Jenny Chan 陳詠欣
Apr 9, 2013

Chinese marketers increasingly using procurement teams for PR agency negotiations: R3

BEIJING - With more pressure on ROI and costs, marketers are increasingly using their procurement teams to negotiate PR agency terms, according to a study by R3 that looked at 212 client-agency relationships in China.

Chinese marketers increasingly using procurement teams for PR agency negotiations: R3

This year has seen an increase in the use of procurement to negotiate compensation, said Sabrina Lee, general manager of R3 Beijing. "Procurement teams were involved in more than 65 per cent of cases”. More than 70 PR agencies were assessed by the consultancy.

Despite the rise, there are also more companies seeking independent benchmarking in conjunction with this. “To be truly successful, procurement works best with cost benchmarks, but that’s been a challenge for any individual marketer,” she added. “We’re seeing China’s marketers seeking outside counsel to help with this process, in order to make sure they get the best value out of their PR agencies”.

Chinese marketers are currently putting 29 per cent of their overall PR budget into ePR and social word-of-mouth, reflecting a shift towards reaching out to Chinese netizens. “We believe within four years, more than half of PR spend will go online," Lee said.

The R3 report also highlights the challenges PR agencies are facing from digital agencies in terms of revenue. Forty-four per cent of all ePR spend in China is currently going to digital agencies instead of PR ones. 

“Marketers are trading up to the digital speed and savviness of digital shops,” Lee said. PR agencies need to invest in and enhance their digital capabilities, or agency relationships with clients will become shorter, she warned.

According to the study, the average marketer in China works with 1.8 PR agencies with the duration of relationships now as short as 2.4 years. 

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

“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 some having multiple relationships: as many as five,” said Lee.

In terms of perception, local PR agency Blue Focus and WPP-owned Ogilvy PR led the way. Blue Focus led on factors including client servicing, crisis communications and value for money. Ogilvy PR led in strategic planning, marketing communications and international networking.

“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,” said Lee.

Campaign Jobs

Follow us

Top news, insights and analysis every weekday

Sign up for Campaign Bulletins

Related Articles

Just Published

Premium
Dentsu issues full statement on overbilling
Premium
1 day ago

Dentsu issues full statement on overbilling

Dentsu President and CEO Tadashi Ishii outlines extent of inappropriate transactions, extends apologies to advertisers.

Premium
AR should mean more than a trick your phone does: Pokémon Go creator
Premium
1 day ago

AR should mean more than a trick your phone does: ...

How an April Fool's joke turned into a worldwide smash by staying true to a mission rooted in human experience.

Premium
Photos: Dentsu Aegis Network and MassiveMusic's Neo Godai at Spikes
Premium
2 days ago

Photos: Dentsu Aegis Network and MassiveMusic's Neo ...

Photos from the party thrown Thursday evening by DAN and MassiveMusic at the Fullerton Waterboathouse.

Premium
Spikes delegates tell us what work they wish they'd done
Premium
2 days ago

Spikes delegates tell us what work they wish they'd ...

Our reporters capture some honest answers to their QOTD from creatives at Spikes Asia.