‘The best client is the one you keep, not the one you win’

BY IMPACT Staff

An outside agency waiting to make an impact in a country that’s flooded with multiple local players is no small achievement. But PR firm Edelman has being doing remarkably well in India, churning out impressive work for a range of clients across sectors. From tech companies to FMCG brands to finance and pharma, most biggies have parked their PR business with Edelman, making it an agency of choice for many.

Going by what Edelman’s President & CEO, Richard Edelman has to say, the objective is to not just post a healthy growth rate year-on-year but a key part is to persuade clients not to buy PR as a commodity but rather as a strategic and an executional tool. And that’s the difference the agency brings to the table.

Going ahead, the agency plans to heighten its focus around BRIC countries and derive a 15 per cent growth rate from them in the next five years. This would be largely driven by its emphasis on the digital domain, particularly social media. In conversation with Johnson Napier, Edelman opens up on the agency’s plans for India, the challenges facing the PR industry and how it’s a boon not being affiliated to a large communications powerhouse like WPP. Excerpts:

Q] How would you assess the growth of Edelman, globally, in the year 2010?

Three things went well for us in 2010: first, we really are the leading PR firm in the area of Social Media. We developed digital to a very thorough extent; it’s now 12 per cent of our fees. For example, for Research In Motion (RIM), in India we have put up Facebook and Twitter embassies, we have staffed it and are constantly conversing on these platforms. The second is, we are getting more and more global mandates; we are benefitting from scale so our big global clients are using us in multiple cities many times. The third trend is that brand and corporate reputation are increasingly intertwined. So while earlier we used to just have the marketing business now we also get the corporate business. I think that’s just a global trend because of the challenges for trust in corporations around the world.

Q] Which are the verticals that have been performing well for you?

The biggest growth vertical for us was from tech. We won the global business for AMD, we are also working with RIM; HP is also a big global client… so that’s the vertical that’s been delivering the fastest growth for us.

Q] There is an increased emphasis that Edelman is laying on the emerging markets. How do you see these markets contributing to your overall growth?

The emerging markets – BRIC and including the Middle East and Indonesia – are only five percent of our revenue as of 2010. Our goal is in five years for it to be 15 per cent. The way to do that is to make a country like India, which was $3 million last year, to make it $15 million - I believe in that. The PR industry in India is really under-represented relative to advertising – the largest PR firm would be approx $15 million I suppose. The largest PR firm in China would be three times that size. The largest PR firm in the US is $350 million. We are going to go after business that is presently in the ad agencies. Because I think that more business ought to be moved and the mix of spending ought to be changed. There should be less of the total spends in advertising and more in PR and digital and PR firms should get a portion of the digital spends. That money should not all go to digital specialist agencies or to ad agencies. That’s because we do digital separately, we do digital as a social aspect.

Q] How do you see the Indian operations panning out for Edelman?

In Asia, it would be about the same size as Japan or Korea or even Australia but I expect the Indian market to be second to China in our Asian context. I expect the Indian market to be one of our top five markets in five-ten years. But right now, it is probably our twentieth market. So there’s a helluva lot room to grow. A key part of the growth is to persuade clients not to buy PR as a commodity – they cannot buy PR at the cheapest possible rate, they have to buy PR as a strategic and an executional tool. And also to give us the ability to do classic marketing, not just what they consider to be small box media relations. Our focus is what we call public engagement, and public engagement is about having meaningful conversations 24x7 and building relationships across the entire stakeholder universe. The difference between PR and advertising is advertising is brilliant talking just to consumers but PR is great for employees, non-governmental organizations, financial communities, regulators and much more. We can do all those plus the consumers. That’s because the world is very inter-twined now; I call it the sphere of cross-engagement.

Q] How has the roster of clients grown for Edelman in India?

We have many big multinational clients here – Kraft, Starbucks, AstraZeneca, AMD, McGraw-Hill and the others. We’ve grown by 87 per cent in the last two years. That’s a staggering growth rate to achieve. Even so we would finish this year at $4.5 million from our three offices in Delhi, Mumbai and Bangalore. Our budget for next year would be a very substantial 30 per cent growth.

Client retention is a key success strategy for the firm. In fact in the past year, we have lost none of top 50 global clients. We believe in relationships; it’s a family business – when my father started this business he would always tell me that that the best client is the one you keep, not the one you win.

Q] You began your journey in India by tying up with Roger Pereira’s R&PM. You had a successful stint with R&PM until you two parted ways…?

Roger is no longer with us and he has not been with us for some period of time. But I would like to credit Mr. Pereira for building a fine business; we were very pleased to have a relationship with someone who was a stalwart in the industry. Having said that, we’ve profoundly transformed the company in the last two years since we’ve moved to a 100 per cent ownership. We have to be a part of the global network and not be something that is standalone. We retain a lot of the people who are assets for the company and at the same time we hire a lot of new aggressive talent who want to be the No. 1 in India. Right now, the No.1 firms are both locals – Vaishnavi and Ad Factors. So that’s where we are aiming at.

Q] Given the huge progress that you have made as a standalone agency, how do you resist takeover bids from agencies like WPP, etc? You must be hounded every now and then by these large hawks of the communications business?

I’m thrilled that we are not a part of a big agency like WPP and I’ll tell you why. First of all, I like the fact that we are an independent private company. It means we can invest in a market like India, hire more people with the idea to draw great returns. Having said that we also can define PR in the broadest possible sense. If you are part of WPP then what happens is you have a sister agency doing digital, you have a sister agency doing advertising…you are always the subordinate character in a relationship because PR is always smaller in the spend than advertising or now digital. We sit at the table because we are independent as equals. We’re sort of like Switzerland – we are not affiliated, we do not have problems. But we go out aggressively and say that this is what the spends ought to be in the PR area and our idea is the big idea that should drive the campaign.

I can’t even tell you how many times we were approached for a takeover but the answer will always be the same – the third generation is already working in the firm and it is always going to remain family-owned. The promise is false – the idea that the Holding company should coordinate all communications for the client, that’s not the role. The client should decide how they allocate the money and what the approach is.

Q] You’ve highlighted the fact about the PR industry being under-represented in India. What are the other challenges that limit the growth of the industry?

I think the PR industry has the challenge of the so-called pay-for-play scandals that emerged a few weeks ago. I’d just like to say that that is not PR but it is lobbying. There’s a big distinction between the two. Also the PR industry here has the issue of being evaluated on the number of clips as opposed to the quality of the story. The biggest issue is I want PR to be at the table as an advisor. I want us to be involved in the strategy as well as execution. We have to own our place there but we can add real value to the CEO/CMO and shouldn’t be just relegated to just reporting to the local PR office. We have too much of an important set of relationships that we can bring our knowledge of.

Q] What is the next course of action anticipated from Edelman for India?

We are going to continue to invest particularly in digital in the market – we are clearly the best social media PR firm already in India and we are going to invest behind that. We are going to try to build our presence in Delhi – that has gone from 13 people to just about 40. Also, we plan to beef up our presence in healthcare and pharma.

Tags : Interview