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
Š Feedback Consulting - 2016
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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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