By Johnson Napier
In a day and age where PR agencies are grappling with each other in offering services with a differentiated touch, US-based APCO Worldwide has its own unique formula of approaching the Indian communications space. Far from being referred to as a PR agency, the firm would rather let each of its verticals, be it corporate advisory, government affairs or civil, act as individual competitors versus the other full-time agencies in the space.
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Entrusted with the task of bringing a differentiated tactic to the market is Sukanti Ghosh, MD, India for APCO, who has donned several communication hats across the sectors of radio, advertising, and banking & financial services. In conversation with Johnson Napier of MxM India, Ghosh elaborates on the tremendous scope for agencies to make it big in India and how government relations & public affairs would be a large space to reckon with in the years to come. Excerpts:
In a largely blurred communications space where agencies try to play the differentiating game very cleverly, how would you categorise APCO Worldwide as an agency in India?
If you look at the Indian communications industry, it is at the various stages of maturity; it’s along a continuum. So on one hand, we have a lot of the commoditised services in India, and frankly speaking, there is no bottom to that pit – there is always another mom-and-pop agency who will offer a service at a cheaper rate – and there is another end of the spectrum that is highly evolved, extremely mature and as good as any other global market. So it depends on which end of the market you want to play in. APCO, nowhere in the world, really plays in the commoditised end of the communications industry. So like there are many Indias within India, similarly, there are many communication industries within the communication industry. It occupies and lives in various forms of maturity. You have to decide which slice of the market you want to play in.
So what is it about APCO in India that you would say is different?
What has defined APCO since I have joined is that we are very clear about the market that we want to play in. APCO looks at communications very differently. If you are aware of the Venn diagram that we studied in school (three intertwined circles), we typically turn around and say, if you look at the three circles – one is business strategy of any company, the other is public perception or civil society and the third is government regulations – there is an interplay between the three and whenever there is an interplay between the three that is where we are the strongest.
So to begin with, if you remove the government element and look at the other two elements of business strategy and civil that is where you get marketing communications. Frankly, that’s not an area where we are the strongest and that is not an area that we would want to play in. Then if you take out the part of civil society, and look at the interplay of government and business only then that’s where you get the issues that keep arising every day.
Today if you look at India and where we are as a country, civil society and the voice of civil society is here to stay and it will only become stronger going forward. Again, that is not an area where we want to play.
We are very clear that at the outset, we are US FCPA (Foreign Corrupt Practices Act) compliant, we are UK Bribery Act compliant; we believe in ethical representation and in the sphere of ethical representation, we are the single largest ethically-owned firm in the US, and also the eleventh largest around the world and that’s where we want to grow.
If you look at the third element, where if you remove out business and look at the interplay between government and the people, that’s where public awareness advertising from the government arises. Again, if you look at the government and business, that’s where you have a number of government initiatives to try and rope in business, that’s where we are again strong. An example is the vibrant Gujarat campaign that won few awards despite being pitted against some brilliant campaigns from around the world. So that’s going to be our focus at this point in time.
Do we really see ourselves as a marketing communications agency – perhaps not. That’s not an area we want to focus on. We would want to focus on selective areas of communications in the broader sense and do well in that.
How would you analyse the performance of your core businesses in India?
Globally, we are a market leader in public affairs, we are a market leader in STG (service to government) practices and we hope to replicate that model out here in India. It would be fair to say that we have got off to a very good start in India. We have more than doubled our revenues from the year before, we are working with some of the finest Fortune 500 companies in India, we are fortunate to have worked with the government of Gujarat and are seriously looking at growing business in that space. Also, even as we speak we are working with several companies, advising them on public-private partnerships; helping them work alongside the government because we believe the Indian government is at a stage where it is more than ready to look at and listen to global leaders to hasten the pace of progress in this country. That is something unique because most companies that have come into India have a misconception with regard to the government and the way it works.
While it seems to be a merry-making affair for you in the government and public affairs space in India, it is not the case with other players who appear apprehensive of making it big into this space. Then there are also allegations of red tape and corruption. Your comments?
Frankly, in the last sixteen months, we have never faced a single problem working with the government. Part of it is misconception and part of it is reality, but the fact is that it is only when a company wants to take a shortcut that the problem arises. The government has very clearly defined processes and companies need to understand and work the processes. The fact is that India is a long term play; so you’ve got to work here to stay and proceed accordingly.
We also help companies in understanding policies and regulations. The latest example being the FDI norms in retail being discussed lately. So the output does not have to be limited to the media; there are cases where you will work with the media and that is only right, but it does not have to be limited to only the media.
Increasing number of multinationals are evincing interest in India while India continues to look up to the outside world for encouragement. What are the trends that you foresee currently on that front?
There are a couple of things happening on that front. If you look at the STG space – I am referring to outward investment as well – there are a couple of things being observed. One is the government bodies or the economic development boards, are today trying to woo Indian companies and get Indian companies to invest in their markets. If you look at the policies space, there are so many Bills that are being talked about, there are so many changes in terms of legislative reforms and these are throwing up hundred different opportunities for companies. So that in itself is humongous.
Globally, if you look at APCO, we focus on a number of areas and those are the areas that we will continue to focus on. We focus a lot on energy and renewable energy, on telecom, on food & consumer products…we are probably the single largest player in the healthcare space. So we would be bringing and developing a number of these practices in India.
How is APCO Worldwide performing outside of India? Also, what are your plans for India outside the two metros that you are already present in?
Apart from Washington, US, which is our largest office around the world and 2-3 regional offices, our London office has a few odd people, Dubai has 40-odd people, Brussels has 40-odd people, and all the other offices are around 20-odd people in operations.
In India we see ourselves moving to three offices by next year, we see ourselves adding one more office in the south besides Mumbai and Delhi. We would grow to be about 50 people soon.
If you see recent industry reports that classify firms from small, medium and large, I think without trying too much in the span of one year, we are very much already in the middle. We are very confident of growing very quickly into the so-called large segment very soon.
How would you rate the fee structure that agencies command in India? There are allegations of it being under-par compared to other countries?
We are expensive and our clients know that we are expensive. Clients know that they will get firms for half the cost but they come to us for the quality and value that we deliver; they don’t come to us for the fees that we charge. In certain parts of the business we compete with the big four, in certain parts of the business we compete with law firms, with the communications industry, and so on but the fact is that we have never had an issue with fees. It is made out to be an issue primarily because you are on the wrong end of the value chain. So you won’t see our people running around with press releases, issuing statements or chasing people.
Do you largely agree with the claim that the PR industry in India is largely unorganised?
I thing the PR agencies have brought it on themselves because they have become so tactical at the bottom end of the spectrum that there is always a cheaper option. And when you are at that level, you would never command a premium and it will always be unorganised. But does that mean that there is no organised side of the business, of course there is. The thing is, India is a large country and is big enough for everybody. Even the largest PR agency is India is around about 40 crores or so, according to Holmes report. This despite them being very big in the communications space and having a large clientele. So you can imagine the opportunity that exists in the communications space.
What is the emphasis that you lay on digital?
Globally, we are very big in the digital space. We have a unit called APCO Online, a pureplay social media unit that has won more than 300 awards across the world. So those are resources that we would be bringing to India. So it’s one of the units that we would be looking at very closely in 2012.
Given your diverse presence across industries, who would you cite as competition?
I can’t name any one firm. In corporate advisory we compete with management consulting firms, in the public affairs space we compete with some of the large law firms; there are very few communication agencies that are doing serious public affairs work. The thing about APCO that strikes me the most is the number of clients who have been with us in upwards of ten years and also the number of people who have been with us average around 10-15 years. So it’s largely a firm that is relationship-led; it is largely a firm that is culturally very strong and frankly speaking, you either fit into the culture or you don’t.
Is the current economic scenario casting its toll on the industry?
We grew at a rate of 6.9 per cent in the last quarter which was the slowest in the last 8-9 quarters, but the fact is, how many countries have grown by that per cent around the world? We may be going through a bit of a rough patch, but we will get out of it eventually. Is it a period of concern for us, I guess not. I think there are austerity measures that have been undertaken and there is a note of caution everywhere.
What are the imminent challenges facing the industry?
There are two big challenges that face the PR industry, the first being the PR industry itself. The second being people. The skill gap that we keep talking about for other sectors is very real for our sector as well. The trend internationally is that people are very focused when it comes to taking selective career paths and so they go ahead and specialize in that from the beginning. That’s not what is happening here. In India, it is still an emerging profession and with all emerging professions there is a period of instability but there will be a shakeup. We need to elevate the status of the industry. Unless we get PR out of being just press releases into being something a lot more sophisticated and holistic, we will not get the right people.
What are the trends you foresee for the industry, and for APCO, in 2012?
For 2012, I see fierce competition and a certain degree of consolidation taking place. I foresee a lot of foreign companies coming to India and a lot of Indian firms willing to sell out. As for us, we are fiercely independent and we prefer to remain that way.