Dubai: A lot has changed across the Gulf economies over the last two years as low oil prices have dampen regional business confidence and liquidity.
There have been massive job cuts across sectors, government subsidies have been removed and major economic policies announced.
But what hasn’t changed is the need to stay relevant, and combined with the slew of new policies that need to be ‘sold’ to the public, one industry has seen growth even though most, if not all, of their clients have slashed spending.
Public relation firms in the Middle East say they have seen an uptick in business over the past two years, landing major government contracts and existing multinational brand clients pushing for better results in effort to stay in the public eye.
“When things look good, we do well. When things don’t look good, people need us even more,” Sunil John,the chief executive of WPP majority-owned Middle East PR firm Asda’a Burson-Marseller, told Gulf News in an recent interview.
Asda’a has won and maintained a number of major regional government contracts over the past two years, including winning a contract related to Saudi Arabia’s Vision 2030, John said.
The firm has set up an office in Khobar, Saudi Arabia for that contract and is planning to triple its staffing levels in Egypt and double in Kuwait due to new and ongoing government contracts, he said.
Gulf News understands that the growth has predominantly been seen among major players, with smaller, boutique firms said to have laid off staff, according to those working in or closely with the industry. Still, tighter budgets among both private and public sector clients has meant that tenders are now being sent out to a larger, more diversified group of PR agencies than two years ago.
“Budgets are tighter. There is no doubt about that,” Bell Pottinger’s Middle East managing director Archie Berens told Gulf News in an interview.
The budget constraints have also meant that it takes clients longer to make decisions, particularly in the government and public sector, Gulf News understands. However, what has made PR more attractive is, in part, because of huge cuts to advertising budgets. PR is perceived to be more valuable, delivering a higher return on investment because of its strategy of garnering targeted, favourable media coverage.
“It is more important than ever to keep your name in the public domain, so it’s a big opportunity for us. Clients recognise that,” Berens said.
Lisa Welsh, general manger of Hill+Knowlton Strategies’ Dubai operations, said clients have become “a lot smarter about how they spend.”
“Clients want to make sure they’re getting the most out of their money,” she said in an interview.
Hill+Knowlton Strategies is owned by WPP but operates independently of Asda’a.
Certain sectors are seeing a downturn on PR spend; energy, financial services and international law firms, according to Bell Pottinger, whilst Asda’a says retail, real estate and automotive are down.
Even with the uptick in business the low oil price effect has been felt by the major firms. Asda’a has merged seven divisions into five in the past two years, partially due to softening demand in certain sectors. and Hill+Knowlton Strategies has consolidated some of its operations.
“[The] person who writes the press release is now also writing the digital strategy,” Welsh said.
Smarter, budget constrained clients had also meant that demands and expectations are changing. Clients now want their PR agencies to handle their digital strategy and increasingly incorporate media buying and advertising to their pitches.
Hill+Knowlton Strategies has responded to market demands by hiring people with skills it had once never looked at, according to Welsh.
“Rather than hiring people who have been with a PR agency for ten years, we’re now hiring graphic designers, cameraman [and] video production.”
Welsh also said that the ratio of retainer versus project clients had tilted in favour of project-based over the past two years. Berens and John said they each continue maintain majority retainer clients, however, Berens did say Bell Pottinger has become less reliant on “bigger clients” in the Middle East.
Another impact of tighter budgets is a concern in the industry that firms are increasingly undercutting each other as they vie for competitive contracts. Berens and John both said undercutting is taking place, particularly among smaller firms. Berens said there was a risk of a race to the bottom but neither he or John agreed that market conditions would drive industry consolidation.
“You could argue the current environment plays into the hands of the smaller operators because they can afford to undercut because they have smaller overheads,” Berens said.
John, however, said that “small agencies might not be able to survive” the current pressures.
