PR and Communications in Central & Eastern Europe: What Does the Post-Covid-19 Future Hold for Agencies?

Overwhelmingly optimistic! That was the tone about the growth of public relations according to the latest International Communications Consultancy Organisation (ICCO) World PR Report 2020 published in November 2019.

In less than four months from its publication date, the world was headed for the most severe economic crisis since the Great Depression of the 1930. PR and Communications and the wider Media Industry, was one of the most seriously affected due to the massive cuts in companies’ marketing and communications budgets.

Eastern European PR & communications agencies were not spared the blow either, with two thirds of the agencies surveyed by United Partners expecting a reduction in their operations and revenues in the range of 10-50%.

While our survey results have important implications for the industry’s future, there are also some considerations related to the overall business environment and the chances for companies of various industries to weather the crisis that are worth looking into.

Understandably, the most sought-after services by clients in the region amid Covid-19 are Corporate and Crisis Communications, and the least likely to be bought are Consumer/Brand Marketing, our research shows.

Comms professionals should think twice before cutting media budgets during a recession. Evidence from past downturns proves those companies that did not lower their investment generated higher growth than the ones that reduced their budgets and went dark.

Analysis by Kantar Millward Brand shows that while going dark can work in the short term as it has little impact on brand or business metrics, longer periods of radio silence are likely to weaken brand health and brand market share in the longer term.

Maintaining ad spend during recession is best to ensure long-term brand growth. Advertising guru Stephen King argued that it pays to go against conventional wisdom during a recession. He researched a number of scenarios where advertisers either increased, maintained or reduced their advertising budgets. In all cases, there was a decline in short-term ROI.

The most important conclusion, however, was the effect of communications on share of market (SOM), which has a greater impact on medium to long-term results. Advertisers that decreased investment saw their SOM decline by 0.2 %. Those that maintained or increased spend saw their SOM increase by 0.5% points as going against the standard approach of budget cutting placed them in a stronger position when the markets recovered.

What is more, it can take up to five years to recover from budget-cutting during a recession. The long-term effects of marketing and comms play a huge role in successfully riding out a recession. The Millward Brown research has shown that brands which are silent for periods of six months or more will see a 5% – 10% decline in equity measures.

A reduced number of consumers are exposed to the companies’ communications and, as such, claimed brand usage and brand image are eroded. In terms of financial performance, it took between 3-5 years for some companies that went dark for a year or halved investment to recover to pre-recession levels.

The Road Ahead

According to the ICCO World PR Report 2020, the areas which Eastern European PR & comms agencies expect to see growing the most over the next five years are:

  1. Corporate reputation
  2. Strategic consulting
  3. Influencer marketing

Furthermore, they anticipate this growth to come from the following industry sectors:

  1. IT and technology
  2. Financial and professional services
  3. Healthcare

The good news for communications agencies is that in the context of the Covid-19 pandemic and thereafter, these areas of expertise have become even more relevant and vital to long-term business success.

Public relations and communications firms in the region are well positioned to take market share from consultancies and advertising agencies as the coronavirus pandemic changes consumer habits, leading marketers to slash their budgets.

As Richard Edelman, CEO of Edelman, told Business Insider, “I think it’s time for PR to take share from advertising. Advertisers don’t want to be next to difficult news. We can actually be part of the news cycle with stories of companies and brands stepping up, of companies in some way changing their supply chains.”

The services of PR & comms agencies are especially relevant now because they can help clients deal with crises and uncertainty while painting their brands in a favourable light when people may not be receptive to traditional advertising.

Likewise, the influx of crisis assignments has opened a door for PR agencies to compete with consultancies by positioning themselves as faster to respond in rapidly changing news cycles.

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