New R3 China survey reveals changing net-driven PR market – Blue Focus and OgilvyPR lead

Chinese marketers are increasingly focussed on ePR, aiming to reach China’s 500m net users. But the market is becoming increasingly competitive with clients using more than one agency with digital agencies making a strong pitch for ePR work. Comments by Sabrina Lee (left), general manager of R3 in Beijing.

According to a new study, China marketers are putting more than 29 per cent of their overall PR investment into ePR and social, reflecting a strong shift towards Chinese netizens. “With more than 500m people online, Chinese marketers have seen the power of building reputations using ePR and social word of mouth. We believe within four years over 50 per cent of PR spend will go online.”

The results come after a study by R3 looking at more than 2012 PR and Social Media Agency relationships in China. The report also shows the challenges PR agencies are facing for revenue from digital agencies. 44 per cent of all ePR spends in China are currently going through digital agencies and not PR. “Marketers are trading off the traditional skills of reputation management from the PR firms for the digital speed and savvy-ness of digital shops.The challenge for PR agencies going forward will be to invest in and enhance their digital capabilities.“

Multiple agencies, multiple challenges

According to the study, the average marketer in China works with 1.8 PR agencies (up from 1.5 in 2011) and relationships are now as short as 2.4 years (down from 2.8 years). “It’s such a dynamic marketplace right now, less than 50 per cent of companies are willing to commit to a single PR agency , with most having multiple relationships, some as many as five. This puts pressure on the partnership, and makes it challenging for the PR agency to invest in long term talent.”

Linked to this is the huge rise in project-based relationships. “More than a third of marketers are just working with their PR agencies purely on a project basis, and only 23 per cent commit to a flat annual retainer fee.”

Rise of Procurement in PR Agency Negotiations

With more pressure on ROI and costs, marketers are increasingly using their procurement teams to negotiate PR and social media agency terms. “This year there was an increase across the board in the use of procurement to negotiate compensation, where they were involved in more than 65 per cent of cases.”

Blue Focus, Ogilvy PR lead the way

In terms of perception, local PR agency Blue Focus and WPP leader Ogilvy PR led the way. Across the nine key criteria for agency assessment, Blue Focus led on factors including client service, crisis communications and value for money, OgilvyPR led for strategic planning, marketing communications and international network. The pair shared first ranking for ePR. “Both agencies are dominant in their own way in China , and both stand out through their stable management and their investment in new tools and talent. But there are another eighty PR and social agencies mentioned by marketers in this study – all of whom are driving hard to improve.”

The China PR and Social AgencyScope is now in its second wave, with previous research conducted in 2011. It compliments the China Creative, Media and Digital AgencyScopes, last conducted in 2012. The Study aim is to understand the latest marketer-agency engagement trends, and perception and performance of more than 80 PR and Social Media agencies in China. The face-to-face survey includes over 120 senior marketers and 212 PR agency relationships.

R3 is a global marketing consultancy focused on improving the effectiveness and efficiency of marketers and their agencies. Founded in 2002, it works with eight of the world’s top twenty global marketers.

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