Is reduced corporate budget allocation on PR spends a hindrance to the industry?

Firms are relying on their cash reserves in desperate times and leaders are optimistic about the market gaining momentum post lockdown

e4m by Nafisa Shaheen
Published: Apr 15, 2020 8:28 AM  | 6 min read
PR Allocation

The International Monetary Fund (IMF) projected an economic growth of 1.9 % for India in 2020 forecasting an overall global recession due to COVID19. The cascading effect of the pandemic has begun to show on businesses with less influx of business and operations being temporarily shut. The 21 days nationwide lockdown imposed in the country has added to the attrition and will continue to bear the brunt with the extended lockdown. Corporate budget allocations for Public relations have reportedly been reduced owing to the unprecedented losses in businesses.

The Public Relations industry too has been feeling the heat of the slowdown in businesses. Experts opine that distressful times like these take a toll on businesses, which then require public relation and communication professionals to help the brand and firm stay alive and relevant to the consumers. The cut in the PR spends will eventually be a task for the agencies to perform and keep their businesses running in times of despair.

Talks about cash flows being affected and clients not paying as they have kept their contracts on hold have been circulating in the PR fraternity. Public Relations Consultants Association of India (PRCAI) has been taking significant steps to provide support and advice to its member firms in these dark and challenging times. Nitin Mantri, President- PRCAI said,” We are using all our resources, time and energy to make the situation less disruptive and stressful for our members and clients. We are constantly evaluating the crisis and its impact on our people and clients.”

He spoke about holding virtual meetings with CEOs of PR firms every week to assess new developments.  The President asserted: "Communications is the business-critical need now, we expect our clients to have additional support requirements this year. He further informed, “We have discussed with member firms how to make our cost heads more efficient”.

On being asked on the steps being taken by PRCAI for member firms, he replied, “For our people, we are offering free training programmes through ICCO, running campaigns and webinars on mental health-related issues, and taking initiatives like virtual get-togethers to motivate them. Finally, we are sharing information on measures firms can take to ensure business continuity for themselves at this time”.

How is the business being affected by the lockdown and its extension as many companies have cut down on the PR spends?

Large PR firms are relying on their cash reserves while others are optimistic about the market to gain momentum in 3-4 months after the lockdown.

Kunal Kishore, Founder Director at Value 360 Communications said, "To be frank, ever since the first coronavirus case was detected in India, we knew that short-term business loss was a very likely possibility."

He added, "With consumers no longer behaving as they would in ‘normal’ market conditions, brands are facing the heat and are slashing their marketing budgets to conserve cash. As a result, not only PR but the entire marketing sector is feeling the heat by this ongoing crisis”.

Kunal also reminded that PR still continues to play a very critical role for many brands and business in this time of crisis, unlike any other marketing function.

Udit Pathak- Founder & Director at Media Mantra too said, "These are difficult times and public relation firms are suffering through the loss of revenues”. He added that there is a crunch in the cash flows and desperate times will require some pay cuts and layoffs too.

Regional PR firms are also facing this unprecedented situation. Shailesh Goyal, Director, Simulations Public Affairs Management Services Pvt Ltd said that the PR industry has been grappling with an overall economic slowdown for more than a year. He added, "Business activity has come to almost standstill in the last few weeks because of the lockdown and with the lockdown having been extended till May 3 now, the standstill will also continue."

Goyal drew attention towards the fact that regional PR firms do have their own client base but many of them are heavily dependent on transactional  business from national agencies also. Since the bigger consultancies have also been adversely hit by the lockdown, it is natural that regional firms will feel the heat too.

On asking if the PR fraternity too planning for pays cuts or layoffs screening the current market situation, CEOs and heads of different PR firms chose to be hopeful of the situation. Leaders said that it may be a bit early to talk of layoffs and pay cuts, but in the longer run, loss of revenue may demand pay cuts and layoffs.

Small players or startups in the industry are bearing with the maximum losses and may have to shut businesses restraining to desperate and difficult times.

Kunal affirmed that the PR fraternity in India has really come together in this time of crisis. The depth of empathy and understanding has been pleasantly surprising, as we pool our collective resources, experience, knowledge and energies for a larger mutual good. He added,”The senior leadership teams at top PR firms regularly connect via video conferencing to outline the latest developments, come up with possible challenges/solutions/strategies and discuss the industry’s way forward”.

He informed that there have, however, been talks of layoffs and pay-cuts across the board. "We have not done any lay off as of now. While nobody – business or individual – could have fully be prepared for such an unforeseen situation, we have acted swiftly and decisively to ensure that our short-term survivability and long-term growth projections were balanced. We have recently announced interim salary restructuring across the board at Value 360 Communications. The deduction is proportional to the individual’s current designation and salary bracket. We at management level will be contributing our salary to support our lower staff,  as we do not feel they can survive if there is any salary cuts done at their level," he said. 

“This measure has been taken to ensure that, till the market normalises, we can meet our operational expenses at a sustainable level. Moreover, as a token of our goodwill towards entry-level professionals and support staff members, we have not enforced salary deduction for anyone. We want to avoid mass lay-offs unless absolutely necessary”, concluded Kunal.

Udit Pathak also informed that Media Mantra has made interim salary cuts at the senior leadership level.

“Agencies should become multi-tasking now and bring a change in their strategies in order to survive ahead. Definitely, the post-COVID world will see a much brighter side of public relations in the country,” concluded Udit Pathak.

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