Factors affecting PR agencies in India now by Ben Smith, MD, PRmoment.in

 10th September 2013    Opinion 

I was lucky enough to visit India during August and spend some time with a number of leading agency CEOs and a number of in-house communication directors.

Clearly, it's an interesting time for Indian economy and the PR sector in India at the moment.

For the PR community this is an exciting time but is within a period of economic uncertainty for the wider Indian economy.

In no particular order I thought it might be useful to outline some of the concerns and trends that I found to be re-occurring themes in my discussions with Indian PR leaders.

1. The PR talent market in India

It should come as no surprise that there remains a serious shortage of available skilled talent within PR in India. As is mirrored in other geographical PR markets, the shortage is broadly from those with two years’ experience to 8 years’ experience.

Due to the shortage within this demographic there is high wage inflation and high staff turnover. The high staff turnover is arguably responsible for the hesitancy of PR agencies to invest in training; because they fear that the people they have invested in will soon leave their business. This helps to create a vicious circle of high staff churn rates, poor training, unhappy clients and a commoditised market place for media relations work.

I’m not suggesting this trend defines the India agency market; on the contrary it does not. There is excellent work being done but this cycle is illustrative of the challenge of running a PR agency in India at this time.

2. Growth within the sector

Despite the flagging Indian economy the Indian PR market continues to grow. This mirrors similar PR sector growth across the world.

The Indian economy currently lacks the confidence of 12 to 18 months ago so the growth in PR revenues suggests that perhaps corporations in India are placing greater value and importance in PR to help them tell the story of their businesses, to help them engage with their stakeholders and as the guardian of their reputations.

I’m not suggesting this journey is complete for the Indian PR sector; merely that PR is valued more highly by corporate India today than it has been historically.

3. Pressure on fees

Both the agency leaders and in-house leaders discussed the need for increased fees to be paid in the PR sector. Clients understand that good work costs money and if they continue to drive down price they are likely to receive a commoditised product from agencies.

Broadly, agencies reported that clients had agreed fee increases, albeit not to the extent that the agencies would have liked but this is always likely to be the case.

4.  Pressure on wages

The inflationary pressures in India are affecting the profitability of PR agencies in India. Fee increases tend to be inflation plus a bit, but staff increases tend to be inflation plus a lot more.

Agency bosses reported having to give their best staff 20% year-on-year increases otherwise the reality was that they would leave.

It seems to me that this sort of year on year salary increase is unsustainable in any business.

5. The race for integrated and social media work

Although increasingly Indian PR agencies are doing good work within social, there seems to be an acceptance in India that social media agencies currently dominate the social media market.

The ownership of social media debate has always seemed pretty unhelpful to me – you might as well argue about who owns the telephone. That said, if I was a brand and I wanted to engage with my stakeholders or tell my story, I still believe that the PR agency is most likely to be the place that has the required skill sets to create stories and engage with my stakeholders.

I predict that increasingly as Indian PR agencies up skill their social/digital offer we will see more examples of integrated social media work in India.

6. The requirement for continued media relations work

The PR market in India is different to virtually all other PR markets in the world because of the continued vital importance of the print media in India. Brands still prioritise mass print coverage above most other media in India. On the one hand this is great for PR agencies in India; in-house teams could not hope to be able to cover such a vast media. But at the same time, it is important that this aptitude for print coverage does not affect the investment in digital/social skills within agencies.

It is obviously a challenge to retain great work in the media relations sector whilst casting one eye on the strategically important social media/digital work that is likely to be important in the years to come.

It seems to me these dual strategic objectives are a challenge for PR agencies are now.

7. The economy

Indians are used to the economy growing at between six and eight per cent. This growth was achieved at a time of difficult worldwide economic conditions. Historically it has always been difficult for democratic countries (i.e.: I can’t see any examples where it's happened) to sustainably grow at that 6 to 8% of GDP level.

It was therefore perhaps always likely that India's economic growth would slow. Particularly, bearing in mind the difficulties the rest of world is having.

That said the current political uncertainty combined with continued corruption difficulties and inflationary pressure is clearly a big concern for the Indian economy.

Yet, after months of what critics have widely termed as a ‘policy paralysis’ over the economy, recent measures taken by the new Reserve Bank of India Governor to improve dollar inflows has resulted in a recovering rupee this week and a stronger stock market.

I’m no economist but whilst there are clearly no easy solutions for these issues, a clear election result next year will help.

What might help a bit more is if the rest of the world’s economies continue to show positive growth signs.If this remains the case it would be very surprising if India's slump continued.

Do bear in mind that as a Brit I'm currently ecstatic that our economy is apparently going at 0.7%. Proof if nothing else that all is relative.

This post was written by Ben Smith, Founder and MD, PRmoment.in - you can find me on Linkedin, on Google and on Twitter.