NEW DELHI: Public relations agencies in India must enhance their capabilities in areas like social media management and proving return on investment to drive growth, a report has argued.

MSL Group, a unit of Publicis Groupe, suggested that the Indian PR industry can currently be valued at a relatively modest $140m.

The ten largest agencies and networks – including AdFactors, Concept PR, Edelman and Genesis Burson-Marsteller – generated estimated revenues of around $100m in 2011, plus an extra $40m or so from smaller shops.

Such a valuation of the sector compares with one of $6bn as reported by ASSOCHAM, the chamber of commerce, last year, when it also forecast this total would hit $10.6bn in 2012.

"There is some myth that the PR industry is worth billions of dollars, which it isn't in India," Jaideep Shergill, CEO of Hanmer MSL, part of MSL Group, said.

A major reason behind this substantial difference, the study asserted, was that ASSOCHAM afforded the Indian PR category a higher value than the advertising market, a fact it strongly contested.

Moreover, it added that India's PR agencies often receive extremely low retainers, typically standing at approximately $40,000 per year, versus a figure of roughly $400,000 for advertising agencies.

Additional factors affecting the PR segment, as cited by the study, were a frequent "undercutting" on price due to intense competition, talent management problems, inadequate training and a lack of trust between clients and agencies.

More positively, Meenu Handa, Microsoft's director, corporate communications, predicted the rise of social media, and the growing need for transparent business practices, should favour PR agencies.

"That is the space that PR has always operated in," she said. "Talent is the number one issue."

Nicholas Archer, head of group public relations for Suzlon Energy, the wind power specialist, also stated agencies needed to offer a broader range of skills: "Most PR firms are either strong on strategy or tactics," he said. "Both would be wonderful."

Rajesh Pandey, managing partner at Clarity IMC, the agency, added that better measurement was vital: "Instead of talking the language of ad-value equivalents, we need to show how a PR campaign changes an entire viewpoint," he said.

Data sourced from MSL Group; additional content by Warc staff