2002 GLOBAL RANKINGS: Asia - Asia didn't buck the economic doldrumsof 2001, but Olivia Toth finds that the area's PR scene, while affected,is among the world's most resilient

Last year, Asia-Pacific's PR industry had to fight to prove its resilience and maintain its profile. 'Leaner and meaner' emerged as the game plan for 2001, as all consultancies worked harder, with relatively little gain, as the world's economic machinery slowed.

Last year, Asia-Pacific's PR industry had to fight to prove its resilience and maintain its profile. 'Leaner and meaner' emerged as the game plan for 2001, as all consultancies worked harder, with relatively little gain, as the world's economic machinery slowed.

Staff cuts were common across industries, expansion the realm of a select few. Communications was but a tear in the fabric that saw the area's media industry fight for survival, and ad revenues plummet.

Unpredictable markets

"2000 was a banner year for the industry, and 2001 started well, except for those firms overly dependent on dot-com business, says Bill Rylance, Burson-Marsteller's Asia-Pacific president and CEO.

By early summer, though, the cracks showed, and 9/11 exacerbated matters.

Tech-based clients were battered by rocky economic conditions, PR budgets were shaved across the board, IPOs slowed to a halt, and travel and tourism were particularly stung.

Lynne Anne Stevenson, Fleishman-Hillard regional director, EVP and senior partner, says the unforeseen events and fallout "tested the mettle of management in every company in every industry."

"PR consultancies had to counsel clients while navigating their own businesses through the downturn, she says. Recession-weary clients pushing for lower fees became common, and with many willing to accept reduced fees, the entire sector felt pressure to do more for less, with fewer resources.

Staff cuts of 20% weren't unusual. Of the top 10 consultancies, only Golin/Harris Forrest and Ogilvy PR - which boasted income gains of 112% and 32% respectively - swelled their ranks significantly.

Burson cut staff from 216 to 187, but did gain 63 clients over the year.

Weber Shandwick Worldwide added close to 100 new clients with 26 fewer staff. Edelman PR Worldwide cut staff from 245 to 227, as its client list fell from 420 to 340. When networks did hire, they chose senior names to help shore up specialty practices or soothe nervous big-name clients.

Encouraging revenues

While top-ranking Burson maintained its revenue-led domination, its income still fell 2% to almost US$21.9 million. Fifth-placed Hill & Knowlton also took a revenue cut, falling 7% to US$14.4 million.

Luckily these were largely the exceptions to the rule, and consultancies such as Ogilvy PR bucked the trend, sporting revenues that surged from US$14.8 million to US$19.5 million over the year.

Golin/Harris Forrest's client list tripled from 84 in 2000 to 249 for 2001. Its income more than doubled, to US$8.7 billion, and staff rose from 47 to 89.

Encouragingly, consultancies such as healthcare specialist Ruder Finn, which fell outside the top ten to 13th place, posted 41% growth for the year.

And as struggling brands and crisis-struck companies needed help, players with finely-tuned crisis capabilities came into their own.

Pockets of success were not uncommon, and WSW's Japan operations contributed US$9.1 million - a third of its entire Asia-Pacific revenues.

Despite a marginal 2% drop in its US$3.5 million Japan revenues, for Fleishman Japan SVP and partner, Shinichi Tanaka, the corporate crises littering the economy began to cultivate a growing area of PR speciality in Japan - change management.

According to Ogilvy PR president Matthew Anderson, 2001 was full of surprises: "Agility was the key, as clients needed quality work in areas that only a couple of months before they didn't know they'd need. The more generalist firms suffered, and those hurt the most had juiced-up Nasdaq clients who were just dipping their toes into Asia, he said.

Arguably, while ad spend budgets shrunk, as did comms budgets, the value of reputation management in a down market gained prominence.

"There was a growing recognition of the need for PR in the boardroom, and particularly as a driver in the marketing mix, rather than a 'nice-to-have' add-on, recalls PPR's Sydney MD, Richard Lazar.

Despite the region's prevailing dour mood, consultancy heads such as Golin/Harris Forrest MD, Asia, Anne Forrest, are encouraged by the growth exhibited. "This is a really positive sign, she adds.

India

While the dot-com boom was poised as India's economic saving grace, the continent reeled after the global tech fallout. Despite being closeted from the direct aftershocks of 9/11, sustained Indo-Pakistan political skirmishes and political unrest combined with natural catastrophes in the Northern region of Gujarat to set an uneasy market for firms to work in.

Dented by the IPO meltdown, financial markets wound to a halt, and while accurately judging the size of India's PR market remains difficult - due to corporate transparency constraints - year on year, 2001's US$20.4 million estimate shows shrinkage.

The maladies of a PR industry at the receiving end of disappearing comms budgets by global and local multinational clients were evident.

Luckily, industry professionalism proved a beacon, and the formation of the Public Relations Consultants Association of India (PRCAI) in December is raising the bar already.

Prema Sagar, PRCAI founding president and principal of India's largest home-grown consultancy, Genesis PR, feels firms with a solid client base of old and new economy clients weren't too badly hurt.

"We already see huge opportunities in biotech - India has the knowledge economy that call centers are relocating from the US to India for and it's creating opportunities for PR companies here, she says.

Multinationals in India saw consequential operational changes, as global travel budgets were cut, and human resources initiatives - their distinguishing point from local competitors - were frozen.

Ironically, according to Sagar, quieting business, boosted by PRCAI encouragement, has led to training as a means of raising the industry's profile.

"Everywhere in the world PR is suffering from the same problem. How to show the value of what we do to clients is by far our biggest challenge."

Meanwhile, the mom-and-pop PR shops proliferate, and within the PRCAI's own top 10 members list (based on unpublished agency fee income), only Ogilvy PR and Text 100 stood out as truly global players with wholly-owned Indian operations, alongside established local entities like Genesis PR.

Both firms' 2001 revenues were within the US$1.5 million bracket despite growth.And while the US travel advisory on India prevails, for airlines and the consumer PR sector, progress was sluggish at best.

At the moment, India's agencies are playing a waiting game. As Sagar notes, insurance markets are opening up to foreign investment, and healthcare looks promising."For the time being though, it's so new - it's not even happening, she says.

Specialization

Most industry leaders cautiously predict gradual growth for 2002. The finance and banking sectors are reemerging. IPO work that has been long in coming is being flagged in markets like Thailand, Indonesia, and Malaysia.

Technology is coming back too, with emphasis on diversification and focuses such as b-to-b and localized capabilities for global clients.

Healthcare is already emerging as a specialty area to watch in the coming year, with WSW boosting local investment in an area that has, until now, enjoyed global, rather than local prevalence, according to Asia-Pacific co-president, Emma Smith.

"We've made a very big investment globally, and I'm extending this with investments into healthcare locally, she says, highlighting China, Australia, Japan, and Hong Kong as markets leading the way.

The year ahead

Most consultancies that cut staff last year have begun hiring again and, in many cases, have already made up the numbers to 2000 levels or higher.

But regional observers say it is likely to be in 2003 that the PR industry shows a full return to form.

With many seeking answers in what remains an unstable global economy, Bill Rylance is happy to play a waiting game. "Anyone can appear smart using hindsight, he says. "But it's very hard to accurately predict how business will look a year ahead."

GLOBAL AGENCIES OPERATING IN ASIA

Rank Agency Name                      Asia-Pacific Income (dollars)    %
2001                                          2001           2000   chng
1    Burson-Marsteller                  21,879,000     22,353,000     -2
2    Ogilvy Public Relations
     Worldwide                          19,510,000     14,794,000     32
3    Weber Shandwick Worldwide          16,249,920     16,235,580    0.1
4    Porter Novelli                     16,733,679     15,868,989      5
5    Hill & Knowlton                    14,435,000     15,554,000     -7
6    Edelman Public Relations
     Worldwide                          13,649,987     12,635,420      8
7    Cordiant Communications Group      11,550,240             NA
8    Golin/Harris International          8,731,927      4,121,019    112
9    Fleishman-Hillard                   6,908,000      6,647,000      4
10   Incepta(Citigate)                   5,822,447      7,831,615    -26

Source: PRWeek US Agency Rankings Note: This is a list of global public
relations firms in Asia. It does not include Asian independents.
We have not included Incepta in this chart because it was not able to
provide sufficient information on its Asian operations.

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