India’s fledgling PR business is riding high on the crest of the
country’s liberalisation wave. Amanda Hall reports
When Tony Good started India’s first independent public relations
business, colleagues in the UK would greet him with, ‘How’s India going,
dear boy? Do go and sit in the shade, I’m sure it’ll pass’.
In 1988 the idea that India needed a PR sector was beyond belief. After
all, this is a country where Rajput palaces sit incongruously alongside
dire poverty, over-population, a poor infrastructure and the perils of
‘Delhi belly’. And even if it did need it, just how exactly do you do PR
in India? I mean, do they have phones that work over there? And can you
actually make any money, never mind getting it out of the country?
Things are somewhat different now. Good Relations has fees of over
pounds 1 million and aspirations to float on the Indian stock market.
And as Shandwick’s reported interest and impending deal with the
Bangalore-based agency Corporate Voice shows, the Indian market is fast
carving out a place for itself on the global PR map.
While the multi-nationals Hill and Knowlton and Burson-Marsteller have
long established links with India, in the past 18 months interest over
here in what’s going on over there has emanated largely from the
financial PR agencies (see panel.)
The domestic agency scene is booming, although it is nascent and
probably has no more than 15 established agencies, as opposed to one-man
bands.
In terms reminiscent of the 1980s PR boom in the UK, agencies talk of
growth rates of 30 per cent, profit margins of 25-50 per cent, and
predict that the sector will grow by as much as 300 per cent in the next
three to five years. Advertising agencies, used to throwing in a bit of
free PR alongside ad campaigns, are cashing in on the boom by setting up
their own PR subsidiaries.
And why is this happening? In a word, liberalisation. In 1991, India’s
governing Congress party began a process of legislative change which is
designed to create a free economy, probably by 1998. Pre-1991, foreign
imports were more or less banned, getting money out of the country was
almost impossible and anyone wanting to run a business needed a
government licence.
Decisions about who got such licences were regularly based on influence
and payment of backhanders to government officials, rather than on
merit. ‘All business creativity and drive went into getting a licence
rather than on producing decent goods,’ says John Moore, head of Barings
banking operation in Bombay which he opened last year. Under the licence
Raj system, PR was then as much about greasing the right palms in the
appropriate ministry to get the licence in the first place, says Vinod
Nair, head of Clea’s new PR business in Bombay.
‘Ten years ago PR in India meant press and political work and a PR man
was seen as a fixer, someone a company would call in when they had a
problem and someone who would pay kickbacks to fix deals. Things started
changing as companies like IPAN and Good Relations set up as
professional communication businesses.’ With multi-nationals now lining
up to access the massive pool of middle-class Indians - around 250
million people out of a total population of 900 million - competition is
being thrust on to domestic businesses. Five years ago, if you wanted to
buy a car, there were just three Indian makes to choose from; within the
next 12 months, the streets of Delhi, Bombay and Calcutta will be jammed
with Fiats, Peugeots and Mercedes.
Good Relations India is the country’s largest PR firm with 56 staff and
three main offices in New Delhi, Bombay and Bangalore. Chief executive
Ravi Dubey attributes the boom to the arrival of competition.
‘Allowing market forces to operate has thrown up several new demands;
one is for the services of PR professionals,’ he says. ‘Indian companies
were living in a protected environment. Now traditional family-owned
businesses are feeling the pinch and are having to diversify, find new
partners and compete,’ says Dubey.
Much of the PR demand is from US and UK multi-nationals with the largest
agencies generating over half their income from foreign investors. Good
Relation’s client list, for instance, includes a host of familiar
brands, including United Distillers, Levi’s, Compaq and ING Bank. IPAN
works for BT, DHL and Goldman Sachs; and B-M Roger Pereira’s clients
include Cadbury, Citibank, Motorola and Seagram.
The second factor which has fuelled the PR boom is media. Between 1984
and 1993 the number of daily newspapers in India more than doubled to
3,740, and the market for business magazines took off. Satellite TV
arrived in 1991 in the form of Rupert Murdoch’s Star TV continues to
expand.
Of the main agencies, most have operations in the political centre of
New Delhi, Bombay, the financial centre and, increasingly, Bangalore in
the south, dubbed the Silicon Valley of India and Asia’s fastest growing
city.
Rajiv Desai, president of IPAN and one-time press secretary to the
former prime minister Rajiv Gandhi, says lack of skilled employees is
cramping agency growth. ‘Every man and his dog is setting up a PR agency
and there will be a shake-out. This year we’ll grow 116 per cent. But
we’re saying, let’s get our infrastructure right first: we’re investing
in phones, IT networks and training.’
Desai operates a McKinsey-style ‘up or out’ system of staff promotion
and while he agrees that the quality of young people coming into the
business is improving, there is a dearth of talent at more senior
levels.
While the potential of the Indian economy is enormous, in the medium and
long term, the country is beset by massive infrastructure problems.
Demand for power in Bombay is outstripping supply. Office space in the
main urban centres is severely limited and of poor quality. Even the top
notch financial houses like Barings and Jardine Fleming are based in
office blocks that wouldn’t look out of place on a derelict building
site and there’s the added entertainment of the occasional cow wandering
up and down the road outside. However, space is not cheap: Bombay boasts
some of the world’s highest property prices and rents are four times
Mayfair rates.
While old hands like Roger Pereira may choose the location for his
Bombay office based on inside information about which phone exchange is
next up for modernisation, in some areas simply getting a phone
installed can take up to four months. ‘That’s good,’ says Good Relations
director Shridhar Naik, ‘it used to be three to four years.’
Occupational hazards like these, combined with current political
uncertainty due to an impending General Election next spring, concern
foreign investors, but not enough to stop them coming. With skilled
labour costing a tenth of western world prices, it is easy to see the
attraction.
Multi-nationals will keep on coming. To keep up, Indian companies will
be forced to promote themselves and communicate with a growing foreign
investment community.
The Indian PR business will benefit from all this, as will international
financial agencies which win mandates from Indian companies looking to
raise capital overseas. Growth, and specialisation, seem assured, but
margins will be eroded by rising property and salary costs and progress,
as in the UK, will be dogged by a lack of quality staff at middle and
senior levels.
When the history of the Indian PR business is written, Tony Good will go
down as one of its founding fathers. He was the first to take PR to the
UK stockmarket when he floated Good Relations in 1981. The same route is
now on the cards in India.
‘We were the first to come to the market in the UK and prove that a PR
company could be a serious and profitable business,’ he says. ‘It gave
us a credibility we didn’t have before. What that did in the UK, I
believe we could repeat here and give the Indian market the same shot in
the arm.’
AGENCIES: Media Focus
Media relations is the predominant name of the PR game in India and
among the more established players, it’s not just media relations on the
run, but as much about strategy and issues management as selling
stories.
While all the familiar terms -- employee relations, crisis management,
communications audit - trip lightly off the tongues of many agency
operators, it is difficult to tell just how much of this sort of work is
really being carried out.
The better organised multi-nationals are tending to buy agency services
months before they launch. ‘Multi-nationals hire us as much for ‘ear to
the ground’ information, help in identifying joint venture partners and
follow up with government for licences to operate, as to create the
right corporate image for them when they enter the market,’ says Good
Relations’ chief executive, Ravi Dubey.
It is partly this wider issues-related service that is allowing PR firms
to boom at the expense of ad agencies. ‘You can’t introduce a company
to India through advertising,’ he says. ‘Advertising will help only
when you’ve established your basic credentials.’
Promotional events like sponsored rock and fashion shows and product
launches have become immensely popular, largely because the boom in
satellite TV has lead to demand for footage to fill business and
society programmes.
Around 75 per cent of the population watch the State-run channel,
Doordarshan; although this is as much a reflection of groups of viewers
gathering around the village TV set as it is of TV ownership.
The quality of work done is highly variable, with the better firms
disparaging the so-called gift cheque culture which dominates the
financial PR market. One agency source says: ‘Journalists can go to four
or five press conferences a day and pick up a gift cheque [voucher] of
around 250-500Rs,’ - equivalent to around pounds 50 to pounds 80 in UK
purchasing terms.
FINANCIAL PR: Medium Term Market
Given the interest shown by UK financial PR firms in India - Ludgate,
Citigate and Dewe Rogerson have all ventured there in the past 18 months
- you would expect this to be a booming sector. In fact, the opposite
is true.
Last year’s boom in new issues slowed down towards the end of 1994.
Nick Butt, head of investment banking at Jardine Fleming, blames this on
rising interest rates, a lack of liquidity in the market and the
political uncertainty in the run-up to next spring’s General Election.
Financial PR has largely been issues-driven and until recently was done
for free by financial advertising agencies. The big five in this area,
which all have their main operations in Bombay, include Pressman, Clea,
Concept, Adfactors and Sobhagya. Of these only Pressman, which formed a
joint venture with Ludgate last year, operates a separate financial PR-
only subsidiary.
Pressman chairman Dr Niren Suchanti says the company’s income this year
will be between pounds 150,000 and pounds 200,000. ‘Two years down the
line it’ll be making good profits. At the moment we’re building
business.’
Traditionally the Indian stockmarket is heavily driven by retail
investors. Share ownership has been split roughly 80/20 in favour of
retail investors rather than institutions; the reverse of share
ownership in the UK.
As a result, investor relations are virtually non existent. However, the
arrival of foreign institutional investors or FIIs is changing that.
Dewe Rogerson, which has an affiliate relationship with financial ad
agency Options Trikaya Grey in Bombay, surveyed investor attitudes to
India this summer; 61 per cent of the 79 face-to-face interviews with
fund managers and analysts responsible for portfolio investment in
India, said Indian companies were not making sufficient efforts to
communicate. Among India-based FIIs this rose to 73 per cent.
Dewe Rogerson director Rosie Catherwood says India will be a good market
for IR services in two or three years. The other potentially lucrative
area is privatisation.
The head of Barings India office, John Moore, says the Government will
be a major issuer of stock, which it will look to sell both at home and
overseas. Judging by the Government’s recent unsuccessful disinvestment
programme- target Rs7,000 crore, actual raised Rs 1.6 crore - it looks
like it could do with all the marketing help it can get.
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PLAYING ABROAD: The Big Names
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Main players Parent
Burson-Marsteller Roger Pereira Joint venture with B-M
Clea PR Clea Advertising
Corporate Voice PR MAA Communications
Enterprise PR Enterprise Advertising
Genesis Independent
Good Relations India Cox and Kings India
IPAN Hindustan Thompson Advertising
LinOpinion Lintas India
Mudra PR Mudra Advertising
Ogilvy and Mather PR Ogilvy & Mather
Perfect Relations Independent
Rediffusion Rediffusion-Dentsu, Young & Rubicam
Sampark Independent
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COSTS: Wages
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Typical monthly wages
Director 22-24,000Rs (pounds 440-pounds 480)
Account director 18-20,000Rs (pounds 360-pounds 400)
Account manager 12-14,000Rs (pounds 240-pounds 280)
Executive 7-9,000Rs (pounds 140-pounds 180)
pounds 1 in India is equivalent to pounds 5/pounds 8 in the UK in terms
of spending power.
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