The PR industry has paid careful attention to the BRIC countries, but, as Marc Longpre finds, there are other regions of the world that provide a robust climate for business
In today's interconnected world, perhaps it's not a shock to hear similar refrains from PR executives around the globe. After all, a global economy becomes more of a reality with each passing day. While different challenges are popping up in burgeoning markets, similarities tend to be more striking than differences.
For this year's Global Special, PRWeek has focused on three regions that have seen substantial growth this decade and for which expectations also remain high for the years ahead. The Nordic region, Eastern Europe, and the Middle East have all enjoyed something of a boom, however different their characteristics might be, and global agencies have aggressively entered these regions.
The story in all three is compelling. The Nordics continue to be a leading force in the industry - sophisticated, forward-thinking, and a hub for technology and green practices.
Eastern Europe is the teen on the block, finally emerging into a full-blown economic force and boasting a PR industry that continues to develop.
The Middle East remains the newbie, with untapped potential and several agencies hoping to tap into a monstrous market.
Growth is certainly a common denominator for these markets. Indeed, in each of the three regions, optimism runs rampant.
The kind of growth agencies are seeing is changing, though. No longer is work dependent on where US-based multinationals go, and no longer is there a shortage of sophisticated communications thinking outside the traditional Western regions.
Of course, all of this means global networks are increasingly crucial to a local agency's viability. It has been a theme for years now, but never more so than 2007.
Of course, truly global work is still something of a rarity. But with global companies more interested in growing regions and, perhaps more important, global companies increasingly emerging from growing regions, agencies are finding work through their affiliates.
The Nordic region can be separated from the other two focus areas simply owing to its position as the most developed of the three. Politically and economically stable, the region serves as a home to a large number of global companies, including Nokia, Ericsson, Volvo, Telia, and IKEA.
International conglomerates have strengthened their presence here through purchases and affiliation agreements, with WPP enjoying a very strong presence in the region through Burson-Marsteller, Hill & Knowlton, and GCI Group. Publicis Groupe is strong in Sweden through its purchase of JKL Group, and Interpublic Group's Weber Shandwick has been establishing a presence in Stockholm, Sweden. Edelman owns a firm in Stockholm and has relationships with six other agencies in the Nordic region.
In fact, the market is so attuned to communications needs that, in Sweden, the top two or three PR agencies have revenue equal to that of the top advertising agencies, says Anders Kempe, CEO of JKL Group in Stockholm and president of MS&L Europe.
"One factor is that it is such a competitive market, so we can help the market grow together through competition," Kempe says. "Of course, it's also that Sweden is a very transparent community, communication is very much needed, and there are a lot of international companies based here."
But as Kempe points out, it's crucial that the major international companies that call the region home continue to do so.
"We are dependent on the blue-chip companies keeping their main offices in this region," he says. "That brings a number of smaller companies, too, and keeps talent in the area. We don't want them moving to London or Paris."
Very few regions can compete with it in terms of revenue based on population, notes Claus Sonberg, regional Nordic CEO for Burson. He notes that the agency's Norway office earns revenue of about $2 per capita, a figure difficult to fathom in other markets.
While Sweden and Finland have more mature markets for PR, Denmark and Norway are seeing substantial growth at the moment. Kjell Hjelm, MD of the Nordic and Benelux regions for Text 100, says the agency's office in Oslo, Norway, saw 53% annual growth, with its Copenhagen, Denmark, office at 25% annual growth.
Sweden and Finland are still growing, Hjelm says, but at a more tame 5% to 10% annual rate. Text 100 opened its Danish office in 2003 and the Norwegian branch in 2005, amid growing demand that agencies were able to handle regionwide business. Everyone seems to agree that demand for regional work is particularly strong in the Nordic region.
"In our region, the demand for pan-Nordic strategies and implementation efforts has increased tremendously during the past years," notes Sofia Heidenberg, Nordic region CEO for Weber Shandwick, via e-mail. "We have also witnessed clients who've adopted a pan-Nordic PR strategy all over Europe after a PR success in our markets."
Of course, the region is particularly strong in areas like technology and the recently buzzing "clean tech" sector. Stein Jacob Frisch, MD for Geelmuyden.Kiese (an exclusive Ketchum affiliate), says local business opportunities are increasing across technology, telecommunications, healthcare, and crisis management.
While the growth in Norway and Denmark will likely not continue at its current rate, most PR executives in the region are positive about the long term.
"With the boom in new media and the blogosphere, we've seen a great shift in the past two years from traditional marketing and PR into this world, which requires more transparency and dialogue," says Hjelm. "You can't talk to an ad, but you can make your voice heard on the Internet, and for that reason, the new-media trends are booming in the Nordics."
Perhaps no other region has seen its business as impacted by recent political events as Eastern Europe. On May 1, 2004, the European Union (EU) underwent its largest-ever enlargement, moving east to incorporate 10 new countries, including Hungary, the Czech Republic, Poland, and Slovakia. Less than three years later, the EU added Bulgaria and Romania.
That move, says Stefan Vadocz, managing partner at Neopublic Porter Novelli in Bratislava, Slovakia, dramatically changed the industry in the region. "Before the EU accession, most of the foreign direct investment went to the more developed countries," he says. "Hungary and the Czech Republic were receiving a lot of investment, but after the enlargement, we started to see companies that had a need for communications in the rest of the region, as well."
Vadocz, who owns a majority in the Slovakia-based firm, also owns a stake in an agency in the Czech Republic, Prague-based Neopublic Porter Novelli. Much of his work, he says, is still concentrated on local communications for global companies that need strategic assistance in the country or region. Local companies, Vadocz adds, are still conservative when it comes to communications (he says about 80% of his business still comes from international clients). Slowly, that could be changing.
"In the CEE [Central and Eastern Europe], PR is still in the early stage of professional development; it's regarded as a media relations- only commodity that is good only for execution tasks," says Ervin Szucs, MD of Central and Eastern Europe for WS. "No wonder the prestige of the industry is limited among potential employees. That's why there's a shortage of talented staff."
Part of that, says Peter Szanto, president and CEO of Noguchi Porter Novelli in Budapest, Hungary, is a lack of sophistication on the part of the media. "Up to now, this has been a rather traditional market, and, frankly, the explanation is that the media became commercialized very quickly here, and media relations has been a real challenge," he explains.
Still, Szucs says certain global trends are becoming apparent in Eastern Europe, as well. Corporate social responsibility is probably the most rapidly developing field, he notes, and companies' need to understand local government means the field of public affairs is flourishing.
In Poland alone, market revenue reached $150 million for PR in 2006, a 20% increase from a year ago, notes Adam Jarosz, MD of 180¼ PR in Warsaw, Poland. He says the country now boasts 40 full-service agencies, with an abundance of new opportunities locally. Of course, the talent problem still rears its ugly head.
"Sometimes, it's easier to find a client than find a person to support that client," he admits.
But Jarosz, like PR professionals around the region, is bullish about the industry throughout the region. "Eventually, I see Poland becoming a PR hub for the region," he says. "It's the largest country, and the centralization of services for the region makes sense. Demand is greater than supply, and we continue to grow."
Despite optimism that the region as a whole will continue to grow more sophisticated, the uncertainty over local economies continues to play a role.
"On the local level, because of the economy in Hungary, companies will find it more and more difficult," predicts Szanto. "They will either be cutting back on advertising and using more PR, which I'm hoping for, or they'll cut PR in order to squeeze in a few more TV ads. I think it's a 70% chance of PR growing; I'm optimistic."
The Middle East
The region most coveted by the major agencies, both because of its enormous potential and its vast wealth and business capital, is the Middle East. But the political and cultural differences between the region and the West also make it a challenging one.
Practices in the region remain something of a mystery to American firms. As Nick Leighton, head of Dubai-based agency NettResults, often explains, "There is the right way, the wrong way, and the Middle East way."
None of this is to say the Middle East is languishing. In fact, business is booming, pushed largely through regional leadership in Dubai. When Leighton started his firm in 1999, he says there were only three agencies in the emirate - now there are more than 100.
Whereas much of the region depends on oil revenues to drive the economy, Dubai remains unique in that its tax and business incentives have made it an international business hub. And so, Dubai has largely led the regional PR revolution up to this point.
Within the emirate - it's one of seven that constitute the United Arab Emirates - the industry is surging. And because of this, the region as a whole is benefiting, with a push from Dubai into other gulf markets: Saudi Arabia, Qatar, Kuwait, Bahrain, and Oman.
Meanwhile, business in the Levant (Lebanon, Jordan, Syria, Palestine, and Iraq) is limited and highly affected by the political and security situations, says Hania Tabet, managing consultant at TBWA\ RAAD Public Relations Middle East, based in Dubai.
"There is a much greater understanding of what PR does beyond just press coverage," says Mamoon Sbeih, MD of Jiwin, a Burson affiliate in Dubai. "In the past, we were on the receiving end of information; right now, we are advising at the strategic level, and I've seen it happen in the past couple of years. We are now involved at the design phase of the big projects, whereas they used to call the PR agency when everything was done."
Sbeih says the industry is growing at a pace of around 30% a year in the region, and Jiwin is expanding into Saudi Arabia, hoping to take advantage of what he says may be an expanding demand for local communications assistance.
Sbeih hopes he can take advantage of potential business that is impossible to tap simply from a regional office in Dubai. Unlike the Nordic region, a regional approach is not effective here, says Tabet. "PR is not a known entity from either side of the proverbial fence," she says.
Part of the problem is the lack of sophisticated media outlets in the region, Leighton notes. "You find that journalists are less experienced in the region, which means you have to work a little harder to educate them," he explains. "And there is little or no investigative journalism."
In the rest of the region, some agencies handle a portfolio with a number of global accounts and work stretching across the region, if dominated by the more stable economic countries. Pierre Azzam, regional MD for Impact Porter Novelli, notes work for Procter & Gamble, Hewlett-Packard, InterContinental Hotels Group, Volkswagen, and EstŽe Lauder. More limited, he says, are assignments from within the region reaching out to the international markets.
While the talent problem registers across the regions, it is particularly vexing in this one. Leighton notes that in the UAE the work force is 9% local and 91% expatriates. So how and where exactly does one look for quality talent? Sbeih says he scours all corners of the globe, with searches ongoing in South Africa, the UK, America, and across the Middle East. "Right now, we're getting [rŽsumŽs] from everywhere," he says.
Of course, the challenge of finding a talent pool for Dubai and the greater region can turn into an advantage. As Azzam notes, the talent the region does attract is multilingual, highly educated, and international. And as Tabet points out, it's that multinational talent force that has helped Dubai's industry evolve so quickly. But that advantage has yet to expand beyond Dubai.
"Other cities across the Middle East are developing, but are still far behind the Dubai model, so any PR-speak beyond press releases and events is going to be met with nothing but dismissive actions by clients who lack fundamental awareness of the industry, its tools, and effectiveness and importance for a business," says Tabet.
Israel, of course, is a separate entity in terms of PR. There, says Glenn Jasper, MD of Ruder Finn Israel, the industry is strong despite remaining unsophisticated. The scene is dominated by several large agencies, with relatively low budgets considering the size of the country and its media industry. And because the agencies in Israel tend to serve as a bridge to the rest of the world, many clients are global in nature. And of course, political unrest is never far from the mind in this part of the world.
"The next two to three years will bring continued unrest in the Middle East," notes Jasper, via e-mail. "Our job is to make sure the global audiences don't feel any business impact of that unrest."