PR set to cannibalize advertising industry?

Keeping aside the matter of advertorials, have you ever found a newspaper article speaking slightly on a positive tone about a brand? Have you ever found a corporate interview on a news channel, where the spokesperson of a firm uses the show as a vehicle to promote his brands? Have you ever thought what marketing communication strategies are used by celebrities or politicians for positioning themselves in front of the people? The answer to all of the above questions lies in an Integrated Marketing Communication (IMC) Strategy known as Public Relations (PR). Public Relations is a strategic communication process that builds mutually beneficial relationships between organizations and their stakeholders. And for this communication process they use media like print, Television and online. PR agencies continuously try to get media space for their clients by publicizing (positive) strategic and corporate level actions (and their results) of an organization in the market. They also create situations at regular intervals, by making the client involve in some charity work or celebrity parties, to draw media attention towards them. This brings not just brand recall but also credibility as the company is being spoken about by a trusted third party like a newspaper or a TV channel which is not the case with an advertisement. The successful Image (and reputation) building, at the national level, of one of the Prime Ministerial Candidates is often attributed to the intense behind the screen PR activity.


PR as an IMC strategy is over a century old, but Indian industry started practicing it predominantly after the opening up of Indian economy in 1990s when notable firms like Perfect Relations started offering their services with a core focus on PR. Though some international PR agencies like Oglivy PR started their services in mid 1980s they could not find a firm footing as their core focus is on advertising. Most of the sections of the media perceived that credibility is at compromise when an advertising agency comes and pitches to them to feature their client PR activity. The overall industry revenue is expected to be around INR 700-800 crore with the top ten agencies generating combined revenue of INR 400-500 crore. The global growth rate of PR industry has been flat at around 2-3 %. But, as per the MSL Group India’s exclusive report, PR industry in India is expected to grow at a whopping rate of 20% in 2013.  The potential for growth in India and China is expected to be more as the industry is still not mature. Comparing it with the advertising industry, the size is much bigger at INR 327.4 billion. This is understood from the fact that advertising industry is in its mature stages in India. What is more interesting is the fact that the growth rate in Indian ad revenues was 17% in 2010, 13% in 2011 and 9% in 2012. Ad spend by FMCG companies declined from 14-15% of sales earlier to 12-13% of sales. Experts of ad industry may attribute this decline in the growth rate to the slowdown in the overall economy which is highlighted by a fall in the GDP growth rate over the same period. Economic slowdown cannot be an excuse given the fact that 33% of the clients increased their PR budgets while 63% of the clients did not cut PR budgets during the same period. Can we conclude from this data that PR is eating away into the revenues of ad industry?
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May be not. But, we can say for sure that literacy, awareness levels and internet usage are increasing in the Indian consumer segment day by day. With awareness comes the ability to question the credibility of marketing communications. This is where PR scores well above an advertisement. Industry experts like Mr. Rohan Kanchan, Vice-President of Strategy and Planning, Perfect Relations, feel that credibility of a PR campaign is atleast five times more than that of an advertising campaign. What incentivizes a rational consumer to believe something that the brand is proclaiming about itself (in an advertisement)? Ad experts counter this argument by saying this is when celebrity associations come into picture. But, when most of the celebrities are endorsing for multiple brands would the average consumer be really in a position to relate a specific brand with a celebrity? And when most of these celebrities are not experts in the industry where the brand exists why should any consumer trust these claims? A diehard fan of Sachin Tendulkar need not be motivated to buy Toshiba laptop when he is well aware that the player has no domain expertise in IT. But, in the case of PR, people receive the communication from a neutral third party like a newspaper or a magazine.  Media is regarded as the fourth estate of the nation and hence a lot of credibility is associated with what comes out of media. Of course there might be differences in the credibility quotients attached with different media sources, but as a whole media is seen to be credible.
When a marketer communicates with a consumer, normally he tries to reach out either to the cognitive or to the affective (emotional) components of the latter’s attitude. Functional benefits appeal to the cognitive component while the emotional or aspirational benefits appeal to the affective component. So, if a brand manager has to communicate the functional benefits of a brand to the consumer, he / she can effectively do it using PR as a vehicle rather than advertising. This is because, cognitive component is more about beliefs and the level of information processed by the consumer would be high in this case. So, it would make more sense if the consumer believes that the information is from a trusted source. So, it can be reasonably expected that PR would make a significant impact in persuading the marketer to reconsider his options when it comes to the communication of functional benefits of his brand. But, the PR strategy as such is not fool proof. The industry, as of now, lacks an objective metric for evaluating the impact generated by a PR campaign. In the wake of all this, we are yet to see whether PR industry in India can become strong enough to cannibalize the advertising industry….?
 
[The article has been written by Sudheer GV. He is an MBA from IIM Kozhikode.]
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PR set to cannibalize advertising industry?

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