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.
