Are low budgets holding back the growth of the Indian PR business?

 22nd May 2013    PR Insight 

Competition from digital media agencies, a shift from media led PR to strategic stakeholder engagement, the move towards transparent brand engagement due to social media; never before has the communications business been in such a state of flux.

It therefore becomes important to look at the state of the budget levels for the PR business and understand how these are impacting PR's growth as a strategic function.

Why are budgets for PR low?
 

Shravani Dang, Vice President and Global Group Head of Corporate Communications at Avantha Group and Advisory Board member of Women in Leadership Forum, says that “PR is an evolving function in the country, the US and the west are leaps ahead in terms of understanding its value and what not having PR means- the dangers and the effect on business. In India, many forward thinking organisations like the Avantha Group, understand PR and uses PR effectively across the world. With understanding of the need for PR comes the budget, without this, PR will continue to be relegated as an expense.”

Existing budget levels
 

Madhulika Gupta, Founder and CEO of REPUTE (Public Affairs and CSR Solutions) and member of the Bombay Chamber of Commerce committee on Media, Corporate Communications, Entertainment and Advertising, says; “Whereas a company may budget Rs 2 crores for an advertising retainer, it is unlikely to spend more than Rs 18-20 lakhs towards a PR retainer. However there are exceptions to this as in everything else, and it can vary a lot depending upon the sector, the level of reputation risk they face from their business operations…say for example the mining or oil and gas sectors could peg higher operational risks and thus reputational ones. Those apart, other factors could influence PR budgets such as the level of interest and engagement by the CEO on media reportage of his/her company or brand.”

PR professional, Arpana Kumar Ahuja, Advisor of Business and Programme Development at PR Pundit, agrees with the assessment of average PR budgets, but points out that “The average advertising retainer has shrunk to Rs 1 to 1.5 crore a year, while PR retainers are in the Rs 20-lakh range.  I personally feel comparisons with the advertising industry are not valid, given that PR industry in India is much younger, albeit with a sharper growth curve.”

Madhulika Gupta also points out that “In the current scenario, it appears PR businesses are doing little to influence an industry wide raise in budgets. Often industry players allude to the contrary, that some PR firms are unwittingly enabling lowering of PR budgets by undercutting on fees simply to secure a piece of business. This could also lead to lowering of the bar rather than raising it.”

How to raise PR budgets?
 

Shravani Dang advises that “PR agencies must continue to add value and demonstrate impact of what they do regularly. New and novel ideas using technology for communications and communication channels is a value add, and new methods like flash mobs and other inventive ideas will be the key differentiator. “

Arpana Kumar Ahuja says that in order to raise PR budgets, the PR business itself need to be sustained by investing more in talent and infrastructure. Ahuja points out that “The industry needs to present a unified front. Collaboration within the industry on various issues such as benchmarks for salaries and fees, partnering with educational institutions to create training courses suited to the industry and putting in place performance measurement systems that go beyond the spread of media coverage.  We need to present a collective face and work together towards taking the industry forward. It is important for all players to be on one platform, create a brand for the industry and focus on quality standards.  I think we are getting there; till two years ago, we did not have any credible Industry Awards, and this year we have both IPRCCA and SABRE!"

Madhulika Gupta says that it is also important to, "Make a collaborative and concerted effort to function as and be seen as strategic communications consultants. Break the perception mould of ‘spin doctors’ into drivers of ‘thought leadership”. She recommends that the PR business should collaborate to build strength and influence of PR industry associations. The industry associations can then represent PR industry issues with one voice especially on mission critical matters, such as pricing and talent development. They can help develop and establish norms and practices, share success strategies etc. Other industries have benefitted from empowering their industry associations in India, and PR industry could take a leaf out of their book.”

Promote strategic PR
 

The solution, PR expects belief lies in creating the right image and demand for strategic PR.

Madhulika Gupta recommends “Engaging with top management/CEOs and Business Heads along with the Marketing and Corporate Communications heads of companies to derive a direction and focus on their business goals aligned strategies.”

Says Vivek Pradeep Rana, Principal of The PRactice, “As firms we must become the nimble and sure-footed ally to help companies negotiate the current shifting landscape and offer a holistic approach to solving client challenges. The death bells for superficial reputation management, controlled one-way monologues are ringing loud.”

Vivek Rana also believes that similarly, corporate communications professionals at the client’s side, a large number of them who have grown up from agencies, must also up their game.” They need to remain relevant with the changing tide and become key enablers in this transformation of public relations as a strategic function.  They will have to garner respect from their internal stakeholders by undertaking strategic initiatives that create value and strengthen reputation for the corporates they represent. “adds Rana.

Pricing models
 

Shravani Dang believes that “India is just waking up to the value of PR, politicians are now scouting for PR resources, political parties have begun appointing them, corporate are already in the game as are celebrities and sport persons. Now small businesses and events are aware and working to get the buzz. I think people know they have to pay for PR but are reluctant to pay. Once the value and impact is clear, it will be boom time for the industry.”

Shravani while admitting that current PR budgets are not reflective of the value offered by PT says that “The value must be measured by impact and in percentage of turnover like R&D. “

Written by Paarul Chand