India’s PR industry at Rs 800 cr: MSLGroup report
MSLGroup report on India’s PR industry sees growth scope amid a bleak economy, but lists fee structure, talent crunch, perception as major challenges
The public relations industry in India is suffering from the growth pangs familiar to every evolving industry. The stumbling blocks echo the challenges that other service industries have faced in the past – talent crunch, struggle to match fees to value delivered, and measuring performance accurately, to name a few, in addition to a bleak global economic outlook.
Professional PR services came into their own in India only in the early 1990s. Before that, the industry was largely unorganised – with individuals offering media relations only, or ad agencies dabbling in PR on the side. The last decade has been one of growth and consolidation. Hanmer & Partners, 20:20 Media and 2020Social were acquired by and integrated into the MSLGroup, while Genesis was taken over by Burson Marsteller. Several new agencies were born, many of whom specialised in specific sectors. For instance, Text 100 focuses solely on technology.
As more global firms – such as Edelman, Ketchum and MSL – enter India by setting up offices here or acquiring local agencies, the Indian PR industry is rapidly becoming an important piece of the large global communications jigsaw. Not only are acquired agencies handling work for their parents’ international customers, but they now also enjoy access to world-class training and global best practices. The next decade is likely to be one of discovery – of new markets and strategies – with the West looking at the East in a changing economic scenario.
While giving the outlook for the PR industry in India, an MSLGroup report has listed the challenges and opportunities.
The Challenges
Size
Confusion and misunderstanding plague the PR industry in India regarding its size. A recent Associated Chambers of Commerce and Industry of India (Assocham) study pegged the size of the industry at $6 billion (Rs 27,000 crore) and predicted that it would grow to $10.56 billion (Rs 47,520 crore) in 2012. Assocham based its prediction on corporations expected to invest in PR services to help bolster their brand image and bottom lines. While the reasoning is correct, the numbers are a gross exaggeration.
As per the MSLGroup report, the combined revenue for India’s top 10 agencies – such as MSLGroup India, Adfactors, Vaishnavi (which recently shut down), etc. – stood in the region of Rs 400-500 crore (roughly $100 million).
The income of smaller agencies and independent professionals would likely be an additional Rs 200-300 crore (about $40 million). Overall, that’s Rs 700-800 crore (about $140 million).
According to Glenn Osaki, President, MSLGroup Asia, “Such flawed estimates take the focus away from the real issues – a serious talent and infrastructure shortfall and a legacy of distrust between clients and agencies.”
Fees
Considered the poor cousin of advertising, PR is underappreciated – the average advertising retainer is Rs 2 crore ($400,000) a year, while PR retainers are in the Rs 20 lakh ($40,000) range. The reluctance of many clients to recognise the value of PR or paying for it is a longstanding issue. There’s no standard fee-per-resource norm and under-cutting is rampant, which is partly responsible for retainers not rising. PR budgets tend to be static and are the first to be slashed during bad times. This, in turn, leads to demotivation and exacerbates the industry’s perception problem.
Talent
As firms scramble for competent people, salaries get inflated. With fees already so low, profitability is affected. This demand-supply gap can only widen over the next few years. If salary costs become prohibitive, PR businesses will suffer. “The biggest challenge facing the Indian PR industry is the rising cost of talent. If client retainers increase by 5 per cent annually, the cost of providing the same services rises by 20 per cent. No industry can survive this unless it innovates,” noted 20:20 MSL and 2020Social MD Sunil Agarwal.
If the PR industry is to sustain double-digit growth, talent could become a make-or-break issue. Some estimates say the industry will absorb 10,000 to 12,000 professionals a year. But industry sources say that over 70 per cent of PR professionals at entry levels shift to greener pastures within a year.
Training
Hiring is just one aspect of the talent issue; retaining it is the other side of the coin. PR firms currently invest little in upgrading employees’ skills. Most of the learning is on the job, according to MSLGroup India research. Training should be implemented across all levels. At MSLGroup India, 2-3 per cent of total revenues are spent on training, which includes interaction with industry experts, hands-on training and the like.
The Opportunities
Clients in India are now beginning to look to their agencies for strategic communications, not simply for media relations. Companies such as Wipro ask their agencies to help them understand how best to communicate their messages and present them in a context that is meaningful for clients, analysts, investors and journalists. As a result, many agencies have invested in creative and digital arms. Cost-effective communications plans – that span advertising, PR and digital media – make sense to clients too.
With the growing adoption of social media, there is a combination of options available. Social media is catching up fast with traditional media and is becoming part of many companies’ communications approach. PR professionals can create tailored communications strategies and content to reach audiences and monitor the landscape for stakeholder sentiment.
Specialty communications
The ‘umbrella’ PR organisation is unlikely to disappear, but it may need to develop special skills to thrive. PR is as good as your product, service or idea – not the other way around. Here’s where service innovations will play a critical role.
Niche PR: This involves the creation of small, specialised teams within organisations or as separate entities. Niche PR can address the really small segments or have a tiny-yet-unique offering. For instance, specialists in Indian languages or in developing content. The current economic crisis might spur the rise of niche PR agencies, offering communications services in a single sector or aimed at a particular ethnic group.
Social engagement: Just as the Internet has made the media borderless, online media will become increasingly important. Such a scenario would make PR more important, as traditional advertising is reaching fewer people, and the true value of online advertising is yet to be calculated. Investments in digital infrastructure and skills today will see a big payout in the future. Implementing a social engagement strategy is now fundamental to a PR campaign. Social media campaigns might focus explicitly on connecting clients directly to consumers or even on building relationships with influencers.
Employer branding: It’s not just the PR industry that’s facing a talent crisis. Attracting, motivating, developing, rewarding and mobilising employees are top priorities for all businesses. The term ‘employer brand’ was first used in the early 1990s to denote an organisation’s reputation as an employer. Since then, it has become a buzzword among global managers. ‘Employer brand’ can be defined as the image of your organisation as a ‘great place to work’ in the mind of current employees and key stakeholders in the external market (candidates, clients, customers, key stakeholders).
Performance measurement
Today, an industry-wide consensus on standards, skills, requirements and deliverables is the need of the hour. There is also need for a clear vision on whether clients see PR agencies as vendors or consultants. It is through an industry-wide debate that a framework for performance measurement can be evolved.
Measure outcomes, not outputs: Outcomes include shifts in awareness, behaviour related to purchases, corporate reputation, employee engagement, public policy and investment decisions.
Media measurement is about quality: Measuring the number of mentions in print or on the air is generally meaningless. Instead, media measurement should involve audience impressions, quality of the media coverage (tone, credibility and relevance of the medium to the audience, message delivery).
Social media can be measured: There is no single ‘metric’ for social media measurement. The parameters would depend on the campaign objective. Right now, it’s mostly about statistics such as how many likes have been achieved on Facebook or the number of Twitter followers. But it’s not about the numbers; it’s about managing reputations online. The emphasis should not be on erasing negative comments or mentions, but to respond quickly and engage. PR practitioners need to listen to conversations and address the issues raised thoroughly and honestly, not react in a knee-jerk manner.
Sunil Gautam, Director, Hanmer MSL Communications, pointed out, “There are gaps in the PR industry too, and there is an opportunity – partnerships. Perhaps it’s time to think of all stakeholders – clients and employees – as ‘partners’. Our success will depend on how we choose them and how we manage these relationships. This is where we can raise our skills and standards, help clients provide better PR briefs, raise the standards of measurement and source and manage talent better.”
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Commenting on his appointment, and his plans for the agency, Neeraj Bassi said: “I am really excited to be part of Publicis India and looking forward to partnering Bobby and Srija to create stellar work that stands out in the market. Working with clients as an independent consultant has given me insight on the primary concerns of CXOs and how communication can help resolve them. Clients today need an omnichannel approach to planning that focuses on identifying and solving their business problems holistically, rather than getting trapped in a discipline-specific approach. I am fascinated by the way all Groupe companies have come together at Publicis to create Power of One, and I look forward to wielding this power to build successful campaigns for our clients.”
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