Early in 2014 Russia was on a high. The Sochi Olympics went well, the economy appeared strong, budgets were soaring and the PR industry was gearing up for yet another year of double-digit growth.
A year later and the market is one of the most challenging our country has seen since the Soviet Union collapsed. The armed conflict in Eastern Ukraine continues, people are seriously talking about a new cold war, international sanctions are taking their toll, oil prices are down and the Rouble has been devalued.
These events have caused many clients and prospects, both domestic and multinational, to revise their comms strategies, suspend or cancel projects. As one international representative put it recently: "Our global headquarters have asked us to go into hibernation mode in Russia."
According to a report published by advertising industry trade body ACAR at the end of April, in Q1 2015 the advertising market dropped by 17 per cent. There is no data available on the current state of the PR business, but it is certainly not doing any better. There is evidence that budgets in some sectors of the economy are down 30-40 per cent.
Even the experienced agencies, the ones that came through the tough times of the 90s, have weathered previous economic crunches and even managed to grow last year, unofficially confirm a noticeable drop in revenues this year.
Yet, while many services are suffering, some sectors continue to grow. Public and government affairs, strategic consulting, crisis comms and digital are all expanding healthily. We’ve also seen increased investment from domestic companies and government agencies in international work – most notably in China and South-East Asia.
Within this mixed picture many smaller firms are in survival mode now, dropping prices, firing people and cutting budgets.
But there is enough work for bigger international PR firms to stay – the president of one of the agencies mentioned in a recent interview to an industry publication that "it would be a mistake to pull out now". Indeed Golin has recently joined the market. So far there has been only one major departure – Edelman, which appointed a local affiliate.
Sadly tough times can bring out the worst in people. Reports of unethical behaviour, corrupted tenders, tax avoidance, media bribery and social media fraud have all been on the rise. Only recently a senior executive from a well-known local agency was caught on camera trying to bribe a TV reporter.
Thankfully though, tough times also bring out the best in people. That’s why trade bodies including AKOS, RPRA, the Association of Political Consultants and others launched an initiative encouraging communicators to sign up to a United Code of Ethics. Its goal is to establish a set of ethical standards for the industry and its members.
Steps like this are making a difference but local market recruitment still needs to focus on entrepreneurial skills, flexibility and tenacity. These qualities aren’t new to Russia’s PR industry. However they are what will separate those who flourish from those who flop before Russia returns from an emerging economy, to a firmly emerged economy.