Pr industry status 2016 (1)

State of Indian Public Relations Industry: 2016

Final Report September 2016

Deepak H | Chanchal Jetha Emerging Sectors Business Unit www.feedbackconsulting.com Š Feedback Consulting - 2016

Disclaimer: This report is solely for the use of PRCAI (Client) & specific companies that PRCAI decides to share. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from Feedback Business Consulting Private Ltd

Š Feedback Consulting - 2016

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Table of Contents

1

Objective and Approach

2

Industry Structure and Market Size (Current and Past)

3

Market Share Analysis

4

Industry Challenges

5

Future Outlook

2

Engagement Objective and Approach  PRCAI appointed Feedback Business Consulting to carry out a study to understand the current status, size, share, trends and forecast of the PR Industry in India  The survey was conducted between August – September 2016, Covering 42 Companies in all  Mode of data collection: Online / web survey and qualitative discussions with specific companies  All individual company information has been maintained

Sample Coverage Approached

Responded to websurvey

Members

35

25

Non Members

27

7

Total

62

32

Annual Reports Analyzed of companies who didn’t respond Total Sample Companies Analyzed

10

42

confidential by Feedback Business Consulting. Only aggregate level analysis have been shared In the report & for all discussions Note: All Analysis and Interpretation in the current report is based on views and information shared by the survey participants. Feedback Consulting does not hold responsibility to the information correctness or accuracy © Feedback Consulting - 2016

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Approach to Current Market Size Estimation Universe Estimation of PR Industries in India

Primary Interviews Players classified based on turnover levels Very Large

Large

All companies met

Medium



Boutique

~Judicious sample of medium & Boutique players was covered to meet the engagement outcome

Freelancers

~ estimated based on primary data

Secondary/Desk Research 

Aggregated to arrive at the large player market contribution

• Average turnover of the companies established based on the sample data • Extrapolated to the universe to arrive at the total contribution of each player

Information from Primary Interviews will be validated with the Secondary data



Based on the secondary data available, market size will be built Source of data- Annual Reports

• Aggregated to arrive at the total market • Revenuee share by Geography, Services offered, Customer segments based on sample covered

© Feedback Consulting - 2016

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Industry Structure and Market Size (Current and Past)

Š Feedback Consulting - 2016

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Indian Public Relations Industry Structure 1,100+ companies estimated to be present Very Large Cos

Company Category

Large Cos

Medium Cos

Boutique Cos

Freelancers

Number of Companies

4

4

10

100

1000

Turnover Range FY 16 (Rs. Crs)

> 60

30 - 59

11 - 29

1 - 10

<1

Presence in 8+ cities

Presence in all Metros

Presence in 2- 3 locations

Present majorly in North

Present in one city

Operations

The Indian public relations industry is quite developed considering every major global agency operates in India today. There is intense competition for business and clients have more choices than ever, from home grown to global firms, specialist agencies and freelance consultants â&#x20AC;&#x201C; all of which are vying for much of the same business Source: Feedback analysis of Survey information, Annual Report, Qualitative Discussion, Feedback assumptions where necessary Š Feedback Consulting - 2016

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Public Relations Industry Size (Rs. Crs) Values in Rs. Crs

CAGR FY 08 – FY 12 : 6.5%

CAGR FY 12 – FY 16: 15.5% 14.7%

14.6%

6.5%

13.3%

19.3%

1,120

940

830

630

720

490

FY08

FY12

FY13

FY14

FY15

FY16

Growth of only 6.5% was observed from FY08 to FY12 due

Industry recovered from the slowdown in FY13, FY14. FY16 was a better year

to the economic slowdown in the Industry in FY10 and

for the PR Industry in India where a growth of 19% was observed

FY11, though the industry was anticipated to grow at 15% during the survey in the year 2008 xx%

Year on Year Growth Rate

Source: Feedback analysis of Survey information, Annual Report, Qualitative Discussion, Feedback assumptions where necessary © Feedback Consulting - 2016

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Profitability Percentage by Company Structure Company Category

FY13

Overall

N = 26

Very Large

N=3

Large

N=2

Medium

N=4

Boutique

N = 17

FY14

N = 30

10%

7%

13%

N=1 14%

14%

2%

11%

N=1 N=1

10%

N=4 N = 22

N = 21

12%

N=3

12%

No0% data

FY15

13%

7%

12%

N=3 N = 16

8%

Profitability percentage is Profit/Revenue

The profitability of small companies has increased from 0% in FY13 to 8% in FY15 Very Large, Large and medium companies, the profitability ratio has been the same from FY13 to FY15 Source: Annual Report Š Feedback Consulting - 2016

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Market Estimate by Company Category Revenue Share by Company Category in FY 08

Revenue Share by Company Category in FY 16

Base: Rs. 490 Crore

Base: Rs. 1,120 Crore

Freelancers 9%

0% Very Large 25%

Freelancers 9%

8%

4 Companies

4 Companies

Boutique 25%

Very Large 33%

3%

Boutique 28% 100 Companies

50 Companies

Large 25%

Medium 16% 10 Companies

8 Companies 8 Companies

The % change from FY08 to FY16 by company category

Medium 16%

Large 14% 4 Companies

-11%

0%

• The Industry has seen consolidation at the top of the pyramid, resulting in very large players gaining higher market share, while the bottom has expanded with respect to the number of players, with lower growth in revenue • Large & Medium Players may not be comparable because of the consolidation that has happened in the industry Note: In FY 08 the company categorization was: Very large: Rs. 30 – 50 Crs, Large: Rs. 10 – 29 Crs, Medium: Rs. 5 – 10 Crs, Boutique: Rs. 1 – 5 Crs Source: Feedback analysis of Survey information, Annual Report, Qualitative Discussion, Feedback assumptions where necessary 9

Revenue Per Employee Trend by Company Category A V ERAGE & M AX I MUM R E VENUE P E R E M PLOY EE ( R S . L A K H P E R A N NUM) 25.0

24.0 22.0

21.0

18.7

18.0

Very Large

15.6

Large

12.3

Medium Boutique

AVERAGE

Total number of people employed in the Indian PR Industry:

~7,750

MAXIMUM

Average Revenue per employee: Rs. 14.5 Lakh

Number of new employees added every year: ~ 5 – 10% of total employed

Attrition rate of PR industry: 28%

Source: Feedback analysis of Survey information, Qualitative Discussion, Feedback assumptions where necessary Note: Outliers have been removed in specific categories © Feedback Consulting - 2016

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Market Share Analysis

Š Feedback Consulting - 2016

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Revenue Share by Geography Share of Revenue for Sample Companies Covered (N = 29) Base = Sum of Revenue = Rs. 580 Crs (Base = 100%)

International, 4%

East, 1%

South, 20%

•

Although Very large and large firms have offices in the East part of India, they don’t have any revenue coming in form there

•

Delhi in North, Mumbai in West and Bangalore in South are where the offices are located majorly

•

Large firms have 11% of their revenue coming from International business

West, 38%

North, 38%

N = Sample Source: Feedback analysis of Survey information, Qualitative Discussion © Feedback Consulting - 2016

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Revenue Share by Services Offered Share of Revenue for Sample Companies Covered (N = 31) Base = Sum of Revenue = Rs. 665 Crs (Base = 100%)

4%

3% 2%

1%

1% Public Relation

5%

•

The heart of the business was Public Relations and Public Affairs

•

Digital and Social Media are gaining significant market share (11% in FY 16)

•

CSR, Content Management and Research and Analytics are seen as insignificant revenue contributing segments for most firms

Digital & Social Media

5%

Public Affairs Financial Communication Crisis & Risk Management

11%

Content Management CSR

68%

Research & Analytics Others

N = Sample Source: Feedback analysis of Survey information, Qualitative Discussion © Feedback Consulting - 2016

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Revenue Share by Services offered Category of companies

No. of companies

Base (INR Cr.)

Very Large

4

375

Large

3

100

Medium

8

110

Boutique

18

75

Breakup by Service offered 76%

43%

8%

23%

7%

70%

7%

10%

12%

62%

11%

Public Relation

Digital & Social Media

Public Affairs

Content Management

Financial Communication

Others

6%

3% 3%

9%

6%

7%

2%

3%

8%

3% 4% 3%

5% 4%

7%

Crisis & Risk Management

ď&#x201A;§ Large firms are adapting to the change in the PR industry and driving their revenues from Digital and Social Media, However very large firms are slow in doing the same N = Sample Source: Feedback analysis of Survey information, Qualitative Discussion

Revenue Share by Project Vs Retainer Business Category of companies

Sample Cos

Base (INR cr.)

Overall

28

545

Very Large

3

245

Large

4

150

Medium

7

95

Boutique

16

55

Breakup by Project Vs. Retainer business

74%

26%

67%

33%

77%

23%

86%

14%

74% Retainer

26% Project

ď&#x201A;§ New clients are shifting away from retainer based relationship in favour of a project based relationship model ď&#x201A;§ Medium sized companies have the maximum retainer business and very large sized companies have the least retainer business N = Sample Source: Feedback analysis of Survey information, Qualitative Discussion

Revenue Share by Customer Segments Segments Government Private

Overall 4% 96%

Very Large 2% 98%

Large 5% 95%

Medium 3% 97%

Boutique 2% 98%

ICT

21%

28%

17%

18%

7%

Financial Services

12%

19%

5%

7%

7%

FMCG & Retail

4%

10%

19%

9%

Start-up’s (Across sectors)

9% 6%

2%

6%

19%

5%

Food & Beverage

5%

3%

8%

5%

5%

Auto OEM’s & Auto Components

4%

3%

9%

3%

4%

Aviation (including Aerospace)

4%

3%

5%

5%

Education & Skills

4%

3%

7%

Energy

4%

4%

7%

2%

Healthcare Delivery

4%

3%

5%

3%

11%

Sports & Entertainment

4%

5%

4%

4%

Chemicals

3%

2%

NGO’s

3%

7%

5% 5%

7% 5%

6%

Travel & Hospitality

3%

5%

4%

Others

10%

17%

5%

3%

22%

N= Base (INR cr)

30 560

3 270

3 100

8 110

18 75

N = Sample Source: Feedback analysis of Survey information, Qualitative Discussion

Industry Challenges

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Challenges for Future Growth Mean Score N = 31

Talent Pool Availability and Retention seen as a biggest challenge in the Industry, while the issue of price pressure continues

Availability of Talent Talent Retention

13% 7%

80%

Increasing Price Pressure

“Increasing Need for Result Oriented Approach”

7%

93%

7%3%

90%

Lack of Measurement Tools

68%

29%

3%

Low Business Entry Barrier

69%

28%

3%

Brands / Clients becoming impatient for results

17%

73%

Lack of Integration between stakeholders

14% 3%

83%

Lack of Technology Investment by PR Agencies

28%

55%

Increase in the number of bad debt cases

52%

Digital not owned completely by anyone

21%

Maybe

17% 28% 26%

67%

Agree

10%

Disagree

4.55 4.00 3.97 3.77 3.74 LOW

3.65 3.61 3.23 3.19

7%

HIGH

3.19 Scale of 1 – 5

N = Sample Source: Feedback analysis of Survey information, Qualitative Discussion © Feedback Consulting - 2016

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Hiring of Talent Pool in FY 16 and FY 17 (Intended) Hiring of Talent Pool by PR Firms in FY 17 (Intended)

Hiring of Talent pool by PR Firms in FY 16 N = 28

Firms are currently hiring from Rival agencies and graduate colleges (Journalism) to plug the immediate talent gap

N = 28

Rival Agencies

47%

Journalism

47% 23%

Advertising and Marketing

43%

Graduate colleges

Research and analytics

Rival Agencies

27%

13%

Journalism

30%

Advertising and Marketing

57%

Graduate colleges

Research and analytics

10%

Other professional services

Firms intend to hire from Advertising and Marketing cos / students as Creativity and Digital Media is a major requisite for PR companies

Other professional services

37%

20%

37%

N = Sample Source: Feedback analysis of Survey information, Qualitative Discussion Š Feedback Consulting - 2016

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Desired Skills Expected from PR Executives Creative individuals with social media community management skills in demand Increasing need for specialized individuals in Business Development & Marketing and Research

Mean Score N = 29

90%

Media Relations

93%

Creativity

86%

Insight and Planning

19%

71%

Research

14%

48%

Crisis Counsel

37%

39%

Multimedia content creation

46%

44%

Measurement and Analytics

Paid Media

23%

77%

Digital build and protection

CSR

14%

67%

Marketing and Business development

18% Agree

48% 29% Maybe

4.18

4.00

7%

3.75

10%

3.43

4%

3.25 3.21

15%

2.96

14%

2.86

11% 26%

54% Disagree

7%

14%

44%

26%

4.50

14%

79%

Social Media Community Management

10%

LOW

2.82 2.25 1.54

HIGH

Scale of 1 â&#x20AC;&#x201C; 5

N = Sample Source: Feedback analysis of Survey information, Qualitative Discussion Š Feedback Consulting - 2016

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Spend on Training and IT: Seen as an key investment area to bridge the talent gap Spend on Training per Employee in INR ‘000

Spend on IT

N = 18

N = 21

Overall

• The average training Very Large spend of the PR industry is half of the service industry Large spend

14000

Overall

6000

Sizable investment on IT by the PR firms 13000

Medium

Small

21000

23000

3.0%

Very Large

4.0%

Large

3.0%

Medium

3.0%

Small

2.0%

N = Sample Source: Feedback analysis of Survey information, Qualitative Discussion © Feedback Consulting - 2016

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Future Outlook

© Feedback Consulting - 2016

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Drivers of Revenue Growth • New Business Areas and Retention of account ( Cross Selling) to Drive growth

Mean Score N = 31

86%

Content Driven Campaigns

72%

Cross Selling by PR firms

21% 88%

Digital Communication / Visuals

12%

81%

62%

3.39

7% 11%

3.35

37% 22% Disagree

3.39 3.35

7% 4%

3.23

8%

3.10

31%

43%

Maybe

3.45

12%

89%

Agree

7%

19%

77%

41%

3.58

12%

81%

Social Media Intervention

• Increasing Increased Awareness of PR Awareness & Increased PR Effectiveness Effective are key enablers of Specific Customer Sector Needs & Growth growth • Needs of specific Technology Interventions customer is changing, Improving Economic Conditions increasing cost of service Increasing FDI Investments

14%

20% 37%

LOW

2.94 2.58

HIGH

Scale of 1 – 5

N = Sample Source: Feedback analysis of Survey information, Qualitative Discussion © Feedback Consulting - 2016

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Public Relations Industry Future Forecast

Values in Rs. Crs

Future Forecast (Overall Assessment)

Next 3 Year Forecast as Predicted by Company Category

CAGR – 17.0%

21.4%

16.0%

15.3%

15.4%

2100

18.5%

1810

16.5%

1570

14.5%

1360 1120

8.8%

Very Large

Large

Medium

Small

FY16

FY17

FY18

FY19

FY20

• The Indian PR Industry is expected to grow at a rate at about 17% from FY18 - FY20 according to the estimates made by the players • The very large companies are very optimistic about the growth in the industry in the next 3 years • Digital, Social media and Content driven campaigns will be the game changers in the Industry and may contribute to as high as 25% of the revenue share Source: Feedback analysis of Survey information, Qualitative Discussion, Feedback assumptions where necessary © Feedback Consulting - 2016

xx%

Growth Rate 24

Key Trends Foreseen in the Public Relations Industry  The ratio of retainer vis-à-vis project model for new business acquisition was around 70-30 earlier but now there is a shift taking place, due to an increasingly competitive agency landscape in India and mushrooming of freelancers wherein clients have more choices than ever before  Companies are having a separate division to specifically cater to start ups  Companies are looking forward for complete integration of all the communication disciplines including PR, digital, content, advertising and reaching out to multiple stakeholders with a unifying message and story  Upselling in the Industry, variety of products re upsold to the same clients which brings in additional revenue  Storytelling has gone visual and increasingly brands are opting for infographics and videos, hence there has been an increased emphasis on Visual communication

Source: Feedback analysis of Survey information, Qualitative Discussion © Feedback Consulting - 2016

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Mumbai

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