Midsize PR Firms could see bloodshed, corporate communicators struggle with strategy: Dilip Cherian on PRmoment Leaders Insight Series

Dilip Cherian, founder of Perfect Relations, iconic PR Guru, and one of the pioneers of the modern PR industry in India; has recently exited from Dentsu Aegis Network. The firm was acquired in 2016 by the Japanese-owned integrated marketing communications firm.  

The recent closure of Ketchum Sampark in April 2024 has reignited discussions about the future of founder-led PR agencies. This model, often characteristic of mid-sized firms, has been a key growth driver for India's PR landscape. The concern is whether these independent agencies can weather the challenges of quick evolving tech solutions, the shortage of high-level talent and price cutting.

PRmoment India's Paarul Chand interviews Dilip Cherian over coffee, on these issues and why the Indian market is a tough market to crack. Read on.

The serious pricing and value creation challenge for Mid-Size PR firms

Paarul Chand: Dilip, if you look at the PR market, it's the mid-size firms bearing the brunt of the undercutting. But, yet these are also the ones who drive the market forward. What is your assessment of the growth of the PR market, given the challenges that have recently emerged, including AI?

Dilip Cherian: I think there will be a possible sequence of bloodshed moments in the middle of the market. They are going to be hit from below by very cheap cookie-cutter technology available and from the top by client-side people who are looking to cut costs.

Dilip Cherian: "They are going to be bludgeoned from the top and chewed up from below. So if I were looking at the industry, I would look for bloodshed in the middle, and how would they possibly survive this bloodshed."

Paarul Chand: Do they become very specialized?

Dilip Cherian: They will have to pay me a large amount of money to either meet them over coffee or to talk to me!

Is strategic thinking in short supply amongst corporate communications professionals?

Paarul Chand:  Moving on to issues facing corporate communications. There is a point of view that the current set of communications leaders (brand side) are not empowered to do their job, to be more strategic. Do you agree with this assessment?

Dilip Cherian: My philosophy has always been that anyone who has not had their posterior ground to bits over 20 years is not entitled to have the word strategy to their name or their CV. Unfortunately, too many people believe what they are doing is strategy.

Dilip Cherian: "Strategy has been the Achilles heel on which many on the corporate communications side have failed. Strategy is not an immature fruit on a tree. It is a hard-shelled coconut that drops off the tree because it is mature and it is ready to blossom and move."

Today, some of my consulting contractors, which I will not talk about in detail, can sit in on the client side, and give them strategic advice, which very often overrides what the agency owner is conning them with and saying, no, this is not the strategy, we need to do this and this is all I want from the delivery. It pains a lot of agencies when suddenly they have someone like me sitting on the client side, not wearing the client hat, but saying, hey, let's correct this and let's do this in the next six months.

Paarul Chand: A recent PRmoment story discovered that corporate communication heads are becoming a full decade younger and some of them definitely would not have the 20 years that you talked about.

Dilip Cherian: If they don't have 20 years, I won't talk to them.

Paarul Chand: Is that a worrying sign for the industry?

Dilip Cherian: "It's a worrying sign for the corporates who are hiring these people. Those are the people who need to worry. I love the fact that these young people, based on the ability to roll off some buzzwords on their lips, can convince senior management that they need them. Doesn't work. Strategy is much more fundamental."

Succession planning for founder-led firms, PR talent challenges 

Paarul Chand: Dilip, I believe you've recently exited from Perfect Relations, what are your views on succession planning? Have founders focused on succession planning and, secondly, has wealth creation failed to trickle down beyond the owner and founder to key members of the team?

Dilip Cherian: I'll answer the second part. First, the flow down of wealth will never retain professional talent, so it's an irrelevant issue. What is relevant is succession planning.

Dilip Cherian: "I think that succession planning in the PR industry is fundamentally flawed. Over the last 10 years, I would say that the quality of talent coming in has seen a dramatic decline. The best people are no longer attracted by the quality of founders or the approach they have to great startup-level talent. They are, to borrow a currently popular phrase, 'Hiring from Galgotias'. So I think it's a disaster because they're going for cheap manual labour when they need high IT-level, technically built communications."

Paarul Chand: Is that a vicious cycle? When you speak to the founders, their complaint is our retainers are flat. I can't get the talent, I can't offer the kind of quality needed to raise retainers.

Dilip Cherian: Post my exit, which is after my sale six years and more ago, I have found that in the consulting assignments which I choose to take, there is no constraint from the corporate side on the levels of consulting assignment fees. I am not looking at what the retainer ends up being, because that is not the model I am looking for.

Dilip Cherian: "My model is different, my model has changed and I find that if you are looking at being a solution rather than a service, then the chances are that people want to pay top dollar for the solution. They are not willing to pay a lot of money for what is called cut-and-paste services."

Paarul Chand: Some would argue that happens (high retainers) because it's Dilip Cherian. Therefore, he would get top dollar and maybe others won't.

Dilip Cherian: The kinds of services that I offer today, are not Dilip Cherian who is front and centre, it's the quality of professionals that I bring on board who do the second round of meetings or the second level of consulting, insights or inputs. So if you are not able to find that level of talent to work with you, then it won't work.

Dilip Cherian: Now, you can again argue in a circular manner, that Dilip can attract those people, but it is faith in the fact that I will be fair, is what fundamentally it is. And the second aspect, the second leg on which this model walks, is that you've got to be good enough to be able to not be intimidated by somebody whose specialist skill is better than yours in the field where you need to bring in the fellow traveller.

Will the Firm Thrive Without Its Founder?

Paarul Chand: After what happened with Ketchum Sampark, the founder-led PR agency model is being questioned regarding whether international PR firms can manage the Indian market once the founder exits. What are your views on that?

Dilip Cherian: India is a tough market. India is a market where the traditional forms of system management, are likely to fail. Global agencies rely on systems, processes and procedures. The stronger they are, the more likely they will find it difficult to be flexible and agile enough to navigate the Indian market. 

There are two reasons why I consider the Indian market a tough market. The first is that the market itself is evolving. So what is a start-up today, on suddenly getting funded, is potentially a client-worthy company tomorrow. What is a balance sheet-based large company is either a victim of a takeover battle or runs afoul of a GST issue.

Dilip Cherian: "Secondly, a very fundamental thought process in many of the global companies is to try and prevent the possibility of either fraud or siphoning off of money. Now, that is a valid concern, but I think that they tend to throw the baby out with the bathwater. The bath water may be both murky and dirty, but there are babies lurking in there, and throwing them out could come at a huge cost, many founder-level companies are successful because the bath water is murky."

Paarul Chand:  Personal relationships have been touted as a major factor in managing India, but is it just that? Are the knowledge levels so low that it's only personal relationships that count? That's hard to believe.

Dilip Cherian:  At the client's end, you have either a strong professional or a dominant professional. Or the client side is dominated by promoters and directors, what I call alpha professionals. The bad news is that in most agency cases, the agency founder, at least in my experience, hasn't been someone who has that level of personal confidence. Where the connection is equal.

Dilip Cherian: "Respect equals business continuity. Not business getting, but business continuity. So, for example, one of the criteria that I have and which I always used to make a fetish about it at Perfect Relations was that the only relationships that matter must be with the professional handling the account. If it is with the owner or founder, that's not a real account."

Dilip Cherian: My business philosophy used to be that I would rather lose an account than retain it simply because it was based on a personal relationship with the company. If it could not be transitive to the senior, most manager or CEO level person in my company, then I would not retain it. I'd rather give it up after a couple of years.

Paarul Chand:  Last question, is Dilip Cherian the brand bigger, or is Perfect Relations the brand bigger?

Dilip Cherian: I have no idea. You have to ask the market.

Paarul Chand: Thank you so much, Dilip, for your time.