The rise of integrated comms in Asia: PRWeek Global Agency Business Report 2016

Revenues may have fluctuated in 2015 for PR agencies across Asia-Pacific, but it was a year of future-proofing for many as they beefed up their capabilities to make themselves full-service digital comms firms.

Was 2015 the year that clients finally began to cotton on to the full range of integrated communications services that Asia’s PR agencies can provide?

Golin’s president, International, Jonathan Hughes, certainly thinks so.

The industry in the region, as indeed it has globally, has been debating for the past four or five years how it needs to expand from traditional media relations to the full gamut of marketing communications services.

And Hughes believes 2015 may have been the watershed year where it really started to become apparent for brands.

"More often than not clients are now looking for a ‘channel agnostic’ approach and therefore they are willing to look at fresh new ideas from a range of firms, not just their historic ‘creative’ agency of record," he said.

"This also translates itself into a trend around the new competitive set.  A few years back it would be pretty easy to figure out who your likely competitors were. Now it’s anyone’s guess and is changing all the time."

These views were echoed elsewhere across Asia too. Text100 pointed out that 2015 was the year that 50 percent of its revenue came from non-media relations work, while market leader BlueFocus’ PR arm, BlueDigital, saw its digital offerings account for 80 percent of revenue.

Similar success stories were told by Edelman, MSLGroup and Ogilvy, a point reinforced by the latter’s Asia CEO Scott Kronick who stated that employees with a PR background were increasingly taking senior roles across the wider network.

There is no doubt that the move towards more integrated services will continue at pace, especially around digital and creative, but one interesting conclusion from this year’s report is that there appears to be little consensus on the best way to achieve it.

Some agencies have chosen to rebrand – Lewis symbolically dropped the ‘PR’ from its title – others are acquiring businesses or forming joint ventures, while some are focusing on hiring non-traditional PR talent.

Edelman’s APAC CEO David Brain said the firm had invested heavily in hiring creative directors, planners and researchers, and said the next stage of the plan was to focus on paid media, especially in the social sphere.

"To get to a brand’s audience, you now have to pay for that. If you are a PR company that produces great content, but you can’t buy behind that, you will be disintermediated and it will go to media companies or people who can," he said. 

As such, Brain is looking to hire a head of paid media in APAC, plus a team of around four staff, within the next six months. He believes this will add a significant string to Edelman’s bow, on top of the other major changes the firm has made.

"We’ve gone from producing content for social and optimising that," he says. "Now we’re promoting it and the scale at which that’s happening means you’ve got to have people who can plan and buy on all of the key social platforms in the region, at scale."

Even the more traditional agencies have gotten in on the act, such as Burson-Marsteller hiring ex-McCann and Saatchi&Saatchi creative leader Barry Wong in Hong Kong.

As APAC CEO Margaret Key stated: "This is a new and quite aggressive move for us – we will be looking to appoint a creative head for other offices in the region."

Other agencies have firmly taken the decision that acquisition provides the best opportunity to equip themselves with the skills they need.

Golin’s recent purchase of creative agency The Brooklyn Brothers is a case in point.

International president Hughes said plans are in place for TBB staff to be on the ground in Asia within the next 12 months, based initially at Golin in China.

"The Brooklyn Brothers’ team will remain a separate entity, but we hope to have TBB people in our offices to support the work we’re doing already, firstly in China and then across Asia," Hughes explained.

"This kind of work is going to be in huge demand: world-class branded content generation, and it gives you a pretty good indication of our direction of travel.  We’re determined to be at the forefront of social and digital content and at the apex of paid and earned media."

Meanwhile WPP and Publicis outfits are increasingly working more closely with their stablemates on joint offerings, be they formal ventures such as Hill+Knowlton and JWT’s Colloquial content marketing arm which launched in Australia, or informal tie-ups such as those between MSLGroup and their counterparts.

As MSL’s APAC president Glenn Osaki points out, these relationships had a significant bearing on the bottom line last year.

"With the restructuring [of Publicis] we’re working more closely with our sister agencies. For example, for AXA, Nestle and Airbus we’ve taken on a significant amount of business across the region. These are Publicis clients, and we’re doing more work with them as part of our wider strategy to be more integrated."

There are some in the industry who fear, rightly or wrongly, that PR faces losing its point of difference in the headlong rush to loosen reliance on its traditional capabilities and embrace a broader spectrum of marketing services.

According to our conversations with agency heads, however, these fears miss the central point.

The common consensus is that once-traditional PR agencies are better equipped with the skills to meet current and future consumer demands than their advertising counterparts – and especially so in Asia amid rapid digital growth, which has jumped straight to mobile platforms.

Also, in emerging markets in particular, traditional ways of working do not always exist, especially as many local brands are seeking to expand regionally and globally for the first time.

This gives PR agencies the chance to get a foot in the door from the outset, a factor highlighted by several agency bosses.

FleishmanHillard’s Asia president Lynne-Anne Davis added that demand for cross-border transactions by Asian companies continues to prove lucrative for the agency, a trend it has been mapping for some time.

"It is no longer about diversification of business and revenue from abroad; it is also about bringing Western business concepts, models and franchises to meet the growing domestic consumption needs of home markets and ‘exporting’ these success models to the West," explains Davis.

It may be that working with local brands to expand their presence regionally or even globally takes on even greater priority in 2016 in what is becoming an increasingly uncertain economic climate.

In Southeast Asia many economies are at risk of flat-lining or posting only modest growth figures. A number of agency heads point to a stagnant market in Singapore, while Thailand is expected to grow at little more than two percent this year. The saving graces are likely to be Malaysia which is predicted to grow by four percent and Indonesia, over five percent.

The almighty elephant in the room, however, is China.

For the first time the ruling party has neglected to provide a concrete growth figure and instead forecast a "growth range" of 6.5 to seven percent.

According to officials, in 2015 the world’s second-largest economy grew by 6.9 percent, although most seasoned observers believe in reality it was far lower.

Indeed, as Sir Martin Sorrell told PRWeek Asia late last year, he believed the figure to be more like 4.5 percent, and he’s a self-confessed "bull" when it comes to the Chinese economy.

How this affects PR agencies in 2016 remains to be seen, but there are clearly some jitters among the industry.

A cautionary look at BlueFocus’ figures for 2015 should start to signal some alarm bells. The holding company’s revenues rose by 44 percent to 8.6 billion yuan (US$1.32 billion), but operating profit tumbled by over 50 percent to 440 million (US$68 million) due to market conditions, higher interest rates and extensive investment.

At the positive end of the spectrum there are those who say that even if China’s growth is more like four percent, that’s still far greater than anything on offer in the West. Others, however, are more cautious, noting that those agencies whose regional growth has been driven largely by China, may find the days of high double-digit advances are coming to end.

As Hughes at Golin points out, the region is facing the most uncertain environment for several years.

"Commercially, I think the uncertain outlook will be a challenge and we’ll have to see if that uncertainty affects marketing spends," he said.

The fact is, at the moment, there are too many unknowns.

One certainty, however, is that is the economy is a potential dark cloud on the horizon when it comes to Asia other major PR concern: talent and recruitment.

It’s fair to say that no agency can claim to have cracked the code when it comes to employment issues. Many can hire, but few can retain.

It is not uncommon to hear of turnover to be in the 60 to 70 percent bracket in China, while rates across the region as a whole can vary from 20 to 50 percent.

The most innovative agencies are trying to devise credible and cost effective ways to tackle this through training, incentives and coherent career plans, but in many cases these are not yet reaping rewards.

One thing is for sure, if the industry is serious in its ambitions to not only expand but also to excel across a full range of marketing communications services, it needs to hire and retain the best people.

If PR is going to be the main communications voice at the top table, clients will accept nothing less.

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