ANALYSIS: Russia faces up to global challenge - The PR industry faces a huge perception problem in post-communist Russia, writes Holly Williams

A recent survey in Russia asked 500 Moscovites an ostensibly simple

question: 'What is public relations?'. The results were shocking. More

than 50 per cent said they had no idea what it meant, with just 33 per

cent answering correctly. But what causes greater concern is that a

proportion thought it was a synonym for propaganda.



The findings, from Russian research agency ROMIR, coincide with recent

reports exposing the extent of Russia's 'black' PR market - or, in other

words, newspapers taking cash for stories.



A press furore erupted both in Russia and abroad when news broke that,

as part of an expose campaign, a Russian PR agency approached 21 news

organisations offering to pay for an article to be published - and 13

published ran the story without question.



Since the expose, led by St Petersburg-based consultancy Promaco PR/

CMA, Russia's PR industry has been catapulted into the media spotlight.

With such blatant corruption evident throughout the industry, it's no

wonder so many Russians are suspicious of and confused by PR.



Until just five or six years ago, PR was widely seen as merely another

form of advertising in Russia. Only very recently has the industry

started to come into its own, although negative press generated by the

cash-for-news scandal does nothing to improve its image. So, it's hardly

surprising Russia's PR industry is lagging behind the West, given that

the development of the industry is directly related to the country's

turbulent history.



Under communism, business and press were government controlled.

Companies simply had no need to market themselves to investors and

consumers. As the country moved towards a market economy, business

started to see the importance of PR and investor relations, which acted

as a catalyst for PR development.



However, Russian PROs found themselves faced with a reluctance inherent

throughout many companies to be open with the press and public - a

mindset that lingered from the Soviet era.



Shandwick financial PRO David Hothersall, who worked in equity research

for Robert Fleming in Moscow and studied in Russia, says the lack of

legislation and accountability still proves a challenge for PR.



'Suddenly Russia has found itself in the midst of everything but does

not have a strong backbone of legislation and a market infrastructure to

keep up,' he says. 'Companies are not aware of the importance of keeping

investors in the loop.' He adds that the decision-making process in

companies can also hold PR back.



Some CEOs do not take PR seriously and cannot understand the benefits of

talking to the media, except to pay for positive news stories.



Russian-born Marina Boughton, Gavin Anderson associate director and

financial PR expert on the region, says: 'In Russia it is customary to

pay for articles, and it remains a Russian mentality from Soviet times

when people were told what to think and do. People still think there's

no value in their story apart from money. I keep trying to explain that

you don't have to pay to get your point across in the media.'



Boughton says Russian companies are often scared to talk to journalists,

especially Western ones, as they see their interest as a threat.



However, as these firms find themselves part of an increasingly global

market, they are being forced to play by Western rules. If they want to

attract foreign investment, they have to start communicating their

company message effectively, and to do that they must use best practice

PR methods.



'Gradually these companies are realising that they have to be

transparent and communicate with investors - and not just when they want

to raise money,' says Hothersall. 'If they have to deal with Western

media they can't operate on their own standards, they must realise that

they are now competing for global media attention,' he adds.



Russia is waking up to the fact it must fight for foreign

investment.



Most of Russia's stock market is based on oil, gas, utilities and

telecoms, which means there are certain areas of PR which are steaming

ahead in terms of development.



Although consumer PR is already relatively advanced, mainly due to the

fact many of the product companies are global with PR programmes already

in place, the real high-growth sectors are investor relations, hi-tech

and financial PR. These are becoming increasingly important to Russia's

industry and are areas of PR that CEOs are being forced to take

seriously.



When it comes to making their business a success, they're willing to

spend time and money learning about PR and how it can help them.



In fact, earlier this month a team of top officials from oil companies

and investment banks travelled to London to take part in a financial PR

training conference, organised by London Corporate Training. The course

covered IR, financial PR, lobbying and brand sponsorship, with speakers

from The Financial Times, Reuters, the International Public Relations

Association and financial PR agencies Gavin Anderson and Weber Shandwick

Worldwide.



Boughton, who also worked as a BBC World Service correspondent in

Moscow, says: 'It's really fascinating how fast financial PR is changing

in Russia, because they want to tap into international capital markets.

We've found that companies are beginning to listen to us and are

actually putting money aside for proper PR budgets.'



However, she adds that there is such a rush in these sectors to catch up

with international PR methods, CEOs are jumping on the bandwagon without

the proper know-how to see it through. They know they want PR and are

willing to finance it, but are still unsure of how to use it or what it

can do for them.



'I know some companies that have communications departments, but don't

even have a communications strategy - and for many, internal

communications just doesn't exist,' she says.



While some groups are still coming to grips with the concept of PR,

there is a growing band of PR-literate growth companies. Mobile Tele

Systems (MTS), based in Moscow, is one such firm. It has formed in-house

PR and IR teams and also retains Gavin Anderson for financial PR.



MTS press secretary Eva Prokofieva joined the company ahead of its

flotation on the New York Stock Exchange, when the CEO realised it

needed a press officer to direct communications through the IPO.



Speaking from Moscow, she says the top-level attitude towards PR has

changed greatly following the flotation: 'Since we went public our CEO

takes PR very seriously, realising investors judge the company by what

they read and see in the media - I now don't have any problem arranging

media interviews.



'There's also a big difference in the attention and importance we attach

to analysts and the investment community as a whole,' she explains,

stressing her company has strict rules not to pay for articles to be

placed.



Fellow Russian telecom group Sistema Telekom (ST) - a holding company of

26 firms - set up its PR department two years ago. ST head of PR Kiril

Maslentsyn says: 'The idea came about when we understood it was

impossible to provide information to the media without a PR department.'

The firm sometimes receives between 25 to 30 press enquiries a day, with

many from international financial journalists.



But Maslentsyn has found the choice of good Russian-based PR agencies

limited. 'There's a huge gap between the amount of money they charge and

the quality of service,' he admits, blaming the lack of experienced PR

professionals available in Russia.



As with the rest of the global PR industry, recruitment is proving one

of the biggest problems, but in Russia this is compounded by the fact it

is still such a young sector. Currently there are around 60 higher

education establishments licensed to teach PR in Russia, which is

encouraging in terms of training, although it will be a few years yet

before an adequate number of experienced PROs arrive on the market.



Many Russian companies seek PR support outside the country as a result

of this, alongside their growing need to target overseas investors.



Yet, according to accounts from some UK agencies, dealing with Russian

firms can prove more trouble than it is worth.



One British financial PRO said they had so many problems recovering fees

they had to resort to extreme tactics.



'With one Russian client who refused to pay, I had to call them up and

pretend that if they weren't going to pay the fees I would be fired from

my job and my wife and kids would be destitute. Eventually they coughed

up,' he says.



'Many agencies who looked to Russia have ended up spending more on

recovering debts than the fees were worth in the first place,' he

adds.



Those who have had their fingers burnt once now refuse to take on

accounts unless money is paid up front. Unfortunately, it is this kind

of attitude from Russian businesses that encourages unethical practice

in the country's PR community.



Shandwick's Hothersall believes those Russian companies which are

starting to adopt fairer business practices and cultures in line with

the rest of the world will not only achieve greater success in Russia

and overseas but will help the PR sector immeasurably.



'There has been a sea change of attitudes towards PR in Russia over the

last five years and every year world standards are increasingly being

applied,' he says. 'The companies that realise you have to be

accountable and use PR effectively will be the true winners, because

they'll stand out a mile.'



Russia's PR market will be invaluable in helping the country's economy

grow, which will, in turn, see the PR industry thrive in its own

right.



The key to its long-term success, though, lies in educating not only

clients but also the press and public on the practice of PR to help

eradicate negative perceptions formed during Russia's complex past.



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