Tag Archives: PR

Hong Kong Agencies: Go Big or Go Small?

From a business perspective, Hong Kong sits in a unique spot in Asia. Traditionally where East meets West, Hong Kong continues to serve as an important regional hub for international companies working across Asia-Pacific . At the same time, Hong Kong itself is a wealthy, cosmopolitan city with ample opportunities for profitable local projects. Marketing agencies in Hong Kong increasingly face a choice: do we cater our offerings to local clients or do we try to build a more regional team?

As we shall see, it’s difficult to staff for both:

The Local Route

  • Lower budget, higher volume work stream focusing on local Hong Kong or limited regional responsibilities (e.g. Hong Kong + Greater China)
  • Higher volume allows for larger employee base, able to absorb work as it cycles in from projects or retainers
  • Clients less willing to pay for strategy, so focus turns to production
  • Agency functions more or less independently, without need of international resources (if the agency is a part of a global agency network)
  • New business can still flow from network hubs (e.g. New York, London) if a local partner is required in Hong Kong
  • Cantonese becomes the dominant office language, which is often helpful for office morale if staff aren’t as comfortable with English
  • Lower budgets and bigger teams typically mean smaller salaries, which is unattractive to Hong Kong’s more ambitious talent
  • Production-oriented service offerings hurt the agency’s ability to build distinctiveness in the market; this can lead to commoditization of services
  • Health of business depends almost entirely on Hong Kong’s economic climate
  • Due to volume, loss of a single account has less of an impact on the overall health of the agency

The Regional Route

  • Higher budget, lower volume work stream focusing on regional or international responsibilities
  • Lower volume typically leads to a lean team structure with higher overall seniority
  • Focus on strategy rather than production
  • Agency usually functions as a hub for global offerings, which means it can receive new business from other global hubs and also distribute production responsibilities to smaller regional offices
  • English becomes office language, which obviously satisfies expat staff, but makes positions less attractive to a significant portion of local talent
  • Big budgets mean higher salaries and potentially the best talent
  • Regional scope allows for flexibility and breadth of offerings; if one market (e.g. Southeast Asia) is performing better than another (e.g. Greater China), business can shift accordingly
  • Loss of a large account can be painful from a revenue perspective

The Right Way Forward?

Put simply, the only wrong way forward is taking both routes at the same time. Given the team compositions local and regional clients require, it is difficult to take on both types of clients at the same time without risking idle or unsatisfied staff. There is merit to both routes, so long as the agencies fully lean into their proposed strategy. Having it “both ways” is a sure path to reducing an agency’s overall effectiveness.

So why not have separate teams? One for local business and one for regional? Here we must think from the staff’s perspective. If you have a regional team that is securing bigger budgets, how is the local team supposed to react? While its own business may very well be important, there is a psychological factor at play when some parts of the agency are working on large accounts, while others are cycling through lower paying accounts. Generally speaking, it is better for any organization to be pursuing the same types of work, and not have a split between high/low volume/budget work.

In order for an agency to reach its potential, it must clearly establish its strategy, and ensure that all relevant internal stakeholders actually follow it. It’s too easy for upper management to state its regional business strategy only to have a business development executive target local opportunities–thus creating a gap between how management envisions staffing the company and where the revenue is actually coming from.

For more information on how to approach strategy (not empty mission statements), I highly recommend reading at least the first half of Good Strategy, Bad Strategy by Richard Rumelt. It serves as a good overview of why good strategy is effective and why bad strategy isn’t worth the paper it’s written on.

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Can PR agencies replace ad agencies?

The marketing space is unsettled these days, and it’s no wonder why. The boundaries between traditionally separate entities are functionally indistinguishable as far as consumers are concerned. The average consumer doesn’t care where a piece of content comes from so long as it’s interesting.

This helps explain the rationale behind why so many traditional PR agencies are increasingly offering advertising-type services; one key way to capture the attention of your audience is to create something relevant, rather than having to wait for a client to do something interesting enough to warrant attention. Why wait for an opportunity when you can create one?

The rationale is sound enough, but this inevitably leads to PR agencies competing in the same space as advertisers—a group that has been in the business of content development from the very beginning. Can PR agencies replace ad agencies?

No, they cannot.

Why PR agencies shouldn’t play in advertising

The biggest challenge facing PR agencies is a structural one. PR agencies simply aren’t organized to produce excellent creative work.

PR agencies swell with ranks of junior account executives who retain duties similar to one another including media relations, report compilation, media strategy, etc. A key feature of successful advertisers is the delegation of responsibilities to suit individual strengths. A PR account executive on the other hand must be a jack-of-all-trades; trouble arises when those “trades” continue to increase in number. Not only is the media landscape becoming more complex, requiring more attention and care, but the other non-core expectations placed on them also increase daily. With PR agencies making concerted efforts to act like ad agencies, does senior management expect their account executives to serve quadruple duty as project managers, account service, strategists and creatives?

PR Comic

The answer is obviously no. Even though you will often hear about the opportunities afforded to junior staff to push the envelope, no one honestly expects account executives to make good creatives.  The solution then is obvious: hire creatives separately.

Then you hit a wall. Where do you place these creatives? If you hire a junior creative, that creative is likely to become a designer—not a professional responsible for idea creation. Account executives will inevitably come to the designer with task briefs, not strategy briefs. And many of those task briefs will be to “freshen up this PowerPoint presentation.” This is not an ideal environment for creating award-winning campaigns rivaling those of shops with existing structures in place to foster creativity.

But what if you hire a senior creative? Do you plan on giving that creative a team? The business realities of most PR agencies would suggest no, you wouldn’t. Hiring a senior creative is expensive. Giving that creative a small team is even more expensive. Finally, refocusing your business development on securing paid-media projects is another major investment. This is to say nothing of the investment required on project delivery and strategy—both key components in securing your bottom line and rationalizing your activities to a numbers-conscious CMO. Doing all this at once would be a risk for any business.

Then again, if you don’t do this all at once, you end up with a creative team catering to the needs of the big money makers for the agency: earned media. Almost immediately, a strategic hire for any agency must prove his or her worth. If he or she isn’t given the resources to pursue the agency’s publicly-stated strategic goals, then the senior creative must target lower-end activities in support of the agency’s bread-and-butter operations. Suddenly the agency’s Facebook posts look a lot prettier, but it will still struggle to develop creative targeting the paid space—an area with which they are generally unfamiliar.

Similar problems face strategists in senior roles within PR agencies. They can propose effective solutions to their clients’ business problems, but their own agency may very well lack the capacity to launch integrated marketing campaigns. Theoretically, these agencies could start launching them (we all have to start somewhere), but without a nice case study to back up the proposal, PR agencies will find themselves outclassed by more experienced ad agencies.

Then there’s pricing. The advertising world is already cost competitive for quality work. A PR agency might risk trying to win a pitch by offering a 10% discount on the work in order to build experience, but what are the odds that their first effort will be successful enough to develop future business? It’s a precarious situation for the PR agency’s MD who must meet certain revenue and margin figures each year.

Another over-looked but important reason why PR doesn’t adequately match against advertising is culture. PR is an industry which hinges on real time events. Crises, media updates, Twitter feeds and other sources of fast moving data mean that there’s little time in PR to sit down and strategize and even less time to sit down and brainstorm with colleagues or subject experts–especially if clients aren’t paying for it.

The best ad agencies work in a different way, because in truth, there’s no such thing as an advertising emergency. An ad that goes out a week from now will likely have the same impact as an ad that goes out two weeks from now. That’s not to suggest that ad agencies are all relaxed environments; they’re not, but at least there’s more emphasis on strategically sound delivery as opposed to immediate delivery, which is an absolute requirement in the earned media world.

Where the real value of PR lies

Competitive advantage is a wonderful thing. I wouldn’t hire a plumber to fix my car even though plumbers and mechanics can both be described as contractors. In the same way, I wouldn’t ask an SEO expert to conduct media relations for me.

The desire to compete with PR agencies is understandable, but what exactly do PR agencies bring to the table that is new? Ad agencies have always been very good at telling interesting stories. As much as PR people love to talk about storytelling, the old guard excels at building brands from the ground up. If ad agencies make the noise, PR agencies can amplify it, serving as an ROI multiplier.

But continuing to hammer away at media relations is a sure path to ensuring that your service offering is commoditized (though I’d argue that may already be the case). What can PR agencies do to expand their revenue (and keep the holding company happy)?

  • Measurement. PR value has always been a nebulous topic. Front page coverage on Time magazine is obviously valuable, but what’s the dollar value? How can a CMO, CFO or CEO justify the expensive of media relations when they don’t have a clearer recognition of ROI? A sure way to increase revenue for PR is to convincingly demonstrate the real value of positive PR coverage, i.e. how such coverage impacts sales. This is where analytics comes in. Without them, it’s far easier to slash a PR budget than it is to slash a paid media budget for which analytics are bountiful.
  • Journalistic Content. If PR account executives know one thing, it’s journalism. By regularly scouring the media landscape, PR people are intimately familiar with the types of journalistic content that appeals to a large audience. If PR wants to expand into paid media, it ought to do so in areas it’s already familiar with, such as advertorials, not sponsored videos, banner ads or complex campaign activations requiring heavy creative support.
  • Real Time Response. Encompassing customer service and crisis communications, real time response is definitely a competitive advantage for PR agencies. Given that pretty much all PR executives are plugged into real time data streams, it makes sense that PR own that particular space. Leave brand building to the ad agencies which have spent over a century crafting enduring, heritage brands. But when there’s a crisis? I’m hiring a PR agency.
  • Specialization. Some industries get more value out of PR than others. Finance in particular is an ever-important sector for the PR agency because the key stakeholders in finance read news. For them, a press release is far more relevant than an equivalent release targeting buyers of shampoo. Tech, finance and several other industries require specialists to effectively reach their target audiences. Rather than trying to be a panacea for all marketing problems, PR should focus on areas where they have the greatest effect on the customer journey.

The areas above represent PR agencies’ competitive strengths–areas where traditional advertising agencies couldn’t possibly hope to compete in a meaningful way. Edelman itself has come out in support of the idea of strengthening PR’s core proficiencies. To quote president and CEO of Edelman, Richard Edelman:

We are playing a broader role, but we have to focus in our area of comparable advantage. Clients want specialist expertise and the opportunity to choose best in class partners. We are happy to work with advertising agencies, CRM and media buying firms for the betterment of clients.

At the end of the day, no one goes to ad agencies for media relations. Why would I go to a PR agency for an ad?

Survey says Thailand happier in wake of coup

From Wall Street Journal:

Happiness Returning To Thailand, Says Survey

 

So what?

It’s not often that a military junta makes such a public show of boosting its PR capabilities, but that’s just what happened in Thailand in recent months. Now there’s a bigger question. Do people feel more safe and secure due to military-imposed law and order, or was the Thai Army’s Happiness campaign responsible? (Probably both)

What to look for:

  • Brands don’t hold a monopoly on projecting an image. Whereas brands try to sell goods or services, governments must sell their legitimacy to their populations
  • In other words, brands take note. If successful, these military activities may translate into something of a handbook for corporate crisis communications–a strange paradox given the not-so-stellar track record of military juntas
  • Expect continued events and activities within Thailand to reflect a “kinder, gentler” military. Also expect major PR pushes with both domestic media (to appeal to the local populace) and major international wires and publications (to bring confidence to foreign investors)
  • More scantily clad women?