Kate Midttun explains to Communicate the stark reality of the challenges small and medium independent agencies are facing and how the organization plans to help them.
The Middle East Public Relations Association (MEPRA) released results from their recent survey which revealed the top challenges faced by small and medium independent communication agencies in the UAE. The findings were quite alarming as it revealed that 60% of SME clients do not pay according to contractual agreements.
Communicate spoke with Kate Midttun, MEPRA Executive Board Member and CEO of Acorn Strategy, to dive deeper into these findings and understand how MEPRA plans to help these agencies.
Could you dive a little deeper into the prime challenges that small and medium communication agencies are facing right now? Do you think they have been prevalent for a long time or are these challenges a result from the impact of the pandemic?
Challenges faced by small and medium independent agencies are primarily in relation to the infrastructure (or lack thereof) compared to the larger network agencies they’re competing against. Whilst independents have benefits around agility, ability to build unique cultures, create value propositions specific to the environment in which they operate in and make a significant contribution to the local economy, they’re also competing against large network agencies that have infrastructure around accounting and legal standards, IT support, training and leadership.
These challenges are not new because of the pandemic, but heightened because of the need to adjust. For example, many small and medium agencies faced additional issues during the pandemic around cashflow, management of HR policies, billings, retaining business, which could all have benefited from the support of a network behind them. This is where MEPRA aims to fill the gap, by supporting with the guidance and advice for these entities where they need it most.
90% of respondents said that they are challenged on price either at pitch stage or by clients and it’s “untenable”. One respondent reported that they are forced to charge lower rates because they are small. What do you think are the reasons for this?
Over the last few years we’ve seen a lot of pressure on rates which could be seen as a commoditisation of services within our industry. Rather than paying for strategic expertise and approach for communications services, we’re seeing a lot more “bulk buying” within a retainer based model. Of course anyone from a university student through to a consultant with 45 years of experience can issue a press release, but the level of expertise and nuanced advice you’ll get from each of those people will provide a different level of value to any organisation.
The problem is that there’s a lot of pressure to provide the lowest possible rate, but not much focus being placed on the experience and strategic guidance during the procurement process. Shopping for the lowest rate comes at the cost of experience and, in many cases, value. In addition, there’s a common misperception that small means cheap. However, small could very well mean highly specialised and come with an extensive level of experience.
How does MEPRA plan to help SME agencies with these challenges? What strategies or plans do you have in mind?
While the survey revealed many of our small independent members benefit from MEPRA’s free training, wellness support and branding opportunities, we realised there was still a lot of work to do in developing support which specifically addressed unique challenges faced by this group. Small and medium independents and consultants are vital to our industry and its future. Supporting their specific needs and ensuring they have access to resources and tools they need is an important contribution to the economy as well as our remit at MEPRA.
MEPRA established a working group made up of small and medium independent agency board members, which is led by myself as Chair, and includes, Brazen MENA’s Managing Partner Louise Jacobson, Matrix PR CEO Hilmarie Hutchison, Shakespeare Communications CEO Ananda Shakespeare, Sticky Ginger Managing Partner Kiera Purdue and Tales and Heads Co-Founder Margaret Flanagan.
We have worked together to develop a tailored support strategy, which includes bi-monthly workshops on cashflow management, legal support, building company culture and how to prepare for growth; a resource centre for small and medium independents and consultants, which includes a list of recommended supplier contacts, tips and guides tailored for SMEs; quarterly digital drop-ins and networking events to discuss challenges and opportunities; industry partner discounts negotiated by MEPRA on behalf of small and medium independents and consultants; an industry rate cards guide to assist with pricing and budget development; lobbying efforts to help assist with delayed payments for SMEs; and special payment terms for small and medium independents and consultants on MEPRA memberships and events.
Based on these findings, do feel the Communication agencies' revenue model is overdue for change?
Any significant and meaningful change we see in the industry can only be made through the collaboration of procurement, the end-user and agencies. Procurement teams and end-users suffer as much as agencies do because of the current processes in place in procuring communications services. The only way to improve the situation is to ensure continued constructive conversation on how to measure the impact of communications and ensure that it is being measured within the technical process, whilst still meeting the budgetary requirements for the best return for the business.
We invited author of Madison Avenue Manslaughter, Michael Farmer, and Head of Chartered Institute of Procurement and Supply (CIPS), Sam Achampong to discuss this very topic on MEPRA’s podcast “The Brief” and we found that there are similar frustrations across the board, and that closer collaboration is required. Many businesses are currently facing a critical time of survival and we need to make sure these conversations are happening sooner rather than later, so that key talent of the industry is retained, supported and able to contribute.
MEPRA will continue a dialogue with CIPS to help achieve the best outcomes for both sides of the fence. We encourage all small and medium agencies to get involved with MEPRA if they aren’t already and be part of this change.
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