There is a schism opening up in the wacky world of financial public relations in the region. It has already caused a certain amount of disagreement, even confrontation, among PR executives in Dubai, and become a hot topic for dinner party conversation when the flacks and hacks get together.
Of course, it's all about money, and specifically how much the PR agencies can charge clients for advice in the straightened circumstances of the post-credit crunch world. Some of the disagreement has got pretty tetchy, with eyeball-to-eyeball confrontations and finger-jabbing point-scoring between normally urbane executives. It's obviously a matter close to the flacks' hearts.
Just a little context is needed. The PR community in Dubai has been reinvigorated in the wake of the financial crisis. Before September 2008, when all the news coming from the emirate and the UAE appeared to be good, PR must have been a simple process - another set of record profits, another iconic lifestyle waterside development, another tallest building in the world.
The flack could just write up the press release, hand it over to the grateful media and sit back to enjoy the fees the booming client was happy to pay. Many western firms, as well as indigenous ones, were keen to get into the Dubai market to exploit this steady stream of revenue.
In the period between the collapse of Lehman Brothers (September 2008) and the announcement of the restructuring of Dubai World (November 2009) the market changed drastically. The "good news" work all but dried up, while what business there was consisted of crisis management and limitation to reputational damage. Firms such as Financial Dynamics, which won the brief to handle Dubai World, and Brunswick, which eventually got the business from the Dubai Department of Finance, won a big chunk of this business.
But to their credit, the newcomers who had arrived in the good times - such as the London firms M:Communications and Finsbury - did not just pull out when the easy pickings disappeared. They maintained, even grew their presence in Dubai, using it as a hub to do business in the Gulf and wider Middle East.
Add the foreign and indigenous incumbents - which include firms such as ASDA'A Burson-Marsteller, Hill & Knowlton, Bell Pottinger and CapitalMS&L - to the ambitious newcomers and you suddenly have an awful lot of PR firms fighting for a declining, or at best static, amount of work. The result, according to those at the sharp end, is stiff competition and some nimble financial footwork.
The scramble to get what business there is going has been intense and has led to allegations of undercutting, or even loss-leading, from some quarters.
When a PR firm "pitches" its services to a client - perhaps as a retained customer, perhaps for a specific period or transaction- it is supposed to be a "blind" process: that is, the competitors are not supposed to know what the others are asking for by way of fees, or what they are promising in return.
The serious allegation is that some firms have found out what the others are pitching, and are undercutting them to win the business. Nobody can say for sure how this information leaks, but you can see how it might be in the interests of the client, or an introductory banker, to tip off the competition.
The matter came to a head recently over a pitch for a capital markets transaction in Saudi Arabia. In the current climate such business, in the biggest market in the region, is like gold dust. One firm (anonymity requested and assured) won the business with a pitch that was some way below the others.
That sparked the angry confrontations mentioned above, with accusations of undercutting and devaluing the business. Stuart Leasor, the head of emerging markets business for M:Communications, puts it like this: "Cut the fee and you get either less time or a less-experienced person, or both. If the prices get too low you will get a poor service - at a time when GCC clients are getting more needy and demand ever better service."
Another financial PR executive puts the other side of the coin: "The point is that we are not trying to undercut the fees as a loss leader. We work out, on the basis of our long-term business model, what level of fees will work for us, give the client good service and make us a profit, and go with that."
Another essential point is this: a start-up operation in Dubai, with expensive salaries, rents and other overheads, will have to try to cover those costs early on, and could come under pressure from the parent company in London to start "washing its face" as quickly as possible. That will maintain an upward pressure on fees.
But in the end, the laws of supply and demand will surely prevail. Those firms that have sustainable business models that allow them to pitch fees at the optimal level, will endure; those that have got the financials wrong will have to do the sums again, or fail.
Ultimately, it is a healthy development for the flacks to be falling out like this. If there were no arguments about fee levels, we might have to assume that there was a price-fixing arrangement in operation, and cartels are certainly in nobody's best interest.
Keep scrapping chaps.
fkane@thenational.ae
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Pakistanis%20at%20the%20ILT20%20
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The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
Confirmed%20bouts%20(more%20to%20be%20added)
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More coverage from the Future Forum
SPECS%3A%20Polestar%203
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The%20specs
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The specs
Engine: 2.7-litre 4-cylinder Turbomax
Power: 310hp
Torque: 583Nm
Transmission: 8-speed automatic
Price: From Dh192,500
On sale: Now
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heading
Iran has sent five planeloads of food to Qatar, which is suffering shortages amid a regional blockade.
A number of nations, including Iran's major rival Saudi Arabia, last week cut ties with Qatar, accusing it of funding terrorism, charges it denies.
The land border with Saudi Arabia, through which 40% of Qatar's food comes, has been closed.
Meanwhile, mediators Kuwait said that Qatar was ready to listen to the "qualms" of its neighbours.
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RESULTS
1.45pm: Maiden Dh75,000 1,400m
Winner: Dirilis Ertugrul, Fabrice Veron (jockey), Ismail Mohammed (trainer)
2.15pm: Handicap Dh90,000 1,400m
Winner: Kidd Malibu, Sandro Paiva, Musabah Al Muhairi
2.45pm: Maiden Dh75,000 1,000m
Winner: Raakezz, Tadhg O’Shea, Nicholas Bachalard
3.15pm: Handicap Dh105,000 1,200m
Winner: Au Couer, Sean Kirrane, Satish Seemar
3.45pm: Maiden Dh75,000 1,600m
Winner: Rayig, Pat Dobbs, Doug Watson
4.15pm: Handicap Dh105,000 1,600m
Winner: Chiefdom, Royston Ffrench, Salem bin Ghadayer
4.45pm: Handicap Dh80,000 1,800m
Winner: King’s Shadow, Richard Mullen, Satish Seemar
COMPANY%20PROFILE
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SPEC%20SHEET
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