Radical 'shakeout' set to hit region's PR industry

Although the number of PR firms operating in the region has rocketed in recent years, professionals from leading agencies are predicting that smaller outfits will face a tough time in the next 12 months, as clients increasingly demand sector-specific expertise.

"In 2007 without a doubt there will be a shakeout in the PR industry," said Sunil John, managing director of Asda'a Public Relations.

"I think that standards will come increasingly into play and if agencies don't come up to scratch, they will fall by the wayside."

John added that agencies without specialist practice departments were likely to feel the pinch most sharply.

"Clients are going to be asking what agencies bring to the table. Nobody needs jack of all trades any more we need specialists."

Oliver Stelling, executive vice president and COO of Bates PanGulf PR, said that small agencies were starting to come under pressure from clients in search of tailored services. "I believe that the shakeout is already happening," said Stelling.

"I hear things about smaller agencies, less than say 10 or 12 people in size, who are struggling. You need a certain critical mass to be able to specialise, which is a real difficulty for the smaller agencies.

"Specialisation is, however, something that clients expect, and while we all survive on media relations and very general PR, we need to build the capacity to offer specialised services, whether it's financial PR, technology, healthcare.

"To successfully build your business into the size where you can offer this is absolutely critical."

Jonathan Walsh, managing director of WPR, a Dubai-based agency that employs four people, said he did not believe smaller agencies were under pressure to specialise, but conceded that the market is set for consolidation.

"I think that for smaller agencies in the region to continue to prosper, as some clearly are, economies of scale are important and so I can see the possibility of some kind of consolidation happening with smaller agencies," said Walsh.

"But likewise I can see that larger agencies are under pressure to act and behave more like smaller ones and to create more of a boutique environment within their own networks."

Walsh said that to survive, it was essential for small agencies to be flexible in their approach to business.

"The key for us is to stay agile and flexible and to grow and develop without compromising quality and by staying focused on our relationships and results."

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