Forbes expects global firms to redefine PR in India

Rohin Dharmakumar writes in Forbes India. His report:

A wave of international firms is sweeping over India’s shores. They see the potential to take the business of public relations to a more professional, systematic and pro-active level. They are trying to shake up a smug Indian industry used to treating PR as a minor cost centre focussed on managing a few journalists; and help it prepare for a more assertive and connected consumer base. In the process, PR is becoming a more strategic but expensive affair for companies…

Indian PR firms are at the middle of this change. Before time runs out, they must shape up to fight the onslaught or sell out to foreign brands. Many have indeed sold out — Genesis to Burson-Marstellar, IPAN to Hill & Knowlton, Hanmer & Partners and 20:20 Media to MS&L and Roger Pereira & Associates to Edelman. A few foreign agencies have started from scratch — Text100, Fleishman-Hillard, Waggener-Edstrom and APCO.

But a few Indian firms are holding out. “I don’t need someone to tell me how to compete,” says Madan Bahal, CEO of Adfactors, one of the leading PR firms in the country.

The public relations business in India is fairly young; most firms trace their origin to the years following economic reforms. Using just sheer doggedness in chasing down journalists, a growing bunch of entrepreneurs fueled a mini-boom. For them, public relations meant little more than media relations. “Everybody who spent a few years doing PR opened up their own mom-and-pop shops, selling media execution. They worried about which hotels to hold press conferences in or what gifts to give journalists,” recalls Rishi Seth, founder-CEO of Six Degrees PR who earlier headed multinational PR firm Text100 in India.

The business was soon commoditised. Most worked on wafer-thin retainers and even slighter profits. To control costs, they began hiring inexperienced and cheaper employees. For many, the profession degraded to ‘planting’ nice stories about their clients or blocking negative stories. Journalists they managed to befriend co-operated…

All that changed with the Internet and mobile phone. There are more than 500 million mobile users and about 80 million Internet users in India today. Nearly 70 percent of Web users are on some social network. Their trust in newspapers, TV news and yes, business magazines, is down sharply: 35-40 percent lesser than two years ago, according to a 2010 survey conducted by Edelman. But they’re connected, eager for information and willing to speak their mind.

“This is the age of radical transparency. If you’re a company behaving in an unethical way, then you will be found out and castigated very quickly. And you cannot hope that your relationships with journalists — however good they may be — will protect your reputation then,” says Arun Sudhaman, managing editor of The Holmes Report, a London-based PR trade publication.

The entire market for agency PR in India is estimated to be just around $100 million annually, says Sudhaman. That’s about 35 percent of just Edelman’s 2009 global revenue. Average monthly retainers still hover around the Rs. 100,000-150,000 figure, a pittance compared against companies’ marketing or advertising budgets. “In New York I wouldn’t consider retainers less than $20,000 a month,” says Robert Holdheim, Edelman’s India head…

International agencies bring a whole new way of doing PR in India. Unlike the local firms which follow ad-hoc methods, they work with data, templates and processes. They try to understand the business problems of the clients rather than just look at the marketing problems…

International firms have become ubiquitous on the PR scene in India. The only three exceptions are Vaishnavi Communications, Perfect Relations and Adfactors. Even they are under constant wooing by foreign firms looking for a toehold in India. Dilip Cherian, founder of Perfect Relations, says, “We are constantly courted and are consistently one of the first ports of call for an acquirer. And though we have always believed that any deal that enhances all-round shareholder value is good, we are not in a hurry to sell.”

Bahal of Adfactors, is categorical that he will not sell out to an international agency. He sees Indian agencies selling out as a sign of weakness and a lack of vision or ambition among entrepreneurs to take their firms to a higher level. Worse, most entrepreneurs have sold out for ‘peanuts’, he says. Bahal is open to partnerships ‘by the hundreds’ though.

The fact remains that the top Indian PR companies like Vaishnavi and Adfactors are still the revenue leaders; they are no weak competitors.

At the end of the day, the nationality of the PR agency doesn’t matter, but the quality and ethics behind their work do. As Hill & Knowlton India’s head Radhika Shapoorji says, “Consumers are getting more empowered. They know their rights and will not stand for nonsense. And in sectors like aviation, telecom and hospitality, due to the sheer number of customers and customer touch points, you can almost expect a crisis a day. Therefore companies must treat each complaint as an issue, before it becomes a crisis.”

(With additional reporting by Samar Srivastava)