PR 2.0
IMPACT ON BUSINESS MATTERS
THE SUMMARY
PUBLIC RELATIONS FIRMS NEED TO BECOME
A STRATEGIC PARTNER TO THEIR CLIENT
Ashwani Singla MD & Chief Executive, Asia Penn Schoen Berland
For those of us in the Indian public relations industry drained by the long-drawn-out recession, there is some good news. Leading practitioners of India's communications industry believe the best days of the industry were still ahead of it pointing towards new opportunities arising out of the need to build new competencies to address the growing complexity of the public relations business. Is this an overtly optimistic assessment given that repeated hopes of an imminent economic recovery continue to atter only to deceive? One hopes it is not. The global economic environment continues to adversely impact most services businesses, including public relations. The growing business complexity has shrunk the opportunity pool for consultancies with the number of engagements going down considerably.
34% of representatives of client organizations said they spend over INR 1 crore per annum on public relations services Yet, while the number of opportunities may have gone down, the nature of business has become far more strategic in nature offering a glimpse of what is to come. Client organizations may not necessarily be slashing their spending budgets drastically, but are instead pushing public relations consultancies to provide services that offer more long-term bang for their buck. We are, therefore, predictably, witnessing a spurt in the demand for services with fresh new competencies across a range of media, technologies and approaches to communications engagements.
PR 2.0: IMPACT ON BUSINESS MATTERS
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COMPLEXITY OFFERS OPPORTUNITY It may, therefore, be pertinent to consider some very unique perspectives we drew out of our analysis of this survey's data. The growing complexity of the public relations business is a result of, among other things, the emergence of the Internet that is today riding a second wind with the onset of social media platforms. The complexity is further heightened by a growing demand for research-backed customized communication moving away from general broadcasts. Finally, the growth of mobility and mobile devices are becoming a central medium of engagement to strengthen this industry trend. This complexity – or the New Normal in the public relations industry – is becoming pervasive amid an era of long periods of underperformance, stalling growth and high unemployment across organizations.
KEY INSIGHTS Within a broad acknowledgement that the PR business is far more complex than it was ever before, there exists differing perceptions across client and consultancy organizations on whether organizations are ready to cope with this new complexity and, therefore, their ability to tap the emerging opportunities. There is a growing tide of organizations that underscore the importance of social and digital media for their businesses and, indeed, for their long-term strategic growth. More than 85% of representatives of client organizations, for instance, feel digital marketing is a key enabler while driving engagements due to its ability to connect in real time, its reach and ability to scale efficiently and with speed. However, as our analysis showed, while the importance of social of representatives of client organizations said they spend over INR 1 crore per annum on public relations services and digital media for businesses was generally being accepted overall, about half of our survey respondents still feel that public relations consultancies were not making the most of this medium to be able to leverage it effectively enough. Let us think about the following now: 1. 80% of clients acknowledge that public relations play a strategic role in their business, while 69% of consultancies felt they were treated as strategic partners by their clients. 2. Clients and consultancies alike largely recognize the complexities of the New Normal. They support a research-and insights-driven approach for effective measurement of business ROI. But fewer agencies compared with clients favour measurement of impact on business. 3. A significant 2/3rd of clients demanded research to measure the effectiveness of communication pointing toward a growing acceptance that applied insights result in lasting impact and better ROI.
WAY FORWARD Aligning with the reality of the new business complexity, public relations consultancies must focus on addressing gaps in their existing approaches and offer solutions that demonstrate their hunger to employ strategies that concentrate on the results and not just on the effort. While consultancies will need to focus on driving business impact and book their place at the strategic head table of client organisations, buying decisions will be influenced by the following imperatives: a. b. c. d. e. 04
Focusing on results and not just the effort. Developing programs that will build sustained momentum. Becoming proactive in identifying issues/mitigate risks. Becoming strategic partners. Evolving from being merely implementers of public relations. Developing sector or domain expertise to offer advice that is innovative and ideas that are actionable. PR 2.0: IMPACT ON BUSINESS MATTERS
THE SURVEY The online survey Penn Schoen Berland (www.psbresearch.in) conducted in partnership with IMPACT magazine makes an attempt to understand how public relations can remain relevant and drive impactful and sustainable business impact in an era of constant economic ux. Decision makers and senior communications practitioners at leading Client Organisations and Public Relations Consultancies were interviewed to assess expectations, preparedness and delivery of public relations services.
METHODOLOGY 89 senior communication practitioners were polled across the country's major metropolitan areas, including Delhi, Mumbai, Bangalore, Chennai, Kolkata and Hyderabad in the month of May 2013. Chief executives and heads of the corporate communications function on the client side accounted for 56% of the sample; while country heads, account heads and senior managers at public relations consultancies comprised the remaining 44%. The survey places consultancies into three categories: Full Service (64%); Specialized (24%); and Regional (10%).
Whom did we ask?
Online survey in the month of May across top metros in India. Amongst key decision makers across Client Organisations & Public Relations Consultancies.
56%
44% PUBLIC RELATIONS CONSULTANCIES
CLIENT ORGANISATIONS
64% are from full service organizations. 24% from specialized service organizations. 10% from regional organizations.
48% have a dedicated internal Public Relations team. 44% have a small internal Public Relations team, outsourcing most activities.
Chief Executive, Head of Marketing, Head of Communications across DiversiďŹ ed, BFSI, Technology, Healthcare, FMCG, Retail.
Country Head, Account Head, Senior Manager in consultancies. 69% of which are Independent (Indian Owned).
PSB used its proprietary research and analytical frameworks to draw insights.
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AN ERA OF GROWTH India's public relations and communications industry appears to be heading towards an era of growth even as it negotiates the turbulence of a relentless recession afflicting the global economy. More than 60% respondents of the survey said they expect that the best days of the industry are still ahead of it, while 34% of Client Organisations said they spend over INR 1 crore per annum on public relations services. While this augurs well for the industry, an overwhelming majority of respondents, at over 90%, felt the public relations industry landscape is far more complex today, pointing toward new opportunity for growth. It is here that public relations consultancies and client organizations must build lasting strategic partnerships to exploit this opportunity. The majority of respondents, while acknowledging the growing complexity of the public relations business, said this was a result of the emergence of the Internet and digital media that was riding a second wind with the onset of social media platforms. Consider the numbers below that point toward the growing impact of the digital medium as well as the rise of new media. One, 2/3rd of respondents acknowledge the growing importance of social/ digital media for their businesses and, indeed, for long-term strategic growth Two, over 85% of clients said digital marketing is a key enabler while driving engagements given its ability to connect in real time, scale efficiently and with speed Three, clients are a divided house when evaluating consultancies on their ability to understand the scope of new mediums of engagement
READY, NOT READY Given this emerging environment, we asked respondents whether public relations consultancies were ready to face this new business complexity. Predictably, there were differing views between client organizations and public relations consultancies on this very parameter, a crucial first step for consultancies beginning their journey to be a strategic partner.
Differing Views: Readiness Quotient of Consultancies Clients Consultancies
66%
Consultancies
18%
Client’s view of Consultancies’ Readiness Are You Ready?
Clients
8%
Client’s view of Consultancies’ Readiness
0%
32%
Ready but need some improvements
Absolutely Ready
Not at all Ready
Somewhat Ready Clients
54%
Clients
24%
Consultancies Client’s view of Consultancies’ Readiness
23% 60%
2%
Consultancies Client’s view of Consultancies’ Readiness
5% 8%
The divergence in perceptions is predictable given the different business priorities and environments of clients and consultancies. However, the survey draws attention to varied opportunity areas for consultancies to address some of the key challenges that have been highlighted.
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PR 2.0: IMPACT ON BUSINESS MATTERS
Capability Assessment: Consultancies have much to do 96% see digital media as a friend and enabler in driving higher impact. 82% 79% 74% 69%
52%
52% 46% 42%
Have a formal process of measuring impact or effectiveness of the communications programs Consultancies’ self image
Recommendations and ideas are supported with relevant research data
Provide research data to support their ideas or initiatives:
Capable of leveraging Digital media effectively
Clients’ view of Consultancies
Clearly, driving business impact and being able to measure that effectively, as we stated earlier, is emerging as a key parameter of a strategic partnership, though there is a strange dichotomy in client expectations on whether the measure of impact was more important than media coverage.
RESEARCH-DRIVEN INSIGHTS FOR LASTING IMPACT As client audiences become smarter and more knowledgeable, public relations consultancies have much to do to be able to exploit great opportunities that lie in making the right investments to manage this changing business environment.
Driving impact as client audiences become smarter
1) Media coverage continues to be most important measure
Low relevance for Clients
High relevance for Consultancies
Disconnect
1) Lack of audience loyalty due to a plethora of choices 2) Emergence of citizen journalism 3) Advent of technology – cloud computing, cloud applications, etc.
1) New platform of interaction like Facebook, Twitter, etc. 2) Measurement of online presence is still not well understood or practiced 3) 24x7 news cycle 4) New mediums of communications have emerged (tablets, smartphones, etc.) 5) From general broadcast to customized communication
High relevance for Clients
1) Parameters for measuring success have changed from media COVERAGE to IMPACT on business 2) Smarter and knowledgeable audience groups 3) Problems and issues are no longer local High relevance for Consultancies
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The new complexity is offering an opportunity for public relations consultancies to build an approach that leverages research-driven insights to build communication campaigns for specific client needs to be able to effectively measure its impact on their business in a sustained manner. Greater customisation is really the key and will differentiate the winners from the losers.
Making the right investments in the face of change 67%
66%
60%
60%
59%
51% 46%
30%
28% 23%
Collaborated with agencies that offer end-to-end services
Invested in technology / specialized tools
Added expertise for specialized media (social media, internet, etc.)
Consultancies’ initiatives to overcome challenges
Increased team size
Upgraded existing skills of my team
Clients’ initiatives to overcome challenges
Fewer consultancies compared with clients favour measurement of impact on business. However both clients and consultancies largely recognize the opportunity that an empirical, research-and insights-driven approach offers, especially given its ability to make the measurement of impact on business ROI more effective.
Consultancies need to improve on perceptions of delivery New platform of interaction New mediums of communications 24x7 news cycle From general broadcast to customized communication Problems and issues are no longer local Parameters for measuring success have changed from media COVERAGE to IMPACT on business Measurement of online presence is still not well understood or practiced Smarter and knowledgeable audience groups 25
35
Clients view of Consultancies’ Understanding
45
55
Consultancies’ Self view of Understanding
65
75
Client’s view of Consultancies’ Delivery
85
95
Consultancies’ Self View of Delivery
It has been some time now that client organizations have been ready to pay a premium for advice based on empirical evidence or for insights-based campaigns. In our last report, we spoke about the need for India's public relations industry to embrace empirical public relations to demonstrate how integrated stakeholder campaigns can move the needle by applying research-based actionable insights at each phase of a campaign. 08
PR 2.0: IMPACT ON BUSINESS MATTERS
Greater Customisation: Focus on research based insights to drive impact Customised research is a potential way to measure effectiveness 69%
69% 62%
62%
55%
54%
50% 46%
Internet or online activity
Customized survey/research
Direct feedback
Media coverage (column-centimetres space) Consultancies
Clients
Clients and consultancies alike are beginning to favour the empirical model steadily. The survey finds that 80% of clients acknowledge that public relations plays a strategic role in their business, while 69% of consultancies feel it is treated as a strategic partner by clients. Within this view, there are clearly great new opportunities for public relations consultancies to demonstrate much stronger capabilities in areas such as media relations by expanding its understanding of the role of strategic media, public advocacy programs and finally investor relations.
Opportunity: Media Relations, Public Advocacy & Investor Relations
80% Client organisations agree PR plays strategic role in their business
69% Consultancies feel they are treated as Strategic Partners
CSR, Internal Communication & Thought Leadership offerings overestimate client demand
94%
67%
64%
64%
64%
64%
60% 46%
41%
40% 36%
36% 30%
26% 21%
Media relations
Digital marketing
Thought leadership
Public advocacy
Public affairs and government relations
Internal/Employee communication
Corporate social responsibility
Consultancies’ offering of services
24%
Investor relations
Clients' need for services
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STRATEGIC PARTNERSHIPS TO CO-CREATE OPPORTUNITIES Offerings woven around internal communications, thought leadership, and corporate social responsibility programs – in spite of the fact that CSR, as we all know, is the next big thing – appear to overestimate client demand for these services at the moment. In an era of citizen journalism and the explosion of digital information, companies and public relations agencies are struggling to establish and maintain mutually-beneficial relationships. Organizations that use sophisticated public relations tools, including the use of technology and science (analytics/measurement) strategically to co-create opportunities will separate the boys from the men.
Becoming Strategic Partners: Consultancies must focus on driving impact
10
TOP 4
TOP 4
EXPECTATIONS CLIENTS HAVE OF CONSULTANCIES
EXPECTATIONS CONSULTANCIES HAVE FROM CLIENTS
Develop programs that will build sustained momentum
Realistic expectations on delivery and timelines
Develop sector or domain expertise to deal with specific business issues and requirements
Openness to using new ideas/ technology/ tools
Come up with innovative and actionable ideas or advice
Consider programs that will build sustained momentum
Focus on results and not just the effort
See the role of agency as a strategic partner
PR 2.0: IMPACT ON BUSINESS MATTERS
ABOUT
PENN SCHOEN BERLAND Penn Schoen Berland (PSB) is a 'Global Research based Strategic Communication Advisory' that brings the lessons learnt from its campaign trails into the board room to help companies negotiate some of their toughest corporate image & corporate affairs challenges. For over thirty years PSB has used research to leverage unique insights about public opinion, to give our clients a competitive edge. PSB serves Fortune 100 Corporations, leading Hollywood Studios and has helped elect over 30 Presidents and Prime Ministers around the world. PSB South Asia office was established early 2011 in Gurgaon and serves a blue-chip clients comprising leading Indian transnationals and multinational corporations operating in the Indian Sub-continent. It has also helped design winning campaign strategies for leading candidates across several State Assembly elections. Ashwani Singla, MD & CEO, Asia who was formerly the CEO of Genesis Burson-Marsteller (GBM) & Board Member, Burson-Marsteller, Asia Pacific leads the office. PSB is a part of Y&R Brands and WPP (NASDAQ:WPPGY).
www.psbresearch.in
Ashwani Singla MD & Chief Executive asingla@ps-b.com M: +91 98110 75843
Shefali Khanna Director, Marketing skhanna@ps-b.com M: +91 97111 18615 Penn Schoen Berland South Asia, 603, Unitech Cyber Park, Sector 39, Gurgaon, Haryana, India