PR industry's Q4 earnings take a hit

 

Danai Chanchaochai, chief executive officer of DC Consultants and Marketing Communications, said it was imperative for Thailand to restore the confidence of foreign investors and tourists next year about the country’s social and political stability as well as its readiness to handle crisis situations.

He said the public relations industry, in the latter half of 2011, was hit hard by natural disasters that occurred in different regions of Thailand and forced clients to postpone their activities and campaigns. Nevertheless, he is confident the country’s economy will be able to improve and consumers’ demand will grow, thanks to the strong economic fundamentals, the government’s stimulus measures to be applied in the first half of next year and the recovering employment situation that will help increase domestic spending.

However, he said, it is still necessary for the state to speed up strategies and efforts to rebuild investors’ and tourists’ confidence in Thailand and to help the private sector resume its major role in driving the economy.

“The flood catastrophe and political changes in 2011 have resulted in many tourists cancelling their trips to Thailand, while investors are keeping a close watch on the situation and Thailand’s ability to respond to a crisis, including possible natural disasters in 2012 and fragile political conditions,” Danai said.

“The state is directly responsible for planning an effective communications strategy to boost the confidence of target groups at home and abroad. At the same time, both private and public organisations should prepare systematic operating plans and communication strategies for internal and external partners in case of an emergency, as well as provide drills for executives and staff.”

DC Consultants will launch a new service called Social Media Solutions next year as an alternative to mainstream media. The benefit of social media is that they allow two-way communication with target groups.

Hasan Basar, managing director of Bangkok PR, said the impact on the industry from the flood had not been uniform. Companies that are primarily “event driven” have probably been hit hardest because virtually all events were postponed. Those public relations companies that have a heavy consulting function could probably still continue to provide their services, regardless of the floods, and probably even had more work to do as most annual PR plans had to be redrawn to accommodate changing circumstances.

However, as an industry, there is no doubt that the floods have seriously affected them in the last quarter, as they have affected all other industries. 

“Perhaps the worst effect of the floods on our industry is that small operations, which were important, high-quality members of the supply chain, have been almost put out of business by the sudden and prolonged cut-off of income,” Basar said. “It will be very hard for them to recover, and that will mean a shortage of quality suppliers to the public relations industry. 

“Typically, I am talking about small but good-quality organisers, graphics companies and other production operations that enable PR companies to succeed. Many of these companies are two- or three-man shows and have few reserves to cover their fixed costs for three months when all their income dries up,” Basar said.

“The first three quarters were good for the PR industry, which is why I would expect the year’s performance of the industry still to be up on last year. We could see that last year, in 2010, even with the red-shirt crisis, the total billings of the top five public relations firms were still able to grow by about 17 per cent, from Bt424.3 million to Bt496.1 million. 

“At Bangkok PR, we work with a limited number of clients on a longer-term basis with a heavy consulting component. We will be closing 2011 with some top-line growth on 2010,” he said.

Basar said the company’s strategy for 2012 was to stay focused on its core proposition and not get distracted, no matter what may be happening around it: and that was to serve a limited number of clients, providing them with the highest-quality counsel from very experienced executives, and always delivering on its aligned goals. 

“It takes a long time for ‘good counsel’ to show its worth by the problems avoided as much as the bigger upsides delivered, but we are fortunate to service clients who are experienced in public relations and value good counsel. Every year, we will sign up one or at most two new clients, and we are set for 2012 already,” Basar said.

Kitti Chambundabongse, chairman of Spa-Hakuhodo, said public relations strategy and campaigns during the flood crisis could be easily described as a “media flood” on the front page of every newspaper, on every TV channel and on satellite channels.

“There are at least 40-45 companies that launched public relations materials of some form in both print and electronic mediums. A lesson in marketing to learn from this media and public relations clutter is the question of how effective these campaigns or these corporations are. Everybody is a good guy, but how many good guys do we remember?” Kitti said.

Among all these corporates and brands that jump on to the bandwagon, the winner with the most share of the heart will be the one with strong brand equity and awareness. They have been more consistent in their CSR (corporate social responsibility) activities every year before this flood crisis. 

Kitti said that as December is about to end – the last-quarter festive season – this year will not close with great news for many in advertising agencies as well as manufacturing. Contrary to the normal high-growth level of spending during the last three months of the year, 2011 is likely to see lower billings and revenue for many agencies.

“Spa-Hakuhodo and Spicy H are no exception. We are closing the year lower than our budget forecast but still 5 per cent higher than our performance in 2010. It would have been a different story without the flood,” Kitti said. 

The company faces a Bt160-million cut in client spending during this quarter.