, Mantri said, "I remain cautiously optimistic. The caution is only because we are now in an election year and things may slow down a bit."Aman Dhall, head of corporate communications for Policy Bazaar Group of companies, agreed with the overall assessment, pointing out opportunities at the same time, "With the general elections looming large, there will be opportunities to tap from the companies influenced by government policy and decision making. At the same time, you would see a guarded approach towards spends on PR from those who might want to wait on the sidelines to see how the economy will unfold over the next six months or so."
Adding further perspective, Dilip Yadav, founding partner, First Partners, said that, "Firms who are focusing on specialization are in the best spot. Second gainers are the firms who are able to integrate conventional and non-conventional solutions into the same offering. There are several ancillary solutions which were earlier provided by advertising firms which are now revenue drivers for PR firms as well."High growth PR firms For quite a while now, medium and boutique-sized PR firms have shown robust growth. Is this just a function of a smaller growth base? Is there really retainer growth? In an interview with PRmoment India last week, Netflix's head of communications for Asia, Jessica Lee, said that the recent round of consolidations of global PR firms is a matter of concern. She also said that looking for innovative edge brands may then seek out mid-size and boutique firms. Udit Pathak, Media Mantra's founder, and director says the question of which category of PR firms will show better growth is, "A question that deserves a nuanced reply as the retainer charged by a firm can be independent of the size of the firm. For instance, a small firm that creates exceptional PR campaigns can successfully command high retainers while a giant PR firm simply Will command a high retainer. So the quality of work often decides the size of the retainer among emerging PR firms. Hence, I cannot point to a specific category of PR firms and say that this category of PR firms is showing good growth because good growth among PR firms is independent of the size of the PR firm. However, when we do not consider the size of the retainer, I can say that many emerging PR firms that are less than 10 years old are showing robust double-digit growth while the largest PR firms are consolidating their business and are geared to deliver quality work to existing clients. Emerging PR firms are eagerly attracting new clients and expect to deliver higher quality work in the future as they grow in size."Agreeing with this assessment, Yadav added that, "Firms who are focusing on specialization are in the best spot. Second gainers are the firms that are able to integrate conventional and non-conventional solutions into the same offering. There are several ancillary solutions which were earlier provided by advertising firms which are now revenue drivers for PR firms as well."Yadav, further said that "Industry will show overall healthy double-digit growth. Larger firms may report lower than expected growth, as a part of the growth would be taken by new entrants into the business."The PR flat Retainer-high PR growth conundrum While no one is questioning the sheer volume of PR work that is going on, retainer growth remains a challenge. Neha Mathur Rastogi, the founder of WordsWork, admits that "This phenomenon has me baffled as well. The retainers I heard about when I started my career over a decade and a half ago have surprisingly not grown much. However, the volume of business has grown manifold. The sector has seen a healthy growth only basis this, however, if one were to imagine proportional growth in retainers as well – the numbers would easily place PR as a sector to look out for. Our failure is to grow our share and perceived value in the marketing pie."Growing PR RetainersIntegrated PR Digital, SEO and content marketing Public Policy and Public Affairs Client Advocacy and behavior change Specialisation, creativity, innovation, influencer management, and business impact Fintech, IoT, Consumer Tech and Auto; good growth sectorsLife Sciences Consensus on basic fee structures to avoid industry-wide undercutting
Yadav agrees that, "For Indian PR firms, cost of doing business has been rising with salaries of senior talent getting closer to corporate salaries. This is good for attracting the right talent. Margins in the near term would thus remain under pressure. We could well witness growing toplines with flat bottomlines"Mantri, however, has a slightly different take on the phenomenon of high PR growth and flat retainers, He says, "I don't completely agree with this statement. Today, we are seeing high double-digit growth in certain sectors and businesses. What is happening is that our industry is evolving and while retainer growth may be flat, the projects on top are growing, especially as we do more integrated work in digital and public policy. I continue to remain bullish on the industry because it is really up to us to start boosting our value in the boardroom by doing more."
Pathak adds that "Many PR firms today are pursuing quantity over quality which means they have a large number of clients yet the retainer they earn from each client is often smaller than it had been in years prior. To change this I believe that the PR industry should create more creative campaigns and tell better stories about their clients. PR firms that successfully do so will create a behavioural change in the minds of their client’s consumers allowing them to command more retainers and retainers of a larger sum. A good account director should always be thinking of creative ways to add value to an account instead of simply trying to get greater media coverage for a client."Aman Gupta, managing partner, Strategic Partners Group, looks at the retainer question differently saying, "We are very bullish and are witnessing high double-digit growth across our offerings. Our belief is that, instead of looking at retainer as the factor, what is more, critical will be to consider the profitability at each client/project level and also map to revenue/profit number per person in the organization as it provides better and truer reflection of how well the business is doing."Growing PR retainers in India Rastogi points out that in the long run, "Simultaneous growth of business and retainers will be essential to establish real growth for PR in India. The only way to do this is to first have faith in our own value addition. Retainer growth on an average is low. However, some sectors are still performing better than others. Sectors where the value of PR is high and advertising budgets are limited are a good example of this. For a client to spend more on PR retainers they need to understand how it can impact the business. This hence would require it to be an industry that has seen the impact of PR. In my mind, BFSI is one such sector. Public diplomacy and public affairs is another sector with such growth opportunities."Part of the retainer growth challenge is undercutting and commodification of PR. In order to fight this, Shailaja Rao and Manas Mrinal, co-founders of Skateboard Media, http://www.skateboardmedia.co.in/, suggest that " At some point, there needs to be a consensus on how the fee structures should be in PR across sizes of firms. This is how it is with advertising over the years or with digital now. This will be a critical element as it will ensure growth for all and also help the industry grow in terms of revenues and in turn lead to better service and quality for clients and better revenues for the industry."While consensus on fees is a tricky solution, with issues such as freedom to be competitive entering the picture, Mantri believes the answer lies partly in client advocacy. He says, "Clients also need to reinvent themselves. They should be thinking of integrated and own the integrated model. We are best suited to manage it because we understand engagement. We understand the content. We have been doing it for years. PR firms have so much to offer across owned, paid and earned media, and that too across services like corporate communications, public policy, digital, content, design, and multimedia. Clients and firms should work in tandem to elevate the industry. This will also attract good talent."
Written by Paarul Chand+, PRmoment.in