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PR firms set a scorching pace

20-April-2005
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PR firms set a scorching pace

After two years of recession, the Rs 150-175 crore public relations business is on a roll with the country's top agencies growing at a blistering pace of 30-50 per cent in the last one year.

Vaishnavi Communications has witnessed a 60-70 per cent growth in its billings as well as a 30 per cent increase in its client base in the last 12 months.

"We expect the industry to virtually double every second year from now," predicts Vaishnavi Chairman and Managing Director Nira Radia.

Mumbai-based Sampark has doubled the number of its clients in the last 18 months, even as average billing is up by 30 per cent. And Perfect Relations, one of the oldest PR outfits, has seen a top line growth of over 25 per cent.

What is more, the margins in the business are fat. "Net margins of around 20 per cent make it a profitable business. Compare that to net margins of around 3-5 per cent in advertising and you realise why it's a good business," says Ashwini Singla, CEO of Delhi-based Genesis PR.

With their coffers full, large agencies are now looking at acquisitions to lay their hands on more clients and public relations professionals. Already, the big boys are being separated from the mom and pop stores.

Says Indira Parikh, dean of IIM-A: “In our estimate, the top four players now account for 40 per cent market share of the PR consultancy business. However, there is a significant growth happening at the lower end of the market.”

Genesis PR , for instance, has readied an undisclosed war chest to buy a second agency which has a presence in at least the three metros and a quality talent pool to match. Delhi based Perfect Relations is scouting for a specialised agency which has expertise in below-the-line communication.

"With corporates demanding more and more beyond just press relations, we want to offer a comprehensive package," says Dilip Cherian, the co-promoter of Perfect Relations.

Cherian and others are riding the gravy train because the Indian industry is booming: a large number of companies have new products or services to launch, while several others want to improve their profile as they plan to raise funds.

Adfactors Public Relations has done over a dozen IPOs in the last one year including those of Petronet LNG, Allahabad Bank, Jet Airways and Deccan Chronicle. And conventional public relations wisdom says that an editorial has at least seven-fold better impact than an advertisement for the same communication.

Sunil Gautam, one of the stakeholders in Mumbai-based Hanmer & Partners, says: "Consolidation is very important for this industry but it has not started happening as yet in a major scale. We have shown the way towards consolidation and the others are now following the route."

Such is the appetite of India Inc for good public relations that Vaishnavi is setting up offices in Bangladesh, Sri Lanka, Dubai, South Africa and Singapore to offer support to Indian companies that want to go global.

It has also tied up with UK-based Financial Dynamics(FD) -- a global expert on financial, and merger and acquisition PR -- to offer corporate communication services to Indian companies involved with mergers and acquisitions, or going for IPOs.

In turn FD will refer its global hot shot clients, who want a beach head in India, to their Indian partners.

In the last couple of years, the fierce under-cutting amongst public relations agencies has also gradually subsided as companies have become more demanding. Agencies are expected to perform a host of other services than just pushing releases and remain as clip-vending machines.

Consider this: almost 30 per cent of Vaishnavi's business now come from non-traditional lines like media training to corporates, specialised targeted newsletters, business intelligence, support to brand positioning and marketing communications.

One example: the company is doing a soft skill training programme on etiquette and mannerism as well as communication skills for over 1,300 Indian Airlines employees for a fee. Even though this is not new in India, "these non traditional, tertiary businesses are growing at 60 per cent and offer better margins too," says Cherian.

Of course, public relations agencies (some prefer to be known as advisories) have been forced to invest in extending their reach. Companies have become more demanding and are asking for presence in more cities, shorter timeliness and of course value addition in services.

Says Singla: "Today, the key markets of growth are in rural India and smaller cities, where the volumes lie. So, clients want support in these places." Genesis has expanded its presence to over 70 cities across the country. Perfect Relations hopes to increase its reach from 14 cities to 18 cities by the end of this year.

Because of the scorching pace of growth, these agencies are facing an acute shortage of trained manpower. This is reflected in the 30-35 per cent hike in top-level salaries the sector has seen in the last one year.

Rough estimates by Singla suggest that the industry takes in only 90-150 students from various business schools offering public relations as a specialisation, making it a very inadequate pool of talent.

To compound the problem, attrition rates have touched 30-40 per cent. The agencies are now putting in place systems to bring it down.

Genesis, for example, has started an in-house one-year course called the Associate Learning Programme to train its employees. Vaishnavi offers it management team training at IIM Ahmedabad.

No matter the big plans and the moves, the “infantry” that does the rounds of the media every day continues to be the backbone of the burgeoning industry.

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