Polish companies slow to pick up on value of public relations
"Unfortunately, Polish companies are rather slow" to hire PR agencies, said Ryszard Solski, general manager at Sigma International. Of Sigma's 17 customers, three are Polish firms. Domestic companies so far have been unwilling to spend the money for the long-term image building that public relations can bring, executives said, preferring instead to use the cash for the short-term effects of advertising. The only exception to that, they said, has been Warsaw Stock Exchange (WSE) listed companies, which have begun to realize that they need to communicate information to the public quickly and effectively.
"There is very little understanding as to what public relations is," said Piotr Czarnowski, president of First Public Relations. He said Polish companies that have existing relationships with public relations agencies usually have been influenced by some kind of foreign partner or investor.
Public relations firms need to change that opinion to grow further in this market. Many of the large foreign clients are already taken. Sigma International handles Compaq, Microsoft and Lufthansa, while third-ranked The Rowland Co. has Procter & Gamble and The Wrigley Co. At the same time, the number of agencies has expanded rapidly in recent years. Roughly 11 agencies operated five years ago, said Piotr Czarnowski, president of First Public Relations, but more than 250 exist today.
The chaos in public relations makes it difficult for anybody to give an estimate as to how large the sector is. But many of the top-five firms in the WBJ's list saw their gross fee income double from 1997 to 1998. The exception was No. 1 ranked Sigma International, which reported a slight 2.5% increase to zl. 12 million ($3.43 million) estimated for 1998.
To supplement their income, many public relations firms have branched out into advertising work and media buying. Czarnowski, however, said that these alliances represent a conflict of interest. Ultimately, he said, those jobs will pull the firms away from developing a long-term approach to building a company's image.
"I would say it is a majority" of PR agencies that are linked to advertising agencies or media buying houses, Czarnowski said. "From the point of view of pure public relations, it should not be accepted."
The line between advertising and public relations is not the only one blurred, however. Czarnowski said that the wall between journalism and public relations is also weak.
He said he recently received a mailed solicitation from a company that claimed to be a public relations agency. The company also offered events planning, lobbying, sponsoring and printing leaflets, newsletters and periodicals. But the outstanding feature, he said, was that journalists ran the company.
Both Czarnowski and Solski said that this is a grave ethical violation in both journalism and public relations - one that creates conflicts of interest. But Poland still has journalists working in both fields, they said, largely because the industries are still relatively immature.
"A professional PR person should not write articles," Solski said. "Unfortunately it is still not clear."
One of the key problems public relations firms face in developing a base of Polish clients is that, if those customers use the service, they only do it on a project basis, executives said. While many foreign companies have a public relations agency on retainer, the Polish companies use them only for a one-time event, such as during a public offering. Sometimes they turn to an PR agency only if they have become ensnared in a media crisis.
"When something goes wrong they think the PR agency will solve it," said Anna Krajewska, a director of public relations firm NBS.
Another difficulty the industry experiences is the relatively low amount of capital and exposure a Polish-owned agency has in comparison with one backed by a Western company. Starting a public relations agency typically takes $30,000-$100,000.
Pawel Bernat, creative and media director at United Public Relations, said that at the moment standards at Polish agencies are "a little bit lower" than that of Western agencies. Inexperience in presenting material and a dearth of technical equipment are the primary reasons for this, he said. But he said he expects that quality gap to close within a year.
Sigma's Solski said he believes the outlook for the industry is good, though, despite the mid-term difficulties. One area of opportunity is investor relations, where an increasing number of publicly traded companies will mean that more firms need help disseminating information to investors. The agencies could benefit from working with companies to create internal newsletters. He also sees future growth in the fast-growing pharmaceutical, information technology and banking sectors.
But one of the newest and potentially most lucrative clients will be the pension funds and insurance companies, created under the country's pension reform, Bernat said. "You can connect this move with changes in the Polish financial system."
Another trend likely to pick up in the next couple of years is PR agencies specializing in certain fields, focusing only on finance or information technology. Currently, approximately one-third of all PR agencies in Poland are specialized, such as NBS which focuses on financial services.
"You can't do everything" well, NBS's Krajewska said. "If other public relations firms don't do this (already), then they are starting to think about it."
"There is very little understanding as to what public relations is," said Piotr Czarnowski, president of First Public Relations. He said Polish companies that have existing relationships with public relations agencies usually have been influenced by some kind of foreign partner or investor.
Public relations firms need to change that opinion to grow further in this market. Many of the large foreign clients are already taken. Sigma International handles Compaq, Microsoft and Lufthansa, while third-ranked The Rowland Co. has Procter & Gamble and The Wrigley Co. At the same time, the number of agencies has expanded rapidly in recent years. Roughly 11 agencies operated five years ago, said Piotr Czarnowski, president of First Public Relations, but more than 250 exist today.
The chaos in public relations makes it difficult for anybody to give an estimate as to how large the sector is. But many of the top-five firms in the WBJ's list saw their gross fee income double from 1997 to 1998. The exception was No. 1 ranked Sigma International, which reported a slight 2.5% increase to zl. 12 million ($3.43 million) estimated for 1998.
To supplement their income, many public relations firms have branched out into advertising work and media buying. Czarnowski, however, said that these alliances represent a conflict of interest. Ultimately, he said, those jobs will pull the firms away from developing a long-term approach to building a company's image.
"I would say it is a majority" of PR agencies that are linked to advertising agencies or media buying houses, Czarnowski said. "From the point of view of pure public relations, it should not be accepted."
The line between advertising and public relations is not the only one blurred, however. Czarnowski said that the wall between journalism and public relations is also weak.
He said he recently received a mailed solicitation from a company that claimed to be a public relations agency. The company also offered events planning, lobbying, sponsoring and printing leaflets, newsletters and periodicals. But the outstanding feature, he said, was that journalists ran the company.
Both Czarnowski and Solski said that this is a grave ethical violation in both journalism and public relations - one that creates conflicts of interest. But Poland still has journalists working in both fields, they said, largely because the industries are still relatively immature.
"A professional PR person should not write articles," Solski said. "Unfortunately it is still not clear."
One of the key problems public relations firms face in developing a base of Polish clients is that, if those customers use the service, they only do it on a project basis, executives said. While many foreign companies have a public relations agency on retainer, the Polish companies use them only for a one-time event, such as during a public offering. Sometimes they turn to an PR agency only if they have become ensnared in a media crisis.
"When something goes wrong they think the PR agency will solve it," said Anna Krajewska, a director of public relations firm NBS.
Another difficulty the industry experiences is the relatively low amount of capital and exposure a Polish-owned agency has in comparison with one backed by a Western company. Starting a public relations agency typically takes $30,000-$100,000.
Pawel Bernat, creative and media director at United Public Relations, said that at the moment standards at Polish agencies are "a little bit lower" than that of Western agencies. Inexperience in presenting material and a dearth of technical equipment are the primary reasons for this, he said. But he said he expects that quality gap to close within a year.
Sigma's Solski said he believes the outlook for the industry is good, though, despite the mid-term difficulties. One area of opportunity is investor relations, where an increasing number of publicly traded companies will mean that more firms need help disseminating information to investors. The agencies could benefit from working with companies to create internal newsletters. He also sees future growth in the fast-growing pharmaceutical, information technology and banking sectors.
But one of the newest and potentially most lucrative clients will be the pension funds and insurance companies, created under the country's pension reform, Bernat said. "You can connect this move with changes in the Polish financial system."
Another trend likely to pick up in the next couple of years is PR agencies specializing in certain fields, focusing only on finance or information technology. Currently, approximately one-third of all PR agencies in Poland are specialized, such as NBS which focuses on financial services.
"You can't do everything" well, NBS's Krajewska said. "If other public relations firms don't do this (already), then they are starting to think about it."
