The year 2000 will be remembered by the Asian PR industry as the
moment when global firms realized the opportunity to build specialist
practices in the region.
Buoyed by the new economy, all the large PR families - Omnicom,
Interpublic, True North and WPP - reaped sufficient reward to launch
practices in hi-tech, investor relations and brand marketing to service
the flourishing dot-com sector. As Burson-Marsteller's Asia Pacific
president and CEO Bill Rylance recalls: "It was a year of rising tide,
where any business that was managed well would rise with the tide."
Of course, the boom could not last. When Fleishman-Hillard announced
layoffs in Singapore in May, it was the first tangible sign that the
economic decline in the US would have a direct impact on the
The US influence
Outside Japan, the Asian PR industry is dominated by US brands. The boom
of 2000 was led by mushrooming US hi-tech corporations, which in turn
fueled Asia's own new-economy upturn. Notably, Chinese companies such as
Chinadotcom and Netease used global PR agencies to run investor
relations in the US, as they pursued Nasdaq listings - early signs of
the emergence of China as a global powerhouse.
But the influence of the US economy has been a double-edged sword. While
European markets have been able to stave off the worst effects of the
slowdown, Asia has suffered.
"Asian economies are still very dependent on the US," says Pam Miracle,
SVP and regional director at Fleishman-Hillard until earlier this month
(she's now in Europe). Since most of the global networks have grown from
their international client base, the effect of a US downturn is likely
to affect those agencies with a strong overseas client base, say
regional PR chiefs.
"The firms that were hurt most were those disproportionately reliant on
US technology companies for their profitability," explains Matthew
Anderson, president of Ogilvy Public Relations Asia Pacific. "It's a
crucial time to be selective because there are very significant areas of
opportunity in specialist areas." Ogilvy works with Mead Johnson, IBM
and Tricon Restaurants (KFC and Pizza Hut), but it has also won several
major local clients this year, including the Asia Pacific Economic
Winning locally based clients has traditionally proved difficult in
markets where PR is an emerging discipline. "PR is all too often seen as
discretionary spending in Asia and has been hit hard," says Nicholas
Walters, chairman of GCI Group Asia Pacific.
One of the ongoing challenges facing agencies with Asian ambitions is
the small domestic market. Alison Clarke, CEO Asia Pacific of Weber
Shandwick Worldwide, agrees. "Asia is still cheap and cheerful," she
says. "Client prospects talk about wanting best practice but are never
prepared to put best-practice dollars behind it. That continues to be
the greatest hurdle in Asia."
New century, new gains
Last year saw a changing of the guard. The global merger between Weber
Public Relations and Shandwick at the end of last year made Weber
Shandwick Worldwide the biggest player in Asia - with revenues exceeding
$23 million, $9 million of which was generated in
The Japanese market has undoubtedly been the hardest to penetrate for
global PR agencies, with Dentsu the largest among several
It's a different story outside Japan, where the top 10 global agencies
claimed revenues of almost $90 million in Greater China and
Southeast Asia (China, Hong Kong, Korea, Indonesia, Malaysia, Singapore,
Taiwan, Thailand and the Philippines). Their total average growth
reached a staggering 28%, with only Edelman and Hill & Knowlton
reporting negative growth.
Burson became the first agency in this region to break the $15
Financial success wasn't limited to the big 10, either. US tech
specialist The Hoffman Agency reported revenues of $1,408,197 in
2000, up 163% for the year. This figure represents income from four
locations where the agency has wholly owned operations: Beijing, Hong
Kong, Korea and Singapore.
Similarly, Text 100, a UK-based hi-tech agency, showed significant
growth in its locations in Hong Kong and Singapore, claiming a regional
revenue of $680,680, up 955%.
In addition, Singapore-based Standfirst Communications reported audited
fee income of $445,000 for its offices in Singapore and Malaysia.
The company launched its Kuala Lumpur office last year and virtually
doubled its income in Singapore, from $230,000 in 1999 to $400,000 last year.
But such growth is not expected to be repeated this year. As the top 10
agencies brace for a slowdown, the success stories will likely come from
those that are selective with clients and pursue the specialist route,
say regional PR chiefs. Burson is a good example. The agency resigned
its account with Chinadotcom last year as part of a plan to reduce the
number of relationships in Asia. Its only other significant new-economy
client is securities trading firm CASH online.
"We enhanced and deepened our relationships with existing clients during
the year," explains Burson's Rylance. "As a result, we grew across the
Burson's cause was helped by several huge wins the year before that were
billed in 2000, including the $5 million contract for Inchon
Airport in Korea and a government brief worth $1.2 million to
rebrand Hong Kong.
The only other significant new account was regional client 3Com, says
Rylance, with Burson focusing much of its effort on growing its business
with existing clients Philip Morris, Qualcomm, Unilever and Intel.
Weber Shandwick Worldwide was no slouch either, beating average income
growth with a strong 34%. The integration of BSMG's Hong Kong operations
(Scotchbrook) will only strengthen its top position. But despite such
revenue gains, Clarke says WSW aims to beef up profits by building the
high-end, specialist parts of its business. "We need improvements in
margin. I anticipate that will be our objective."
Asia's market of greatest potential is China. For the first time this
year, three of the top 10 agencies - Ogilvy, Edelman and GCI/APCO -
generated greater revenues in their China offices than in Hong Kong.
The reasons are clear. Foreign multinationals are lining up to profit
from 1.3 billion consumers in China's increasingly liberal economy.
Burson's operations in Beijing, Shanghai and Guangzhou made more than
$4.5 million last year. Investor relations and financial PR in
the China market is expected to be a major growth area this year,
according to Ogilvy PR Beijing managing director Scott Kronick.
Such developments appear to threaten Hong Kong's role as the region's
most important hub. But Burson's Rylance believes that while China poses
a great opportunity for PR, Hong Kong will remain a major market for the
region. "China's gain is not necessarily Hong Kong's loss. There are
probably many complementary and related opportunities," he says.
The hopes pinned on China's entry to the World Trade Organization are
huge, but not everyone in PR thinks China's growth depends on it. "WTO
could be a red herring," says Clarke. "It will clearly have an effect,
but (the delay in China's entry) isn't stopping many of the big
WSW has reported about 50% growth year-on-year in China - possibly the
agency's best performance globally, according to Clarke. Similar figures
are reported among almost all the multinational agencies in Beijing.
"In China, our public affairs and PR practices have had very good
years," says Ogilvy's Anderson. Clearly, a geographical trend will be a
focus on north Asian markets in the coming year.
Korea and Southeast Asia
Significant acquisition's have taken place in Korea. In April,
Fleishman-Hillard and Brodeur acquired IT Korea and InComm,
respectively; GCI signed an affiliation agreement with Korea's Shinhwa
in May; and Golin/Harris acquired Aspect in Taiwan.
But Southeast Asian markets, except for Singapore, remain relatively
unattractive to buyers. Since the financial crisis of 1997, the
much-needed structural reforms encouraged by the World Bank and other
international bodies have not been implemented. Together with continuing
political unrest and scandals among national leaders in Thailand, the
Philippines and Indonesia, the outlook for the region looks poor in the
Agencies in India are also feeling the heat. Last year, Mahnaz Curmally,
Ogilvy's recently promoted president of South Asia, wrapped up a deal in
a couple weeks. Now she takes anywhere from three to five months.
"Today, clients will negotiate hard and delay their decisions as long as
they can," she says.
So what's gone wrong? The last three years were a dream script for PR in
India. With the growing need for information, both clients and agencies
began to leverage the power of the spoken and written word, finally
giving PR the credibility it had been craving.
The $42.5 million Indian PR industry was galloping ahead at 30%
But things went awry last year. With the domestic stock exchange
mimicking the Nasdaq - along with profit warnings from the likes of
Amazon.com and even local tech majors like Infosys - India began
tightening its purse strings in the last quarter of 2000.
Competition is changing the face of PR in India. From barely 40 players
five years ago, the PR landscape is now littered with as many as 200
While most of the leading agencies have outposts in the five major
metros - Mumbai, Bangalore, Delhi, Chennai and Kolkata - the one-man
outfits suffice on local clients.
While a handful of top agencies claim to have revenues approaching
$1.5 million, Indian PR is still at a nascent stage. It has to
tackle the issue of skilled manpower. For most agencies, on-the-job
learning is the norm.
Even Curmally admits that she tackles situations as they come along.
GLOBAL AGENCIES OPERATING IN ASIA
RANK AGENCY NAME INCOME (dollars) %
2000 2000 1999 CHANGE
1 Weber Shandwick Worldwide 23,479,849 18,883,912 24
2 Burson-Marsteller 21,762,000 15,462,000 41
3 Ogilvy Public Relations Worldwide 16,236,300 13,070,000 24
4 Hill & Knowlton 14,199,000 19,426,000 -27
5 Fleishman-Hillard 10,923,000 7,922,000 38
6 Edelman Public Relations Worldwide 9,935,285 10,389,814 -4
7 GCI Group/APCO Associates 6,661,762 5,906,406 13
8 Golin/Harris International 6,190,000 4,793,000 29
9 Manning Selvage & Lee 5,110,793 3,229,250 58
10 BSMG Worldwide 4,987,296 1,112,719 348
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.