Crisis as PR firms fight for staff and clients

It is an industry whose services are not widely understood, but are sought during crises. Now, the communication and marketing business is in a quagmire of its own.

Cutthroat competition for client retention has triggered a talent war as firms target their competitors’ top brains.

The push by multinational and local companies that are going regional to demand a uniform communication and marketing strategy has also put the local industry under pressure to take the same road, putting a strain on their resources.

Available data shows that registered public relations firms have doubled to 54 over the past year.

Raiding rivals’ key staff

With growth out of sync with skilled workforce, companies have resorted to raiding their rivals’ key staff, threatening to push some out of business and keeping their human resource departments perpetually on the streets.

The talent hunt has seen some companies lose entire departments, wiping out their ability to compete for new business and effectively locking them out of the market. The fight has forced a number of firms to replace entire departments, pushing them back to the starting line, with years of talent development going down the drain. 

Although players acknowledge that high mobility of talent in the marketing and communication business is an industry practice, they admit that the past six months have exceeded acceptable limits of staff turnover.

“Talent remains the biggest challenge to the growth of our industry. The requisite skills demand is around more strategic thinking to align with the objectives of businesses. The pool of those skills set in this market is still thin and far between. Therefore, with a dearth of that calibre, attracting a core team of strategists remains an industry-wide challenge,” Mr Okoth Obado, Ogilvy’s public relations managing director said.

Gina Din Corporate Communications (GDCC), a firm that represents the face of Kenya’s homegrown companies, is one of the major casualties in the talent war, having lost more than 30 employees to rival firms and private business in the past two years.

Bring in fresh minds

“Although we have seen some of our staff move to other agencies, this is natural in a growing sector and it means that we can bring more fresh minds into our business and into the industry,” the firm’s managing director, Ms Gina Din Kariuki, told Smart Company.

The firm officially severed its decade-long relationship with Safaricom on Friday, weeks after it lost the Kenya Commercial Bank (KCB) account to rival Ogilvy PR. However, it landed a deal with Telkom Kenya, allowing it to retain a foothold in the telecoms market, one of the top spenders in public relations and advertising.

“Clients are becoming increasingly demanding and keen on results. Companies without a regional presence and sufficient talent are finding it difficult to hold on to such clients, especially at this time when they are expanding into the region,” a source who recently left Gina Din to join a rival firm said.

“Terms of employment and pay are the key factors behind the flight,” said the source, who requested anonymity.

Gina Din Corporate Communications’ predicament is shared by Young and Rubicam Africa, which runs both media buying and public relations arms, and a host of other players in the sector.

The firm, the third largest by market share in the agency business, lost two of its most lucrative accounts — yuMobile and Cooperative Bank — and with it almost the entire creative team that handled the accounts.

This is threatening to stop its quest to topple the big boys in the industry, having managed to more than double its market share to nine per cent in two years from four per cent, according to data from research firm Ipsos-Synovate. 

A third of workforce

By January, the firm had lost about 20 of its staff, which makes up almost a third of its entire workforce. It has since been hiring new employees.

Scangroup, the largest marketing communication agency in the country, has also not been spared. It lost the Kenya Power account — one of the biggest advertisement spenders — to one of its former employees, who decided to set up their own firm.

A former BluePrint general manager left the firm to start his own outfit, taking with him some accounts. Blueprint PR is one of the firms under the Ogilvy brand in which Scangroup recently brought a majority stake.

Ogilvy recently won the Tullow Oil account, a significant addition to its portfolio given its recent announcement of striking oil in the country. It also won KCB and Tatu City from Gina Din and Africa Practice respectively.

It has also lost Telkom Kenya to Gina Din, but is eyeing Safaricom, which pays a Sh5.8 million retainer on average every month.

At the centre of the battle is the growing PR and advertising pie driven by improving economic conditions in the country that have seen the entry of multinational companies, creating new business. 
Better economic conditions have also seen firms increase their advertising and communication budget.  

“The great thing is that the PR pie is growing too, with more and more companies seeing the advantage of having a strategic communications agency to partner with — so there is a place for all of us to succeed,” said Ms Kariuki.

Sources familiar with industry operations say some companies are inflating their bills, claiming that they are paying their staff well.

However, they keep large proportions of the retainers and pay their employees miserly salaries. A retainer is money that companies pay public relations firms, usually on a monthly basis, to run their communication needs.

Competition has also seen firms woo potential clients with exciting pitches on what they offered, only for such firms to end up dissatisfied.

“The pitch process is a gruesome, detailed, thorough, and demanding exercise that clients use to choose consulting firms,” said Mr Obado.

Employee flight across the industry has raised fears of transfer of business secrets and strategy to competitors.

But according to Mr Obado, staff movement is not restricted to their industry. The sector has seen key players leave companies and establish their own and, in the process, move on with some clients and staff. Others have embarked on re-engineering their top level management in favour of lean executive teams to gain a stronger grip on their business.

For example, Scangroup recently scrapped the position of Ogilvy Kenya chief executive after the exit of Mr Koome Mwambia. Ogilvy Kenya is the holding company of four marketing brands — Ogilvy Advertising, Ogilvy PR, Mindshare Kenya, and BluePrint Marketing.

Both Scangroup and Mr Mwambia said there was no relationship between the restructuring at the firm and his exit. Mr Mwambia, one of the top 10 shareholders in Scangroup, is expected to start a new firm or buy out an existing outfit that will rival the parent company, having indicated on his website that he would rejoin the industry as a strategic investor.

“At the moment, I am still taking a break, but I will make any other intention known in due course,” Mr Mwambia said on the telephone. It is understood that he may be eyeing a political outfit to cash in on the spending on publicity that comes with elections.

These happenings are vindicated by the industry’s first benchmark study commissioned by the industry lobby group — Public Relations Society of Kenya (PRSK) — released last year.

According to the report, most PR firms are operating without qualified personnel. The survey shows that one out of every three employees working in PR consultancies has no industry-related qualifications.

The association says efforts to quantify the size and scope of the PR industry in Kenya have proved futile due to uncertainty of small consultancy organisations, especially stand-alone outfits.

No code of ethics

PRSK says lack of a code of ethics, regulations, and standards of PR practice in Kenya is partly to blame for the mess in the sector. “We also face a shortage of PR skilled staff locally and we need to ensure that we provide the right environment to enable our people with the necessary tools and training to be able to deliver the best breeds to the market,” said Ms Kariuki.

Changing communication methods are also causing a big headache to the PR business, given that customers now more than ever are demanding immediate feedback.

“The PR industry has always been dynamic and the challenges change accordingly. Today, we are seeing huge changes in how people communicate in terms of the channels that they are using, and we need to be constantly updating our skills to ensure that we have the ability to communicate effectively for our clients,” said Ms Kariuki.