‘Our business models have fundamentally changed’

US-headquartered Weber Shandwick held 40 per cent stake in public relations agency Corporate Voice in 1990s. In February this year, it bought out the stake of its Indian partner MAA Group Holdings. On his recent visit to Delhi, Campaign India engaged Tim Sutton, chairman, Weber Shandwick, Apac, to talk about the agency's growth and plans for the Indian market.
          
What is your agenda for India?

India has always been interesting for us but we weren’t ready to get in (to the country) five years ago for a whole number of reasons. We have a lot of folks elsewhere, we were one of the biggest agencies in China. We also felt that the Indian market was not quite ready for us then. It was an exciting and dynamic market but also an undeveloped market in some ways on a global PR scale. Over the past four to five years, it has been developing. One key priority is to bring new talent into the business.

Our world is being transformed globally by digital. The substantial portion of our revenues comes from digital. Our business models have fundamentally changed. We have moved from being just a PR agency to being an engagement agency directly. In India, that (digital) market is underdeveloped. There is some digital and some social media presence but not on the scale of what we know we can do. A huge priority for us is to digitalise this business and we want to become the premier digital business. That is going to take time and investment.

What is the share and growth of India and Asia Pacific? How is growth for Weber Shandwick globally?

On the one hand, it is by far the most dynamic part of the world. It is growing very rapidly. We have to put that into perspective: for most PR firms, revenues from Apac are around 15 per cent of the total. This is still a very underdeveloped market compared to North America, which contributes about 50 to 60 per cent of revenues and Europe about 30 per cent.

The business is very dynamic and it is becoming more mature (in Apac). It is growing substantially in size. Over the last five to seven years, we are beginning to see the emergence of a handful of players who are beginning to get substantial revenues but it remains fragmented. It remains a market where the talent is scarce, and that is a huge challenge for the industry. It remains a market where the clients still have to be convinced about the effect of the dollar spent on PR and what that means.

India is probably growing at about five to six per cent. China’s growth is much more substantial. But India has enormous potential, and this five per cent should be close to 20 to 25 per cent in the next two to three years.

Weber has had amazing growth over the last four to five years. We have been in a sweet spot in the market globally. We have the best network. We know from the published data of our competitors that we consistently outgrow them. A lot of it has to do with our positioning as an engagement agency. Growth... particularly in North America, we are pretty strong on share. Europe is not bad at all, UK is very strong and here in Asia, we are amongst the top three to four players.

How big an advantage are global alignments in PR today? What is your view on how it will be in future? How much of your clientele in India / APac is globally/ regionally aligned?

We work on the basis of 60 per cent local and 40 per cent international. It’s very important to have local business and understand local relationships. Roughly, we find that most successful offices, the most profitable ones, are the ones that have that kind of a mix. In India, we are not there yet. Here, 20 to 25 per cent would be global business and the remaining would be Indian business.

Do you see scope for further acquisitions by Weber Shandwick in the region and in India?

Yes, potentially. But organic growth is by far the most important thing to us.

How much of revenue comes from the traditional PR practice?

It’s hard to detangle traditional and new now. About three years ago, digital associated revenues were substantially less than five per cent. Today they are closer to 20 per cent. It is not just the growth of digital revenues per se, it’s what that represents. I think we have moved away from the idea of being an all-traditional business.

Social is seen by many as a PR expertise area. Are PR agencies better equipped to handle social media than pure play social/ digital-cum-social agencies?

Everyone has their own perspective on this. I guess what makes the PR firm uniquely placed to thrive in the social media, and we have kind of always been doing that before there was a Facebook or Twitter, is having conversations and telling stories. The idea of the term ‘engaging’: we were always getting involved in those kind of conversations. Whether directly or indirectly through the media, it’s a very natural environment for us. We are not the only people do to social media. There are all sorts of business that have a legitimate angle. We are kind of a natural at social media.

While the process of globalisation is on (mergers with, acquisitions by, networks), there are more independents springing up. What is your view – is it about the low entry barriers?

There are always independent businesses and will always be. You are quicker when you are younger. They are highly creative, they often bring something new to the market. These firms are very important to us. Local markets are very important. Their ability to seize a niche and react to it very quickly will be important. What they lack is scale.

What do we need? A brain. Ten to 15 years ago, clients would come to us because they thought that we had some specialist arcade knowledge of how media worked. Now, anyone and everyone is a journalist. Barriers to entry are not high dollar. That is why you will always have these businesses starting. We love these businesses and we have partnerships with these businesses because they can do things we can’t and vice versa.

What is your outlook for the rest of 2013 - globally and for India?

Globally, we are having a very good year. It has been surprisingly strong for us in North America and better than we thought in Europe. 2010 and 2011 were incredible and so was 2012. I thought that it is going to slow down for whole number of global reasons. I won’t say that it has been easy, but we are seeing very substantial growth rate in Asia. In most of the Asian markets, the business is close to 20 per cent (on growth). There has been a slowdown but not really that much. I see there is so much growth in this business irrespective of the economic cycle. I feel pretty good about it. If you ask me about next year, I will be very uncertain.

In Asia, the markets are growing hugely. But we also have to see the challenges. There are millions of people who still don’t have access to internet or phones. We have a long way to go.