PR Report Card 09: A year of consolidation

Given the economic environment, budget cuts were inevitable. Reductions of 20 per cent were reported; in some cases the cuts were as high as 50 per cent, and some marketers took a break from PR altogether, especially in the first half of last year.

The pressure was greatest in Japan, Korea,Taiwan and Hong Kong.Alan VanderMolen, regional president of Edelman, also points to a “double whammy” in China of post-Olympic cuts and economic pressure. “This is the first downturn in emerging markets that I’ve been through where western multinationals pulled spend to protect their home markets,” he says.

Eveline Wan,GM for Guangzhou at SPRG, saw greater signs of life in China, not least from car companies and electronics brands, both of which benefited from the Government’s stimulus package. However, she agrees that, in general, agencies were under greater pressure, and even where budgets were maintained, the amount clients expected agencies to deliver increased.

“Instances of providing proposals, presentations and even participation in brainstorming and planning sessions without commitment, payment or clear promise of appointment also arose,” she says.

As well as budget cuts, 2009 was a year of consolidation. Publicis Groupe merged its PR units under the MS&L banner, Eurpoean giant Pleon merged with Ketchum, and Bite acquired Asia specialist Upstream.

To some extent the mergers are a reflection of successful agencies taking advantage of a fall in prices amid the recession. But Olivier Fleurot, CEO at the enlarged MS&L, argues it is part of a broader trend. “[It is] a byproduct of what’s important to clients in today’s world: more holistic and more effective communication with global reach and access to digital and social media capabilities.”

An example is LG Electronics, which last year set out to standardise its global PR relationships. Due to difficulties in finding a single network with no conflicting accounts, it aligned with WPP and set up LG-One, a global team drawn from various WPP agencies, with Ogilvy PR in the lead role.

Ken Hong, director of global communications at LG, says that he wanted a PR set-up with the ability to think globally. “It was a top priority for us to create an environment where we would constantly be aware of the ramifications of our actions in another part of the world.”

A major growth area was public affairs. APCO, for example, picked up an interesting digital brief from the Malaysian Government, and a big contract in Japan for Delta Air Lines went first to Fleishman Hillard then Edelman.One reason for the strength of public affairs work, says Weber Shandwick Asia-Pacific chairman Tim Sutton,is a change in the nature of Asian governments. Weber Shandwick opened a specialist division in Beijing in 2006 and now, says Sutton, it is a “multimillion-dollar business in its own right”.

Another key area was, of course, social media. With sites like Facebook and Twitter showing huge growth, executives paid more attention to the importance of safeguarding reputations online.

The digital shift may bring PR into competition, both for clients and talent, with agencies from other areas. The digital sphere promises to become very crowded, as Thomas Crampton,Ogilvy PR’s director of 360 digital influence notes: “Competition in most markets still comes from small start-up agencies run by three guys who wear black turtlenecks and know how to create Facebook fan pages.”

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