Opportunities Abound for Asian PR Market
By Rick Gould CPA, J.D.
Is it the dawn of the Asian century? The notion is debatable among global economists and civilians alike. But there’s little doubt that countries throughout Asia are rapidly increasing their economic, business and cultural clout.
At the same time, marketers throughout Asia are facing some serious headwinds when it comes to bracing their companies for the future.
Just seven percent of Asia’s CMOs say they are “very prepared” to navigate their brands into the future, and are turning to digital, social and e-commerce to drive their companies forward, according to a survey of 80 companies conducted in late 2016 by R3 Worldwide, a global marketing consultancy with several offices throughout Asia.
What is more, 41 percent of Asia CMOs responding to the survey cited a complex business landscape as the biggest challenge moving forward.
Seems like a classic supply and demand model emerging for M&A players with their sights set on Asia.
As the global economy continues to consolidate at a fairly steady clip, Asia presents growing opportunities for both buyers and sellers of creative services firms. Gould+Partners recently spoke with Greg Paull, principal and co-founder of R3 Worldwide, about the M&A landscape in the region.
Gould+Partners: How’s the PR M&A market shaping up in Asia?
Greg Paull: There’s been a lot of interest from multiple companies in the last year, both from global firms and local players. This year we already have seen WE Communications invest in two entities in China and South East Asia. We have also seen Blue Focus and others actively looking. There’s going to be more growth in Asia than potentially any other region on earth.
Gould+Partners: Is the market more active among sellers looking to align with Asian PR, marketing and advertising companies or Asian-based buyers looking to expand their operations and global footprint?
Paull: In recent years there are a lot of asynchronous buyers in Asia, such as HNA Group, Shenzhen Media Group and Tensyn, which are making local investments in China and Hong Kong, often at higher multiples than the global holding groups. It’s very clear that a critical path to growth is going to come through the right investments.
Gould+Partners: What’s the M&A nexus right now between U.S.-based PR firms and the Asian market?
Paull: WPP, Omnicom, IPG and Publicis are all looking for the right PR investments in Asia right now. Increasingly, they are looking at supplementing their business with digital, social or (online) analytics plays.
Gould+Partners: What are some of the management tools/services that PR sellers need in order to increase their appeal among Asian-based buyers?
Paull: The fundamental thing for local agencies is to build pipeline business—that means clients that represent recurring revenue. All buyers are looking for some confidence for their investment and having one year or two year retainer relationships makes a major difference. Another critical area is marketing. Building a capability of white papers, insights and using social for your own agency are all critical.
Gould+Partners: What sort of PR properties are Asian-based PR firms interested in?
Paull: A proven track record and stable management are essential. In the end, buyers are investing in talent and people. Showcasing long term senior management makes for a compelling proposition, which will show clear succession planning.
Rick Gould, CPA, J.D., managing partner of Gould+Partners, is the author of “The Ultimate PR Agency Financial Management Handbook: How to Manage By The Numbers for Breakthrough Profitability of 20% or Greater,” and “Doing It The Right Way: 13 Crucial Steps For A Successful PR Agency Merger Or Acquisition.”
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