Talking with the image makers
After shrugging off the stagnation at the turn of the millennium, Poland's PR industry has begun reaping the benefits of accession to the EU, which has promoted the country as a potential marketplace for foreign investors. Future rewards look certain with a host of IPOs on the horizon creating companies requiring their services, an increasing awareness of the value of PR among smaller firms, and the huge inflow of EU cohesion funds that will filter through the country's economy. One PR company revealed to the WBJ that it is now looking to expand its services abroad - and there is speculation that in the near future Poland may be able to carve itself a role as a public relations hub for the CEE region. Three of the country's leading PR figures discussed their thoughts on recent developments.
Michał Pakulniewicz: What is the current state of the Polish PR market? How does it compare to past years?
Rafał Szymczak, director of Profile: There are two sources that we consider when talking about the PR market. One was the research carried out last year by the Institute on Market Economics in which companies were asked whether they plan to increase expenditure on PR. The other source is our internal audit in the Polish Public Relations Consultancies Association (ZFPR) - we ask the agencies about revenues and incomes. It must be noted that not all agencies are members of the association. Based on both sources we estimate that the PR market will grow approximately by 20, maybe even 30 percent, in 2005 in comparison to 2004.
Ryszard Solski, general manager of Sigma International (Poland): There are a few factors responsible for this growth. First, one is the maturity of the Polish PR market. Today not only foreign corporations and the largest Polish companies are hiring PR agencies, but more and more medium sized companies and even municipal governments are interested in PR services. Secondly, Poland's entrance to the EU has brought many foreign investors to Poland who need a good reputation, need to present a positive image of themselves. Finally, this market is 15 years old and there are more and more people who are PR experts and know what this job is about.
But it doesn't change the fact that the Polish PR market is very young compared to the largest western countries. How does our market compare to those markets?
RSz: Well, we can't even compare ourselves to the American market, which is by far the largest in the world and has the longest tradition of PR and free media. The same thing with the highly professional and highly specialized UK market. But in comparison to the Austrian, Portuguese, Italian and even Spanish markets we have nothing to be ashamed of. Those markets are larger in terms of revenue, but when we compare creativity or effectiveness the difference is not that big.
RS: However, there is a visible difference in terms of specialization. The Polish market is not very specialized - between 80 and 90 percent of our activities are still contacts with media. There are only a handful agencies specializing in investor relations and public affairs. In the western markets there are agencies that specialize only in brand PR, in corporate PR, and there are agencies that only deal with crisis management.
RSz: If you look at the largest PR agencies in Poland you'll see that within the agency there are specialized teams of professionals who deal with one thing only.
Paweł Trochimiuk, president of Partner of Promotion: In our agencies we deal with highly specialized financial PR. Although we deal with all types of PR, our people who work on public affairs, promoting IPOs or investor relations, are highly specialized economists with thorough knowledge of market mechanisms.
RS: There are some specialized PR agencies in Poland, but there's only a handful of them and they are smaller entities. As far as investor relations go, I don't think there are more than five consultancies dealing exclusively with investor relations.
The PR market in Poland is growing, Polish agencies are receiving international awards and Sigma International has recently been named Wincanton Trans European's (a British logistics giant) representative for CEE region. Is the industry planning to expand abroad?
RT: It's the first time I'm revealing these plans to the media - Partner of Promotion is planning a serious expansion to the neighboring countries in September. We plan to create our network in those countries.
RSz: I think that the Polish PR market has a chance to become what is called a 'hub' - a place which coordinates PR activities in the region. PR is rarely done in the way that a company has a network of agencies it works with, each agency on each market. It will rather have a regional coordinator whose sub-coordinators will manage specific markets of the region. Poland is a very attractive place to establish coordination centers because we are highly competent, we are culturally and linguistically close to the countries of the region.
RS: I have been to Prague recently and the Czechs are noticing that management centers are moving to Poland. It is the same with Hungary. They have been working with Wyncanton Trans European as well and now their work will be coordinated from Warsaw. We are getting offers from Russia and Turkey as well. Yes, we are planning further expansion abroad, but we will not be establishing our network. We are affiliated with Weber Shandwick, so we will not be competing against them, but we have many partners in the region and we have taken part in numerous projects with Weber Shandwick.
A very controversial area are the so-called 'advertorials' - very favorable articles in the editorial sections of newspapers, resulting from unhealthy contacts between PR experts and journalists. What are you as presidents of leading PR agencies, as well as members of the management board doing to combat this behavior?
RSz: First we have to find the boundary between what's acceptable and what's not. This line would be misinforming the public. Rarely it's articles for bribes, most often it's the journalist who would promise a favorable article for a sold advertisement in his paper or a representative of an agency who would promise an advert in return for an editorial article.
RS: These 'advertorials' are not something that occurs only on the Polish market. I've spoken with my colleagues from Italy and they said that it happens all the time in regional and local newspapers. But in Britain or the US such dealings are totally unacceptable.
RSz: We, in the PR Consultancies Association, can only monitor the companies which are our members. I also think that PR agencies aren't the entities that are most responsible for these 'advertorials' - it seems that advertising agencies and the media itself are more interested in them. We can only promise that if such accusations arise against any member of the association, the case will be thoroughly dealt with. If accusations turn out to be valid the agency can even be expelled.
RT: Unfortunately, when it comes to non-members we, as an association, can only issue an opinion that the agency hasn't abided by our ethics code.
RSz: What we have managed to achieve during the past year is that we made our colleagues from the media and from advertising agencies realize that this is not only a problem of PR agencies. All these circles have started to realize that 'advertorials' are destroying the media's credibility, which is hurting all concerned, and PR agencies in particular.
RS: When we are hiring a new employer at Sigma International, he is given the Ethics Code of ZFPR to become acquainted with and to accept it.
RT: Being a member of ZFPR is a sign that the agency is reliable and abides by certain ethic rules. According to my estimates, 60, maybe even 70 percent of clients ask whether we are a member of ZFPR when we enter a tender. The membership is a recommendation and a guarantee of good and fair services.
You have mentioned that while most of the clients of PR agencies are either foreign corporations or larger Polish companies, there is a growing number of medium-sized enterprises hiring PR agencies. Are SMEs the future of the market? What other segments are expected to grow in the near future?
RSz: Polish medium-sized companies are starting to be more and more interested in PR services. There's no doubt that there is large growth potential for us in this segment of the market. Another part of the market where growth will be very visible is the public administration especially after Poland's entrance to the EU and the structural funds coming from Brussels.
RT: Medium-sized companies' growing interest in PR is a chance for smaller PR agencies. They are more likely to be chosen by those enterprises, because larger agencies are often viewed as too expensive. So smaller companies will hire smaller PR agencies and work with the larger ones only on bigger, more complicated projects.
RS: Sigma International pulled out of working with public administration a few years ago. We have had bad experiences, many tenders organized by public administration were already decided before any decision was taken. For the time being we are staying away from this segment, but it doesn't mean it will always be that way. We are monitoring this segment especially after the entrance to the EU.
What are your expectations for the future of the market in Poland? What are the barriers that could hamper further growth?
RSz: Well, the biggest obstacle to further growth of the market would be a stagnation of the economy. Although not necessarily a fall, a few years ago stagnation hurt the PR market. PR is a reflection of the economic situation of the country and during a crisis most companies tend to cut expenditure on PR.
RS: Like I said in the beginning of this discussion the perspectives are very good. We entered the EU, structural funds are coming in to the country, industrial production is growing. Also more and more students are graduating from PR faculties, which means that even if they don't end up working in PR agencies, they will know the advantages of such communication and could become our clients. Another trend noticeable in the highly developed countries is that companies tend to move funds from advertising to PR, as people are tired of advertisements and they no longer seem to be effective.
Michał Pakulniewicz: What is the current state of the Polish PR market? How does it compare to past years?
Rafał Szymczak, director of Profile: There are two sources that we consider when talking about the PR market. One was the research carried out last year by the Institute on Market Economics in which companies were asked whether they plan to increase expenditure on PR. The other source is our internal audit in the Polish Public Relations Consultancies Association (ZFPR) - we ask the agencies about revenues and incomes. It must be noted that not all agencies are members of the association. Based on both sources we estimate that the PR market will grow approximately by 20, maybe even 30 percent, in 2005 in comparison to 2004.
Ryszard Solski, general manager of Sigma International (Poland): There are a few factors responsible for this growth. First, one is the maturity of the Polish PR market. Today not only foreign corporations and the largest Polish companies are hiring PR agencies, but more and more medium sized companies and even municipal governments are interested in PR services. Secondly, Poland's entrance to the EU has brought many foreign investors to Poland who need a good reputation, need to present a positive image of themselves. Finally, this market is 15 years old and there are more and more people who are PR experts and know what this job is about.
But it doesn't change the fact that the Polish PR market is very young compared to the largest western countries. How does our market compare to those markets?
RSz: Well, we can't even compare ourselves to the American market, which is by far the largest in the world and has the longest tradition of PR and free media. The same thing with the highly professional and highly specialized UK market. But in comparison to the Austrian, Portuguese, Italian and even Spanish markets we have nothing to be ashamed of. Those markets are larger in terms of revenue, but when we compare creativity or effectiveness the difference is not that big.
RS: However, there is a visible difference in terms of specialization. The Polish market is not very specialized - between 80 and 90 percent of our activities are still contacts with media. There are only a handful agencies specializing in investor relations and public affairs. In the western markets there are agencies that specialize only in brand PR, in corporate PR, and there are agencies that only deal with crisis management.
RSz: If you look at the largest PR agencies in Poland you'll see that within the agency there are specialized teams of professionals who deal with one thing only.
Paweł Trochimiuk, president of Partner of Promotion: In our agencies we deal with highly specialized financial PR. Although we deal with all types of PR, our people who work on public affairs, promoting IPOs or investor relations, are highly specialized economists with thorough knowledge of market mechanisms.
RS: There are some specialized PR agencies in Poland, but there's only a handful of them and they are smaller entities. As far as investor relations go, I don't think there are more than five consultancies dealing exclusively with investor relations.
The PR market in Poland is growing, Polish agencies are receiving international awards and Sigma International has recently been named Wincanton Trans European's (a British logistics giant) representative for CEE region. Is the industry planning to expand abroad?
RT: It's the first time I'm revealing these plans to the media - Partner of Promotion is planning a serious expansion to the neighboring countries in September. We plan to create our network in those countries.
RSz: I think that the Polish PR market has a chance to become what is called a 'hub' - a place which coordinates PR activities in the region. PR is rarely done in the way that a company has a network of agencies it works with, each agency on each market. It will rather have a regional coordinator whose sub-coordinators will manage specific markets of the region. Poland is a very attractive place to establish coordination centers because we are highly competent, we are culturally and linguistically close to the countries of the region.
RS: I have been to Prague recently and the Czechs are noticing that management centers are moving to Poland. It is the same with Hungary. They have been working with Wyncanton Trans European as well and now their work will be coordinated from Warsaw. We are getting offers from Russia and Turkey as well. Yes, we are planning further expansion abroad, but we will not be establishing our network. We are affiliated with Weber Shandwick, so we will not be competing against them, but we have many partners in the region and we have taken part in numerous projects with Weber Shandwick.
A very controversial area are the so-called 'advertorials' - very favorable articles in the editorial sections of newspapers, resulting from unhealthy contacts between PR experts and journalists. What are you as presidents of leading PR agencies, as well as members of the management board doing to combat this behavior?
RSz: First we have to find the boundary between what's acceptable and what's not. This line would be misinforming the public. Rarely it's articles for bribes, most often it's the journalist who would promise a favorable article for a sold advertisement in his paper or a representative of an agency who would promise an advert in return for an editorial article.
RS: These 'advertorials' are not something that occurs only on the Polish market. I've spoken with my colleagues from Italy and they said that it happens all the time in regional and local newspapers. But in Britain or the US such dealings are totally unacceptable.
RSz: We, in the PR Consultancies Association, can only monitor the companies which are our members. I also think that PR agencies aren't the entities that are most responsible for these 'advertorials' - it seems that advertising agencies and the media itself are more interested in them. We can only promise that if such accusations arise against any member of the association, the case will be thoroughly dealt with. If accusations turn out to be valid the agency can even be expelled.
RT: Unfortunately, when it comes to non-members we, as an association, can only issue an opinion that the agency hasn't abided by our ethics code.
RSz: What we have managed to achieve during the past year is that we made our colleagues from the media and from advertising agencies realize that this is not only a problem of PR agencies. All these circles have started to realize that 'advertorials' are destroying the media's credibility, which is hurting all concerned, and PR agencies in particular.
RS: When we are hiring a new employer at Sigma International, he is given the Ethics Code of ZFPR to become acquainted with and to accept it.
RT: Being a member of ZFPR is a sign that the agency is reliable and abides by certain ethic rules. According to my estimates, 60, maybe even 70 percent of clients ask whether we are a member of ZFPR when we enter a tender. The membership is a recommendation and a guarantee of good and fair services.
You have mentioned that while most of the clients of PR agencies are either foreign corporations or larger Polish companies, there is a growing number of medium-sized enterprises hiring PR agencies. Are SMEs the future of the market? What other segments are expected to grow in the near future?
RSz: Polish medium-sized companies are starting to be more and more interested in PR services. There's no doubt that there is large growth potential for us in this segment of the market. Another part of the market where growth will be very visible is the public administration especially after Poland's entrance to the EU and the structural funds coming from Brussels.
RT: Medium-sized companies' growing interest in PR is a chance for smaller PR agencies. They are more likely to be chosen by those enterprises, because larger agencies are often viewed as too expensive. So smaller companies will hire smaller PR agencies and work with the larger ones only on bigger, more complicated projects.
RS: Sigma International pulled out of working with public administration a few years ago. We have had bad experiences, many tenders organized by public administration were already decided before any decision was taken. For the time being we are staying away from this segment, but it doesn't mean it will always be that way. We are monitoring this segment especially after the entrance to the EU.
What are your expectations for the future of the market in Poland? What are the barriers that could hamper further growth?
RSz: Well, the biggest obstacle to further growth of the market would be a stagnation of the economy. Although not necessarily a fall, a few years ago stagnation hurt the PR market. PR is a reflection of the economic situation of the country and during a crisis most companies tend to cut expenditure on PR.
RS: Like I said in the beginning of this discussion the perspectives are very good. We entered the EU, structural funds are coming in to the country, industrial production is growing. Also more and more students are graduating from PR faculties, which means that even if they don't end up working in PR agencies, they will know the advantages of such communication and could become our clients. Another trend noticeable in the highly developed countries is that companies tend to move funds from advertising to PR, as people are tired of advertisements and they no longer seem to be effective.
