By Ullekh NP, Kausik Datta and Malini Goyal
In the end, Niira Radia’s exit from the public relations (PR) business came in a flurry of press releases. It was just the way she would have liked it – no ungainly media scoop to quell, no unruly mob of television crews to wriggle her way of out of (and she has faced a lot of these in the last year or so), and finally, no probing questions to handle.
Her laconic public statement was followed by far more effusive press releases from the Tata Group and Reliance – the country’s largest corporate houses and the anchor clients of the agency Radia founded exactly 10 years ago, Vaishnavi.
Radia often subordinated “her personal and family interests in favour of her clients’ priorities,”,said Tata Group chairman Mr Ratan Tata in a release. RIL has agreed to place some 30 Vaishnavi executives in its internal communications team. And soon, in what a senior executive of a Mumbai-based company describes as a “somewhat late face-saving bid”, Tatas announced Vaishnavi’s PR replacement: Rediffusion and Edelman.
Ms Radia’s decision to shut down Vaishnavi and its other subsidiaries like Neucom brings to close a chapter which marked Radia’s rise from your average behind-the-scenes publicist to national recognition and most would agree, infamy.
But it is also a chapter that the fast-growing Indian PR industry would like to forget in a hurry. After all, it is not often that a publicist gets so much publicity and that too for the wrong reasons.
Earning a Bad Name
So was Radiagate, as it became known, a loss of face for corporates or for the PR industry? Opinions vary but many PR executives, perhaps not surprisingly, claim that the scandal was a worse reflection on PR. The scandal unfortunately made Ms Radia the de facto public face of PR, at least for a while. A senior executive at a Mumbai-based conglomerate rues that in the case of ms Radia, corporates let PR folks “dominate” them.
Industry insiders claim Ms Radia distorted the way PR is practiced. “Unethical lobbying got disguised as PR. And the industry as a whole suffered. There is suddenly an overhanging cloud of suspicion,” says one.
Another longtime practitioner says the alleged involvement Ms of Radia in the scandals did not surprise the Indian PR industry. “Rather, the industry is saddened by the way corporate big guns showered praise on the lobbyist when she shut down her outfit, Vaishnavi.” A Delhi PR executive says his company decided not to pick up accounts of people with tainted reputations, one of them being former McKinsey chief and former Goldman Sachs board member Mr Rajat Gupta. ET on Sunday couldn’t independently verify the claim. Not everyone is so pessimistic though. Mr Robin Banerjee, chief finance officer of Suzlon Energy, doesn’t think the “Radiagate” was a negative for PR.
Long Road Ahead
But in spite of Radiagate and its resulting “loss of face”, the 20-year-old industry is growing rapidly. Assocham expects the PR industry to grow around 30% annually – four times faster than the growth in developed markets. “PR as a business can only go up, simply because conflicts in society grow,” says Mr Madan Bahal, managing director at Adfactors Public Relations, India’s largest PR agency according to The Holmes Group, a global tracker.
PR veteran Mr Dilip Cherian, founder, Perfect Relations, says PR is destined for huge growth because there are “extraordinary levels of interest in matters corporate, and so the flow of information and its management are crucial”. Mr Arun Sudhaman, partner and managing editor of The Holmes Report values the industry at $200 million. Others peg it at Rs 500 crore.
Edelman chief Mr Robert Holdheim calls the Indian scenario a “perfect storm” that will result in a fast-track growth for the PR industry which, according to industry figures, employs 30,000-40,000 people across nearly 2,000 big, medium and small firms. He adds, “We see episodes like Radia’s everywhere.” A PR professional who has worked across continents and cultures, Mr Holdheim should know.
Corporate Fights Drive PR Expansion
Indian PR has come a long way since the early ’90s when liberalisation led to the birth of Indian PR. The PR industry’s growth was also fuelled by the growing ambitions of Indian corporates and increasing competition between Indian companies to capture public mind space. A long-time industry watcher recalls that PR professionals shed their tags as mere ‘couriers’ of press releases and began planting stories in the media when a Mumbai-based corporate house shared information of financial difficulties of its rival with the media in the ’90s.
PR firms also played their part during the corporate wars of the ’90s. In fact, when British American Tobacco (BAT) tried to take over ITC, a newspaper ran a story with a headline “Good vs Perfect”, referring to the two public relations firms that represented the tobacco companies: Good Relations and Perfect Relations. In 2004, when the Ambani brothers fell out, much of the battle over the Reliance empire was fought through the media. But there’s a twist here. Much of the ammo came directly from the two rival groups. It was after the battle was over that outsiders doing big PR jobs matured as an idea, at least with one of the two rival groups.
But the real fillip for the PR industry came when the global PR firms started looking at India. Ms Prema Sagar, founder, Genesis Burson-Marsteller, recalls that a decade ago, foreign PR firms weren’t interested in India. But as India’s growth story gained global favour, international PR firms made a beeline for India. “They realised they needed to be represented in this country and understand how media operates here and got into affiliations.”
Mr NS Rajan, MD at Ketchum Sampark, which was formed after Ketchum picked up majority stake in Sampark PR last year, says in his experience, a global partnership maximises opportunities for an Indian firm and together the partners can service their clients better.
WPP unit Burson-Marsteller bought out Genesis PR in 2005. Other foreign PR firms that made their Indian foray include Publicis, Weber Shandwick, Ketchum, Ogilvy & Mather, Fleishman Hillard, and Edelman. According to The Holmes Report, expansion of digital and social media in the Asia-Pacific belt has led to PR thriving in the region. Ms Sagar cites a plethora of reasons for such alliances: “Some entrepreneurs feel that they have grown the company up to a point they wanted and they would like to cash out and do something else or retire from working life; others felt threatened by international PR firms because of the international experience, strategic value and depth of domain knowledge they bring to the client.”
A Cultural Change?
Mr Sudhaman, however, argues that the talk of a consolidation in the industry thanks to the influx of companies from elsewhere is premature. “Small firms stand a great chance of survival if they are good and focused, and there are many,” he says.
Besides, he adds, it is not just the local firms, but MNCs, too, that have many lessons in business and practice to learn. “Entry of foreign firms may lift overall standards, but handling India’s complexities isn’t easy,” he says emphasising that there is a lot that MNCs can pick up from Indian firms that follow best international practices.
Adfactors’ Mr Bahal expects local players to have an edge over foreign companies. Adfactors is one of two big PR houses still wholly owned by local entrepreneurs. The other one is Mr Cherian’s Perfect Relations. In fact, not all foreign forays into the country were tales of success. For instance, College Hill of London has shut operations and the joint venture between Vaishnavi and Financial Dynamics did not last.
One question that most industry executives were unwilling to talk on record was: will the entry of MNCs reduce unethical lobbying? Unlikely, says an executive. After all, these are part of big groups that are successful in countries with a high rate of corruption such as Italy and Russia.
Plus, they are all highly focused on results, rather than the process of achieving them, argues a Mumbai-based PR professional, asking not to be named. Radias will continue to thrive in the industry, but in different names, contends the communication head of a large metal company who also asked not to be identified.
Cheque Please
One constant gripe that practitioners of this spit-and-polish art has is that they don’t get paid enough by the clients they service. In India, most clients work with PR agencies on a retainer fee basis. In the West, PR companies get paid like lawyers and software code houses – on a billed hour basis.
In India, agencies get retainer fees-there’s no standard fee-per-head ratio, which makes over-servicing a very real scenario, say industry seniors, who also talk about proliferation of agencies and under-cutting.
Industry insiders say employees also need to be paid much more to ensure that agencies are able to attract and retain talent. “Remuneration for mid-level and entry-level staff, concedes a top official of a Delhi-based PR firm, requesting anonymity, has to go up much more.
It’s a growing area of concern for the industry. “The most important issue which the industry should address is that of talent shortage. The industry should invest in creating talent with a view to meeting the ever-increasing market,” says Mr Sunil Gautam, founder chairman of Hanmer & Partners who sold out his company to MSL group three years ago. Cherian puts the percentage shortfall in talent at top-level management in India’s PR firms at 70%.
Beyond Traditional Media
With the growth of social media, the very business of PR is undergoing a sea change. Ms Surekha Pillai, an independent communications consultant, talks of an old school versus new school of PR. The old school is obsessed with the media and focuses on the number of newspaper clippings or video clips. That’s media relations, not PR, say many young PR executives, who seem to chaff at the limitations of the old model.
What is the new school? “I call it integrated communication,” says Ms Pillai, adding that PR must work hand in hand with companies to build brand equity across media platforms from traditional media to the virtual worlds of Twitter and Facebook.
Genesis’ Ms Sagar agrees that multiple stakeholders are involved here. “With integrated communications becoming a reality, corporations don’t care where the Big Idea comes from – advertising, public relations, digital or any other area of the marketing communication mix,” says Ms Sagar.
What about the age-old charge that PR is all about spin? Mr Cherian says that there is no getting away from the fact that there an element of spin in PR, which is ultimately about management of an organisation or a person’s image. Pillai notes that none of the big brands or names became big brands overnight. “There is great public relations behind all of them, and there is nothing wrong with it.”
Bringing in more transparency to lobbying could be part of a solution, contends Mr Cherian. One of the early movers in Indian PR, Mr Cherian expects globalisation to be a major catalyst for PR in the years to come, for both local and foreign companies. “After all every company wants its appropriate share of shout,” he says. But, for the moment, what PR needs is good PR, and a really loud holler at that.
Source:The Economic Times
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By A Correspondent
