PR Market in Kazakhstan
Gulmira Arbabayeva, Deputy Editor-in-Chef, the Kazakhstan international business magazine
The notion public relations (PR) first emerged in Kazakhstan a decade or so ago. During this time our society’s attitude to PR has been constantly changing. This is because the purpose of PR was unclear. In fact, it was often confused with advertising. But later a simple definition of the aims of PR and advertising sufficed to explain the difference between the two concepts: for advertising, it is "to buy or not to buy" and for PR, "to love or not to love".
At the moment experts divide Kazakh PR into three types – business, political and social. The latter two, they believe, are less developed. The market for political PR, specialists argue, is seasonal because huge funds are spent during election campaigns or other political actions. There is, however, another opinion that Kazakh politicians increasingly employ Russian or Ukrainian spin doctors. As for the social PR, this activity, in the view of PR agencies, mainly depends on the NGO sector and the social responsibility of the business, and this responsibility is at quite a low level at the moment.
That is why the emphasis here is mainly on business PR. In the domestic market, this means in some way paying tribute to fashion, finding a competitive edge and building up a commercial reputation.
Public Relations (PR) is a system of communications that aims to ensure the placement of an entity (a company or an individual) in the information system and in particular sectors of the media.
Government Relations (GR) is a set of PR measures directed at state bodies.
Investor Relations (IR) is a set of PR measures directed at company shareholders and potential investors.
BTL (Below-the-Line) is a set of measures aimed at indirectly encouraging sales, merchandising, sampling, campaigns, loyalty programmes and so on.
It is quite hard to count the number of companies offering PR services, because advertising agencies, the editorial offices of some newspapers and even NGOs are all trying to get into the act now. However, we can single out seven major Kazakh agencies specialising in public relations. These are Renaissance, Promo Group Communications (PGC), PR-Management, Star Media & Ogilvy, East Point, Media Systems and Public Relations & Promotion Central Asia. All of them operate in Almaty.
Even though these agencies specialise in public relations, their PR services account for less than 50% of their activities.
For example, the Renaissance agency offers corporate PR services and reputation management. It also organises news conferences and media campaigns, as well as preparing and publishing promotional material. The main activities of PGC comprise consulting services; planning and implementing PR and advertising campaigns; organising presentations, exhibitions, seminars, round tables and news conferences; and monitoring the media. East Point also offers services of consulting, advertising and informational back-up for business projects. PR-Management offers informational and PR support and consulting services.
The Kazakh PR market is quite uneven and consumers of PR services are divided into several groups in terms of their level of "maturity". The first group includes companies that understand the importance of public relations and actively employ PR principles in their work. They, as a rule, have their own PR arms and certain image strategies. This group includes a number of oil and gas companies, banks, FMCGs and IT companies.
The second group is quite large and is made up of consumers that understand the topicality of PR but lack the skills to employ it. They also sometimes fail to understand the mechanisms of establishing communications. Although, these companies are interested in creating an attractive image, they often are not ready for publicity and openness. It is good if a company is led by a charismatic and competent leader, but if it lacks such a "trump card" then its competitive advantages are not obvious.
And, finally, the third group includes companies that do not use PR in their activities. They do not believe that PR can be effective, because of a misunderstanding or "an allergy" to PR developed due to experience with unprofessional agencies. Unfortunately, this syndrome exists in many major companies.
Of course, clients of PR agencies are mainly coming from the second group but experts forecast that hiring PR agencies or setting up their own PR arms will soon become a usual practice. Many companies increased their PR budgets in 2005, proving that PR services are in demand by many domestic companies and that the PR market is becoming "mature".
As positive factors that open up great possibilities for the PR market, experts point to the development of the stock market (in particular, the recent IPO placed by Kazakhmys and Kazakhaltyn), the creation of a regional financial centre in Almaty, growth in understanding the importance of PR activities and strengthening competition in the media market.
Problems and Solutions
A basic analysis shows that over the past year the Kazakh PR market has undergone significant changes regarding the number of players, growth in the client base and, possibly, the quality of services offered. However, it is early to talk about radical changes because the market itself is still being formed and undergoing "development diseases" which are natural at this stage.
Even though the supply has increased thanks to new PR agencies, the quality of services is still quite low. The companies that have long been operating in this market are continuing to offer an old set of products. Moreover, advertising and marketing agencies often offer PR services as a "supplement", limiting their activity to publishing paid material in the media. Some agencies often fail to properly assess the competitive advantages of clients, to use professional image diagnostics or to offer effective PR solutions. As a result, clients get disappointed not only with these agencies but with the effectiveness of PR techniques in general.
On the other hand, the problem with the quality of PR services also emerges due to the inadequate activity of clients themselves. Many of these companies do not realise the significance of a comprehensive approach to PR and prefer one-off actions to the detriment of a fully-fledged PR strategy. Usually, they fund PR projects as the least important thing and understand PR actions as publishing paid material in the media.
The PGC general director, Asel Karaulova, has said that PR specialists are still spending a lot of energy on explaining to clients that any communicative strategy should not be chaotic and that it should be planned thoroughly. Clients often believe that they can exploit the positive results of their one-off action over a year. Quite often, there is a lack of understanding that PR envisages long-term and trustworthy relations between agencies and clients, especially growth in the non-material assets of the clients.
The president of the GALA Investment Consulting company, Galina Shalgimbayeva, has said that communications are needed to preserve and strengthen investors’ confidence, increase the number of investors, inspire "fair" appraisal and access new capital and funding. Galina Shalgimbayeva believes that communications should be aimed at the media and analysts, i.e., those people whom investors listen to. At the same time, the main instruments of communications should be a good presentation of a company that covers the aims and strategy, high-quality press releases (with a respectable English-language version), a regularly updated website (including an English-language version) and an effective feedback mechanism.
It is problematic for PR agencies to find experienced and "multi-purpose" staff members because the demand is far higher than the supply. In-house training of personnel is a complicated and quite expensive process.
Mayrash Taykenova, the Zere company’s PR specialist, thinks that the existing belief that good journalists turn out to be good PR specialists is a mistake. Mayrash Taykenova said that in addition to the component of creativity, the PR profession also demands a managerial grip and a knowledge of marketing and market relations in general.
This is why teachers and PR specialists are jointly trying to achieve fully-fledged status for the PR speciality at domestic universities. They believe that the No 1 task is to improve the practical aspect of teaching, prepare textbooks that take into account the Kazakh specifics and discuss practical cases.
According to an opinion poll carried out among Kazakh students, the main problems of the PR education in the country are the shortage of qualified teachers (46.5%), the low share of practice in training (32.8%), the absence of clear distinctions between PR and related specialities (19.2%) and the shortage of books published on the subject in Kazakhstan (4.5%). Almost all the respondents believe that PR should be taught at Kazakh universities as a separate speciality.
The Media and PR
Factors that deter the PR market from developing are processes that are taking place in the Kazakh media at the moment, in particular, the growing control over the media by the state, state orders for publishing paid material in the media, the shortage of good journalists and price dumping.
Many experts are inclined to believe that the Kazakh media business with all of its achievements lags behind other leading sectors. Independent economic observer Tulegen Askarov has said that the capitalisation of the media is still low. Media outlets are not entering the stock market and their ownership remains unclear.
In rich countries, the main sources of revenue for the media are advertising, subscription and retail sales. They build their budgets on the selling of a final product (a newspaper, a magazine, a radio station or a TV channel) that meets the needs of the audience, and to do so they need always to improve quality and find new solutions and technology to enhance their product.
In Kazakhstan, many media outlets depend financially on their founders who sometimes are not interested in developing them as professional businesses, but instead use these controlled outlets as an information vehicle to lobby their interests. By acting as a guarantor of funds for a newspaper, a magazine or TV channel, the owner artificially excludes his outlet from the competitive market and creates easy conditions for it. This affects the quality of a media product and relations with PR specialists.
Experts estimate the Kazakh PR market at least at $100m (for comparison, the Russian market totals $500m). Moreover, domestic PR specialists expect the demand for their services to be boosted, despite a possible redistribution of the market in favour of Russian or international chains. The main trends, they point out, are a change in the structure of the market, the expulsion of "amateurish" PR consultants, an improvement in the competence of clients and outsourcing public relations functions, with subsequent laying off PR specialists.
The director of Renaissance, Svetlana Krutskikh, has said that the following aspects will develop actively: reputation management, media relations, intra-corporate communications, GR and customer service relations. PR will integrate more fully with related sectors – advertising, marketing and human resources.
The world PR market is estimated at about $5bn a year. PR budgets are expected to be from two to five times bigger than advertising budgets by 2008, illustrating the global trend of falling confidence in advertising.
PR specialists, advertisers and press service personnel have their own patron saint – St Bernadine of Siena (1380-1444). Huge crowds gathered to listen to his public speeches all over the Apennine Peninsula. Historians of the Catholic Church believe that he was the first professional PR specialist who won great fame for his skills to tame crowds of indignant people in various Italian towns. His speeches often started to the accompaniment of swearing and whistles, but ended in bacio di pace – the kiss of peace – proposed by the saint.
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