Quo Vadis Turkish PR?13 years, 9 months ago
The Turkish PR market continues to grow but competition among agencies has put pressure on margins and there are concerns that many local clients do not fully grasp the benefits the discipline can deliver. By A. Cem Ýlhan.
What are the developmental trends in the Turkish PR sector? Coming up with a clear answer to this question is both easy and hard.
The easier part of the answer is connected to growth. After a severe economic crisis in 2001, triggered by the collapse of the financial sector, the Turkish economy has grown by 7.1% on average between 2002-2006, performing well over the world average. Today, the Turkish economy is one of the top 20 economies in the world with a GDP of approximately USD 400 billion.
A Chaotic Growth Trend
After the 2001 crisis, Turkish manufacturing and the services industries, which set high growth targets for themselves on the basis of productivity and higher competitiveness, invested heavily in communications, particularly in advertising. Naturally, the PR sector, in turn, has shown continuous growth at least in terms of revenues for the last four years.
Yet, it is highly questionable how healthy this growth has been. It is hard to deny that the firms in the industry have grown or increased their profitability.
In fact, after the crisis, with large-scale layoffs in the Turkish media, a considerable number of veteran journalists entered the PR sector and claimed a share of the pie as they established their own companies. Consequently, competition in the industry has largely focused on price. In short, while the total revenues of the industry increased, profitability declined considerably due to the proliferation of new firms. This in turn hindered the emergence of firms of scales that could pioneer further institutionalization of the industry.
The harder part of the answer concerns where the Turkish PR sector is heading from a professional perspective. The Communication Industry Perception Study commissioned by the Turkish Public Relations Association and the Communications Consultancy Companies Association on October 19, 2006 provides us with important clues on the issue.
The Turkish PR Market
The Turkish business environment has a structure dominated by large, mainly family-owned conglomerates. On the other hand over 90 percent of the active firms are Small and Medium Sized Enterprises. Two important and new developments that changed this picture are the major privatizations and the inflow of foreign direct investment on an unprecedented scale. Finally, although there is a very vibrant Stock Exchange in Istanbul, going public is not yet a widespread practice among Turkish companies.
In this market, the driving force of the Turkish PR industry’s customer portfolio consists of Istanbul-based conglomerates and their subsidiaries, global companies, services and retail companies aimed at niche markets. Outstanding sectors are FMCG, consumer durables, automotive, construction, finance and information technologies.
A notable fact of the fast growth, post-2001 economic crisis period has been the emergence of PR services as a sine qua non for large companies. Parallel to this development was the new found enthusiasm of SMEs that produce goods and services for domestic consumption for PR services. The cutthroat pricing policies of the new PR companies that filled the industry also contributed to this expansion of demand for PR services.
What Does The Industry Think?
Which services does the PR sector offer in the face of these trends?
The results of the TUHÐD-ÐDA poll with 65 companies are pretty objective: 44% of PR agencies (that is almost half of the industry) have annual revenues of over USD 500,000. Consultancy services are very limited. Only 25% of the agencies receive consultancy fees that exceed USD 500,000. A great majority (57%) serves 1 to 10 companies; employs 16 people on average.
Among the communications services they provide, media relations, corporate social responsibility efforts, and product and brand public relations take the top three slots. Likewise, the services for which they believe there is an increase in demand are media relations (94%), event management (74%), corporate social responsibility efforts (69%) and product and brand public relations (66%). In this broad picture, realistically speaking, the ratio of companies whose communications consultancy fees exceed USD 1 million is just about 14%.
In short, the picture we have of the industry is as follows: The Turkish PR industry makes most of its income through the operational PR services it provides to its customers.
In terms of professional development, this picture has a very clear meaning. In Turkey, just as in most of the rest of the world despite great efforts by pioneers of the profession to alter the situation, PR is yet to be acknowledged as a communications device. It is rather recognized as a service that concentrates on the promotion of companies and products. The answers given by the representatives of the sector in the above-mentioned opinion poll also confirms this.
For example, only 64% of respondents give a positive answer to the question whether they believe top management in PR firms could see the relation between communication and business results. The ratio of those who think that our clients make efficient use of all the services we provide is merely 27.7%.
The representatives of the PR industry have a rather gloomy opinion of the managers they serve. Only 42% believe that their clients appreciate the importance of communications strategies to obtain business results. The three services where they expect to see a significant increase in demand are media relations; event management and corporate social responsibility.
Agreeing with the PR professionals’ assessment, the clients cite media relations and event management as their top two priorities; they place corporate internal communications and product and brand communication to the third and fourth ranks, respectively.
It is noteworthy that for a great majority of the firms receiving PR services, more abstract tasks such as reputation management, subject and crisis management do not even appear on the charts.
As for expectations, although customers emphasize the importance of reputation management, their projections for their future demands on extra-advertising communications activities highlight five areas:
1. Online communications
2. Corporate social responsibility
4. Sponsorship management
5. Direct Marketing
Yet most corporate CEOs expect their communications executives to have heightened competence on issues such as crisis management, to follow the agenda more closely, and to be better informed on economic and political matters. The communications executives’ top expectations from the PR professionals are operational issues such as adherence to the time schedule/delivering on promises, followed by creativity, creation of solutions and strategic thinking. Last but not least they want the quality of the services to be on par with their price.
Although certain contradictions are apparent, the picture on the customer front actually complements the assessments of the professionals of the PR sector. The PR industry undergoes the convulsions of institutionalization just as it tries to offer higher value added services to its clients. While struggling in the search to provide itself and its customers with value-added services on the one hand, the Turkish PR sector goes through the pains of institutionalization on the other.
In this sense, two important questions come forth that might have a defining impact on the future of the Turkish PR sector.
First is the international PR networks’ approach to the Turkish market. There is a rather curious situation here. The list of the top ten firms in the Turkish advertising industry is dominated by international companies. Multinationals are lining up to invest in Turkey. Yet in the PR industry, notwithstanding occasional memberships in networks, there is almost no foreign capital investment.
Second, and more importantly, is the direction chosen by the Turkish PR industry as it develops its growth channels in a buzzing economy and learns to take its customers expectations into account. Here, the most important parameter is the appropriateness of the service provided to the fee paid.
A. Cem Ilhan is General Manager of Tribeca Communication Consultancy and one of its founding partners.mail the author
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