EU Expansion: New frontiers in PR

The accession of ten further states to the EU last May presents an opportunity for western brands and agencies. Mark Tungate reports from Budapest

Ten years ago, when I last visited Budapest, it was still struggling to emerge from its post-Communist shell. There were prostitutes along the highway from the airport, the only recognisable western store was Marks & Spencer, and the New York Café – Budapest’s intellectual hangout – was full of swarthy bespectacled types who looked as though they had missed the revolution. Indeed, the building still bore the scars of the moment when a tank ploughed into it during the uprising of 1956.

Today, the New York Café is closed for refurbishment: it’s being turned into an expensive restaurant. There are drive-in McDonald’s and Burger Kings along the highway and Zara has opened opposite M&S. Along with Poland and the Czech Republic, Hungary is considered one of the stars of central Europe. And since its accession to the European Union, it is a land of opportunity for PR agencies.

Local knowledge

‘The major players are here,’ says Gabor Jelinek, senior consultant at Weber Shandwick, in the 20-strong agency’s swish offices opposite the parliament building. ‘Hill & Knowlton, Porter Novelli, Rowland… most networks have a local affiliate. One thing you’ll notice is that there are very few foreigners working here. It’s such a particular market that local knowledge is everything. An expat would take years to catch up.’

Having said that, says Jelinek, most of the clients are international. Names handled by his own agency include Nestlé, Nokia, DHL and Goodyear. ‘Western companies really understand the importance of PR,’ Jelinek states. ‘Many of the local firms still equate the term with propaganda. What you have to understand is that a lot of the big bosses were brought up under Communism.’

Jelinek’s agency also won a state contract to run a call centre handling enquiries about European Union membership. And that’s not the only advantage of accession, he says. ‘The EU requires every public project to allocate part of its budget to communications. That can only be good news.’

In Poland, Przemyslaw Wloszycki, MD of Business Communications Associates (BCA) – an affiliate of Edelman – is equally optimistic. ‘The Polish PR market is estimated to be worth 40 million euros – and it’s going to grow rapidly. Entering the EU has changed the business a great deal. Since last May, we have received ten times more business from Edelman than in the previous two years put together.’

With a population of 38 million and a swelling middle class, Poland is the kind of market that sets western brands rubbing their hands. Wloszycki explains: ‘The Czech Republic is a more developed market, but growth will be much slower there. In Poland, many local firms are just coming around to the idea of PR, so the pool of clients is expanding.’

The 15-strong agency’s clients include Eli Lilly, British Aerospace and Swedish state energy firm Vattenfall, which has acquired two power plants in Poland, each with 5,000 employees. ‘Vattenfall took over an institution that had existed during the Communist era. Lots of working practices and values date from that time, as many of the workers are over 40. So there’s a huge internal comms issue,’ he adds.

Wloszycki cites local knowledge as a prerequisite for working in central Europe. ‘But we are aware that the market needs to become more “western” in terms of professionalism. After Communism, it was a bit like England after the war, when tiny PR firms sprang up. There are about 400 PR agencies in Poland, but 22 of them generate 80 per cent of the business.’

In the Czech Republic, Milan Hejl, managing partner of AMI Communications – another Edelman affiliate – believes the terrain has grown tougher for western networks. ‘After the fall of Communism, leading agencies such as Hill & Knowlton and Burson-Marsteller were asked by their clients to enter the eastern markets. In the early 1990s they did good business and made nice profits.

‘In the second stage, local competitors emerged and used their contacts with clients and media to snatch business,’ says Hejl. ‘Some of the biggest agencies closed or sold their offices to local management. Now there’s a mixture of affiliates and agencies owned by big networks, but run by locals. I think we’re going to see some consolidation shortly because international agencies will try to buy out their partners in the new EU member states.’

Hejl describes the Czech market as ‘developed to a similar standard as continental Europe’. ‘Even international accounts are won locally. What makes the Czech Republic special is Prague. Our capital is located at

the heart of Europe and is a very pleasant place to live. This has made it the regional HQ of international firms.’

But whereas Prague, Budapest and Warsaw have an international profile, both in terms of business and (at least for the first two) tourism, the Baltic states have an appeal of their own. Cities such as Ljubljana in Slovenia, Tallinn in Estonia and Latvian capital Riga offer beautiful architecture and thriving nightlife, as well as a ready market for western brands. Latvia and Lithuania are considered links between Russia and western Europe.

However, Dejan Vercic, a partner at the Pristop agency in Slovenia, is scathing about western agencies’ commitment to the region: ‘So far, none has achieved a clear and operational regional presence. Each country has a story of its own, and investment by international agencies has slackened with the recession. Most of them seem to value their presence more in terms of having dots on the map than expecting to do serious business.’

National identity

Pristop employs 200 people across Slovenia, Croatia, Bosnia, Serbia and Macedonia, serving a mixture of domestic clients and international firms such as Novartis and Siemens. ‘Even when going regional, we design campaigns on a country-by-country basis. The south-eastern part of central Europe is very sensitive to questions of national identity.’

In Latvia, Jana Ezerina, Latvia Komunikaciju Agentura (LKA) business development director, confirms that the presence of international agencies in the Baltic states is limited. ‘They tend to enter in tandem with advertising agencies and, for now, the PR and advertising strategies of western companies are very much linked. Yet it’s clear that our market immediately became more attractive after the Baltic countries joined the EU. Latvia is strategically useful as we have a huge Russian-speaking population, which is reflected in the press, politics and diplomatic relations.’

Relationships with the media in central Europe vary but the emergence of a ‘free’ media means that they are trusted, or at least respected, by the general public. In Poland, Wloszycki says: ‘Recent research indicates that the public regard the media as the most trusted institution [in the country] – above the parliament, the president or the judiciary.

‘I think the mistake some agencies make is to be more brutal and aggressive in their approach than their western counterparts. They lack tact and diplomacy in their relationships with journalists. But you must remember that democracy is only 15 years old,’ says Wloszycki

Slovenian journalist Meta Dobnikar, editor of local marketing magazine MM, says: ‘I’m sure Slovenians get the most international PR awards per head. The Public Relations Society of Slovenia was founded as early as 1992, and I believe standards of professionalism are higher than any in the region.’

Jelinek, who worked as a journalist for nine years on the Budapest Business Journal before moving into PR, says the profession is regarded more sceptically in other markets: ‘Journalists are wary of being manipulated. Not so long ago in this part of the world, the government called all the shots. Now businesses call all the shots – but at least this time there’s a dialogue.’

Mark Tungate is a British writer and author based in Paris

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