FOCUS: EUROPEAN PR; Privatisations open PR doors

A fledgling PR industry in eastern Europe is taking off on the wave of an increasingly liberal market. Robert Gray reports

A fledgling PR industry in eastern Europe is taking off on the wave of

an increasingly liberal market. Robert Gray reports



Lenin once said liberty is precious - so precious that it must be

rationed. But following the collapse of communism and disintegration of

the old Soviet Union, metaphorical ration cards were torn up all over

Eastern Europe as a free-for-all mood caught hold.



The region has embraced freedom by introducing sweeping political and

economic reforms. New consumer societies have been born and western

corporations have not been slow to tap into them.



And where there are markets there is marketing. So it was inevitable

that some of the larger international PR networks (and some smaller,

braver ones) would seek to exploit developments by setting up offices in

these rapidly changing countries.



Now that the dust has settled after the first wave of privatisations and

socio-political upheaval we are in a better position to judge the PR

growth potential of these markets.



Which countries are the most mature, that is, akin to their counterparts

in the EU? Which have real potential? From which sectors is there most

demand for PR support?



The three countries in the region widely held to be the most mature and

sophisticated insofar as the PR market is concerned are the Czech

Republic, Hungary and Poland. It is no accident that these are the

countries of central Europe, bound in most tightly to their neighbours

in the west, sharing much history and culture and possessing a

receptivity to the way business is conducted in the global economy. They

have developed the furthest and fastest since the fall of communism.



‘The biggest mistake western companies make is tothink these places are

banana republics,’ says Hill and Knowlton president Europe Paul Taaffe.

‘In the last five years the infrastructure developments have been huge.

And the understanding of business has grown because of the big

privatisation programmes.’



Burson-Marsteller and H&K are the two international PR companies with

the biggest operations in this part of Europe. H&K has offices in Prague

and Budapest while B-M has offices in these two capital cities plus

another in the Polish capital, Warsaw.



B-M set up its Prague office in 1991 and it now boasts some substantial

clients. Recent work has included sending a branded bus across the

country to map out cholesterol levels for client Flora, an issues

management programme for Canadian company TVX Gold Inc, which is

prospecting for gold in the Czech Republic and a pan-regional campaign,

taking in Poland and Hungary for McDonnell Douglas, which is looking to

secure orders for military aircraft.



‘The overall fascination with advertising that was dominating after 1989

is declining,’ says Prague office managing director Michal Donath. He

sees this as an opportunity for PR and identifies healthcare, issues

management, public affairs and financial communications as areas with

significant potential for growth.



Donath laments the fact that most clients only want help with media

relations and that at this stage these is still little demand for high-

level consulting work. Julianna Goulden, his counterpart in Hungary,

says that in her case there is demand for strategic counsel alongside

crisis management and consumer marketing.



In Hungary B-M carries out consumer brand-building work for the likes of

Coca-Cola, Unilever and the brewer Amstel. It also has a growing

presence in the healthcare sector, working for clients like Schering-

Plough, Astra and Molnlycke.



‘In the beginning we probably got away with a lot more because there

were no ground rules,’ says Goulden. ‘But the Hungarian media has become

quite tough and it’s hard to get things past them now.’



Lobbying firm GJW has wholly owned offices in Hungary, the Czech

Republic and Poland but sees the latter as having the most potential in

the coming years.



The biggest agency in Poland, meanwhile, is Shandwick affiliate Sigma

International which in 1995 had revenues of over USdollars 8 million.

Its clients include Compaq and a raft of Polish government ministries.



‘Now big Polish companies, especially those listed on the Warsaw Stock

Exchange, feel the need for PR,’ says Sigma general manager Ryszard

Solski. ‘A couple of months ago we were called in to work for Poland’s

number two manufacturer of margarine, NZPT which is based in Brzeg a

small town about 400km from Warsaw. That wouldn’t have happened a couple

of years ago.’



Dewe Rogerson has also made quite an impact in Poland - where it has a

joint venture with local partners called NBS - working on privatisations

such as banks WBK and BRE. Over 60 per cent of the Polish economy is now

in the hands of the private sector; and although inflation remains a

problem, it is well down on former astronomical levels and the economy

as a whole has shown strong growth in the last couple of years.



‘In Poland, perhaps more than some of the other countries, the service

sector has moved forward and is thriving,’ says Dewe Rogerson director

David Westover. He adds he is bullish about the future of the corporate

and financial sector in Poland.



Dewe Rogerson is also working with affiliates in Bulgaria, Romania and

Slovenia. ‘In all these markets people are improving rapidly,’ says

Westover. ‘It was a new discipline to people after 1989.’



GCI has its own offices in Romania and Bulgaria (as well as in the Czech

Republic, Hungary, Poland, and Russia - the latter opened by sister

agency APCO as long ago as 1988). The Bucharest office now employs about

15 staff and the work centres on helping western companies get their

products to market and build a competitive advantage.



The operation benefits from links to the Romanian government for which

the agency works in Washington. Although not as developed as some other

Eastern European countries Margery Kraus, president and CEO of APCO

Associates and vice- chairman of GCI, urges that Romania should not be

mistaken for an economic backwater. ‘If you go to downtown Bucharest

there are shops and boutiques that just weren’t there a couple of years

ago,’ she says.



In the Baltic States, Hill and Knowlton has blazed the trail, setting up

offices in the Estonian capital Tallinn (eight employees) and the

Latvian capital Riga (three employees). Lithuania, however, is still

seen as too small and poor a market to merit its own office. Clients

include McDonald’s, PepsiCo, Amoco, Riga Airport, Estonian Mobile

Telephone, Tallinn Dairy, the Estonian Privatisation Ministry and the

Estonian Ministry of Finance.



The biggest market is in Estonia, where there is strong demand for

marketing communications support. Initially this was driven solely by

the giant western corporations like PepsiCo and McDonald’s but domestic

companies are coming into the picture more and more.



‘Now the local companies, the ones who want to draw attention to new

products and start the branding process are keen on PR,’ says Peep

Muhls, managing director Hill and Knowlton Estonia and the Baltic

Region.



The opening of the Tallinn Stock Exchange earlier this year has created

opportunities for more financial and corporate PR. Muhls identifies

public affairs as an area that remains buoyant as a way of ‘solving

problems for private enterprise’ and thinks there is scope to develop

the agency’s healthcare business in coming years.



Also this year, Estonia’s national university Tartu, which was

established back in the 17th century, began offering a course in PR for

the first time. Clearly this is a country which has embraced PR.



To a lesser extent, so too has Latvia. Although Muhls makes the point it

is hitherto not as sophisticated a market as Estonia because ‘the public

perception and understanding of what PR is, is less clear’.



But what of the rest of the Great Bear, the erstwhile USSR? Taaffe reels

off a list of former Soviet republics including the Ukraine, Uzbekistan

and Tajikistan and dismisses them as being ‘still graveyards’ for PR

consultancies, where in his view it is preferable to fly in consultants

from abroad for specific tasks rather than go to the expense of

grounding offices.



But B-M Europe president and CEO Ferry de Bakker takes a different view

when it comes to the Ukraine, describing B-M’s Kiev office as its second

‘hottest’ in Eastern Europe after Prague.



‘The per capita income in Kiev is very low yet these people want to

drink Coca-Cola, smoke Philip Morris cigarettes and eat Mars bars,’ he

says. ‘They have had access to western consumer products and that’s what

they want.’



Russia on the other hand is seen to be more of a risk, although Burson-

Marsteller has enjoyed some success there, notably with campaigns such

as promoting the introduction of the new dollars 100 bill on behalf of

the US Treasury. Political instability has put off PR agencies and

lobbyists alike.



‘Government relations does need a pretty clear idea of how government

operates and there are a lot of uncertainties still in Russia,’ says GJW

director Nigel Clarke.



Few want to commit to a country where commercial risks are high and

there is the possibility, however remote, that liberty may once again be

rationed.



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