Public relations: operators and options

By Ranvir Nayar Dubai

The secret of most successful businesses can be reduced to three elements: instinct, imagination and image. While executives in the Middle East may be very familiar with the first two elements, they are just starting to learn about image and the importance of image management.

Take the following case. The chief executive of a local bank is about to sit down for a television interview. A year ago, he would have sat behind his desk, cluttered with files, and said a few lines just to get it over with. Today, the banker calls up his PR agency and asks for a rapid-fire training session. The PR company brings in a television crew and a "dummy" reporter, who asks all the questions that have been sent in by the television station earlier and then he adds some tough ones of his own. The CEO grimaces, sweats and finally smiles. He is ready for the real thing.

While a couple of years ago, it would have been rare to find a CEO going through the dummy run, today few CEOs would dare to face the camera without having had a training session. "Media training sessions is something that has caught on faster among the CEOs of the region than any other fad," remarks a PR professional.

Regional businessmen are finally beginning to understand the importance of image. Little wonder, then, that the bosses of PR companies in the region are happy. Last year, the global PR business was valued at $2.5 billion and only a small fraction of that - $20 million - was spent in the Middle East. By 2006, this figure could go up to $100 million, translating into 500 percent growth in five years.

Branding. The growth has been helped, rather than hampered, by the September terror attacks in the United States as a number of local governments and organizations consider hiring PR firms in order to address the negative image surrounding the Arab world since the attacks. The Arab League is seriously considering launching a campaign to remove misconceptions. Similarly, the UAE, Saudi Arabia, Jordan and Egypt are believed to be looking at national branding campaigns that will seek to enhance the image of their country in order to attract tourists and foreign investors alike.

Business has been booming in the region since September, remarks a head of a PR major, grinning widely and predicting that it will get even better in the coming few months. The booming growth has ensured that most of the world's big players in the PR industry are already present in the region, either directly or through affiliations with local companies.

Boom times. As the market is booming, the key players have begun to clearly outline their strategies for growth and to occupy their positions. Some, including Asdaa and Gulf Hill Knowlton - the two biggest agencies in the region - have focused on growth coming from clients from sectors as varied as Spanish olive oil exporters to Korean electronics giant Samsung.

Asdaa, an affiliate of Burson Marsteller, has chosen to focus on organic growth, coming from existing clients as well as exploring new areas like healthcare, financial communications and offering consultancy to regional companies on the challenges posed by the World Trade Organization rules. Asdaa's strategy seems to be working since the company has bagged nearly a dozen new accounts in the first six months of this year, including Visa, Samsung, Emaar Properties and the newly floated Dubai Bank.

By contrast Headline PR, an affiliate of Grey Communications, is content with a handful of clients. Though the company occupies a postmodernist office in Dubai, its philosophy does not seem to belong to the present. Sadri Barrage, the chief executive of Headline PR, appears laid back and unambitious. He says that his company would be very satisfied with four or five clients.

"In PR, the clients need a lot of attention. So, you need to be very close to them all the time. We have a philosophy of having a few clients and serving them really around the clock." Barrage admits that his strategy is risky; if even one client withdraws, it would mean a 20-25 percent drop in revenues.

He says that he almost panicked in September 2001 when large multinationals began canceling or postponing several big events. "There was absolutely no vision about 2002 at all. Most managers were not even sure if they would be still be around. That is the time when we panicked a bit." But he says that he does not want to be under pressure all the time for new clients and is happy with the current situation.

As for Asdaa's Sunil John, he has been driving his team hard since taking over two years ago. With 14-hour workdays and seven-day weeks, John has been keen to bag as many new clients and to win as big deals as possible. Little wonder then that Asdaa has got 12 new clients in the first half of 2002, making it the biggest gainer in the regional PR industry.

Another company, Spot On, chose a radically different path. It focused solely on information technology clients. The strategy worked especially well during the dotcom boom years of 1999 and 2000 when Spot On expanded at a mind-boggling rate. However, the heady growth of the boom years has now tailed off and Spot On's current growth is comparable to that of its rivals.

But has focusing solely on IT proved to be a handicap? Spot On received a huge blow when its biggest client, Microsoft, decided to move on. It also lost Compaq, but gained a much bigger account in IBM. "The downturn is of particular relevance to us since the technology and Internet firms have been affected and this really hit hard in spring of 2001," admits Carrington Malin of Spot On.

He says that most of his clients have become very conservative about spending and a number of projects were cancelled or postponed. But Malin insists that the business is looking up again. "Since November, a number of customers decided to go ahead with new programs and we also bagged several new accounts," says Malin, adding that the company expects a growth in revenues of 30-50 percent this year.

Malin says that focusing on technology and Internet companies means that his team is best prepared to handle these accounts. "We have people in several countries working all day, everyday, all week, all year on technology, communications and Internet accounts, which means that in terms of general knowledge, market knowledge and driving programs, we bring immediate benefits to customers by cutting down drastically the time needed for the agency to understand the business. We hit the ground running and we continue to run fast."

Not putting all its eggs in the IT basket, Saudi Arabia's TRACCS has taken another route in its hunt for clients and success. It focused on its Arab identity in order to appeal to clients. The company that began life barely two years ago as a single location operation today has a presence in six countries throughout the region and employs over 40 people. "In two years, we had created a strong reputation and began looking at the region and found that the only thing that set us back was that we were a very focused and small company compared to the large PR companies operating across the world," says TRACCS' chief executive Mohamed Al Ayed.

Last year, TRACCS acquired Quantum Communications with whom it had been working on the VISA International account. "We saw that our style and ethics were so similar and had so many synergies that we decided to merge together," Ayed says. And since then, TRACCS has been rapidly building up its network that has brought it 25 clients.

According to Ayed, his company is unique in that it has built up its network by depending almost entirely on the local talent. "In Jordan, we have Jordanian staff and the office in Egypt is manned by Egyptians," he says. "We bring local flavor. This also helps in briefing the officers, who are often expats, about the nitty-gritties of the local culture, including how to welcome the media, how to sit during the interview, the gestures to be avoided."

Mom & pop. As with many other sectors in the Middle East, the boom in PR has attracted a large number of other players, most of them "Mom & Pop" shops with few professional skills and a reach limited to their host market. "When the boom started about five years ago," says the director of a large PR firm, "almost every respectable company here thought it must have a subsidiary dealing in PR.

For starters, they bagged all the home accounts or accounts of their sister companies, allowing them to survive for some time. As a result, today, you have a large number of very small companies that survive mostly on in-house accounts."
But as the market evolves and local companies begin looking for some serious PR solutions, the industry is set to receive a strong dose of professionalism. Asdaa's Sunil John says his company is focusing on client servicing and that his aim is to add value to the client's operations, especially its public communications.

"Our only unique selling point is our attitude towards client servicing," says John, one of the few Indian CEOs in a field that is largely dominated by British and American expats. "We are not there to get the pictures of the managing director in the papers, nor to get articles published on how glorious the year has been. We are there to ensure that the company's messages are understood in a true light; we are there to create an informed opinion about the company and to manage perceptions."

But a lot of smaller companies are thriving on doing just the things that John rules out. One of the characteristics of an evolving market like the Middle East is that as most companies and their managers are still new to PR, their understanding of the issue is still limited and the success of a PR operations is counted in the column inches that the company's press release has generated in the newspapers. The small PR companies use this lack of understanding to push their own services and bag a significant number of deals, which would otherwise have gone to professional PR companies. But John is not disturbed by this, saying it is a passing phase.

"We see a major shakeout in the market in the next year or two," warns John, "where the small players will no longer exist because their business models will no longer work. Consolidation has to come, as there are not so many opportunities in the market. While there is place for small shops for niche work, they will find it very hard to survive." He adds that his own company is showing the way by investing in people. While the clients may have driven the changes in the industry over the last two years, now the agencies, the bigger ones at least, are moving ahead on their own steam.

The bigger players also enjoy another advantage - that of local presence throughout the region. Spot On, for instance, has offices in Amman, Cairo and Dubai, while Asdaa has a presence in Amman, Cairo, Beirut, Jeddah and Kuwait and a head office in Dubai. The network has often proved to be a critical deciding factor when clients chose the PR company they want to work with.
Rivals.

Samsung Electronics had been working with Bain Communications, a Dubai-based company for about eight years. However, as the Middle East market evolved, the company began to look for a network agency that could service them in various markets throughout the region. It finally settled on Asdaa, even though Bain had by then tied up with EuroRSCG. But a lack of networks is not the only risk. Some of the bigger players discovered that they were often losing out some big accounts only because they were already handling a rival brand. As more and more global brands establish themselves or increase their presence in the Middle East, the losses arising from this "conflict of interest" for PR companies are bound to increase.

Some players are believed to be looking for unusual solutions like floating another company that would pitch for accounts of brands whose rivals are already being serviced by the mother company.

Besides the extreme competition, which is often based on pricing, another problem that professional PR outfits face in the Middle East market is the lack of a proper value for their services. In most markets, PR agencies charge their clients in terms of the amount of work that each mission requires, billing by the hour. However, as the concept is still new in the region, the Middle East clients balk at the thought of PR companies charging by the hour. So most PR outlets have to be satisfied with a lump sum payment, which is often far lower than in Europe or the United States.

"The task to charge the correct price becomes more onerous in a developing market," says John, "since we have to first convince the market about the value addition that we are bringing, and the difference that we make."

Spot On's Malin agrees: "Most companies must look at multi-country markets in terms of resources and growing the services and markets. This is largely at odds with the budget they have. So the process of planning communications and reconciling that with the money that is allocated is a very complex and difficult challenge."

Another challenge for the PR companies is the reputation of the industry and awareness about what it entails. In order to create awareness about the industry, 18 PR companies in the region came together last year and formed MEPRA, one of whose main functions is to make the people in the region aware of just what PR entails.

With the Middle East corporate world focusing on image, the news could not have been any better for the PR industry. But it is also a boon for regional businesses, which will finally be able to deal with well-trained employees, conscious of the importance of the image of their company and going the extra mile in servicing consumers' needs.