Arun Sudhaman 24 Aug 2018 // 8:50AM GMT
Maybe you had better summer plans, but I spent the bulk of mine meeting and talking with public relations agencies from across Asia-Pacific for our annual Consultancies of the Year research process. And this year's submissions offered a far more optimistic picture of regional agency growth, after a rather more subdued scenario 12 months ago, when China's cooling economy came at the worst possible time for global PR firms.
The 'golden era' for international PR firms in China may be over, but the country remains a critical driver for growth in the region, and better agency operations continue to return substantial growth as they navigate its unique challenges.
Meanwhile, a number of other learnings emerged from this year's research process, spanning geographic factors, engagement trends and sector issues. Here, in no particular order, are five:
(1) Content to commerce
By now, it is rather trite to keep trotting out the observation that China's social media platforms offer far more advanced ecommerce capabilities compared to their Western counterparts. As long ago as 2015, our IN2Summit featured a high-profile P&G case study that successfully drove (and tracked) sales via an earned media WeChat campaign. That kind of thinking now pervades much of the region's best digital activity, which tangibly links content to recommendation and conversion. That much is also borne out by our SABRE Awards shortlist, which features numerous PR campaigns that are connected to ecommerce, particularly in China, where social and ecommerce platforms are rapidly converging. And that, furthermore, is also fuelling a more sophisticated use of data and analytics.
(2) The 'Greater Bay Area'
Staying with China, another noticeable trend is the slew of agencies that have opened offices in Shenzhen. This makes plenty of sense, because China's technology ecosystem is increasingly centered on this 'Greater Bay Area', which links the cities of Hong Kong, Macau, Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen and Zhaoqing into an increasingly integrated economic and business hub. One side-effect of this initiative is a return to relevance for Hong Kong, once the Asia-Pacific PR hub, but relegated in recent years to a financial services hotspot. Meanwhile, the rise of the Greater Bay Area is also offering tangible opportunities in the shape of more Chinese brands with global ambitions. Where once, every agency aimed to have Huawei and Alibaba on its books, those names are now increasingly supplemented by the likes of Tencent, Oppo, Vivo and others.
(3) Unicorns offer hope
In tandem with the rise of the Greater Bay Area, Asia's startup economy is thriving — in Greater China, Southeast Asia, North Asia and India. Agencies, perhaps unsurprisingly, are becoming smarter about how they tap into this growth, with many setting up dedicated practices designed to provide specific services for early-stage companies. Naturally, there are risks, but smarter PR firms are focusing on startups that are already beyond Series B financing, or (even more attractively) are unicorns with valuations of $1bn or higher. I can recall only too well the parade of PR agencies that stopped working with startups in Western markets, thanks to a mixture of unrealistic expectations and unsustainable profit margins. The hope is that a measure of caution will help Asian agencies navigate this growth in better shape.
(4) Healthcare's emergence
The healthcare sector should be fertile territory for public relations firms in the Asia-Pacific region. The issues that help healthcare specialists flourish in other markets — a regulated environment that precludes much advertising, the benefits of an educated and informed patient base, a myriad of issues from safety to pricing — are amplified in several Asian markets by the opportunities presented by an expanding middle class and ageing populations. And yet, the market is home to relatively few sophisticated healthcare specialists, whether in terms of standalone agencies or network practices. In recent years, though, that has begun to change — and this year's meetings revealed considerably more growth from the healthcare sector than we have ever seen in the region. Staffing still presents a challenge, but economic trends suggest that healthcare may finally turn into a sustainable growth driver for agencies of all sizes.
(5) The rise of the midsize (and boutiques)
Bigger agencies have always done better in Asian markets, often aided by the conservative client preference for a household name that is deemed less risky than a newer player. But all that has changed rapidly in recent years as a slew of boutique and midsize players have emerged — many led by big agency veterans. And, in keeping with our global analysis of the rise of the midsize, these firms offer differentiation based on something more than price — namely, a deep sector or practice focus, senior client counsel and the kind of agility that can still elude the bigger networks. At the same time, the advantages of scale have been eroded by the rise of technology and private equity funding. That seems particularly true of Southeast Asia, where firms such as AKA, IN.FOM, Mutant, PRecious, Redhill, Rice, Vero and W have emerged as impressive operations.