Market Know-How: PR – Hoax or Clarification?

PR-departments of real estate companies differ greatly depending on a number of factors. Some companies employ only one spokesperson, while others may have up to 20 employees involved in their PR departments; a PR service may operate separately from an advertising department, but in some companies the two departments are merged into one with a joint budget…

Incidentally, in the West PR-departments operating in any market are by tradition included in marketing departments and never merge with advertising departments, although in Russia different views exist. The main thing that is required from the employees of the PR-front is the result.

The company must be well-known to the consumers, respected by business rivals, and its officials must be quoted in the media - all that is good for business. To achieve that goal firms are ready to spend considerable funds on salaries for experts and their promotional campaigns.

According to the results of a survey carried out by the Creative Union of Journalists in the Real Estate Media, the effectiveness of PR departments' interaction with the key PR instrument - the mass media - depends more on the competence and expertise of the employees in the department than on their numerical strength and the size of the company's budget.

Fifteen journalists from the leading editions reporting on the real estate market were asked to evaluate a group of companies by the degree of their media openness. In particular, the respondents assessed the companies by their willingness to cooperate with the media, completeness of data provided, professional skills of PR officers, as well as the availability of top executives from the companies for comments and interviews.

Among those who earned the highest appraisal were the Department for Investment Programs of the Moscow city government, Miel-Nedvishimost (Miel Real Estate), Colliers International, Stiles&Riabokobylko, Inkom-Nedvizhimost, Konti and KROST. On the basis of their work experience and impressions from their interaction with the press-services and executives of those companies, the respondents rated them as being most efficient in terms of availability of information required.

The companies which the respondents rated as least favored, given their unwillingness to maintain broad contacts with the press whether intentionally or due to poor performance of their PR-services, include the Russian Guild of Realtors, the Moscow Committee for Architecture, as well as the construction companies DON-Stroi, SU-155, DSK-1, Glavmosstroi and DSK-3.

The first such survey was carried out a year ago, and this year analysts had an opportunity to compare the results of the latest survey with the one held last year so as to register the reaction of the media community to the changes in performance of various PR-teams. For instance, Penny Lane Realty's score dropped, after some of its employees left the company and started their own businesses. The MIAN company, after losing several of its PR officers, too, scored less points as compared with last year's results.

Aleksandr Senatorov, president of MIAN, nonetheless, showed little concern, saying that the employees' decision to leave the company had been pre-determined by the demand for their top skills and expertise on the market. The DON-Stroi construction company proved to be the recognized leader among those companies that journalists dislike most.

The price of a reputation

The PR-department of a real estate company is faced with the task of representing the company as a professional versed in the market situation and as a company open to the public, belives Roman Cheptsov, the head of the owners department at ABN-Realty. To achieve that goal PR officers address potential clients through the media and organize the company's participation in various conferences, forums and briefings.

PR efforts are aimed at achieving the important goals of maintaining the company's reputation and image and at the same time addressing routine issues such as informing the public of industry news, responding to the market developments and commenting on the situation.

“One could say that we work for the reputation of the company,” says Yekaterina Semikhatova, a spokesperson for Kapital Group. “And reputation is crucial both for business partners and individual investors.”

As a rule, the budget for promotional campaigns is a part of the marketing department's budget. Most of it is spent on sponsor activities or arranging news conferences. In line with general marketing policies, the amount allocated for such campaigns varies from $10,000 to $500,000. Yet, it rarely exceeds $100,000, Andrei Patrushev, a spokesman for Paul's Yard, believes.

It is not easy to determine which share of the company's budget is used for purely PR events, considering that the expenses are usually included in the advertising budget and amount to approximately $10,000 to $150,000 per year excluding contingencies, holds Roman Cheptsov of ABN-Realty. If the company wants to sponsor some project, it will have to be prepared to spend more. On average, participation in exhibitions and major news conferences entails expenses of $100,000, which covers the sponsorship fee, preparing booklets, outdoor advertising, monitoring, and salaries to models at exhibition stands.

The budget for advertising and PR activities may be combined, with items for PR activities clearly indicated, or each department may have its own budget, says Yekaterina Kutumova, a spokesperson for Colliers International. “This is a classic argument - what is a part of what, whether PR is a part of advertising, or vice versa,” she says. “As I see it, PR is an instrument of management, while advertising is an instrument of marketing.”

In Kapital Group, known for its costly promotion of new projects, the PR budget is part of the corporate marketing policy. “It is impossible to clearly determine how much exactly we spend on advertising and how much on PR activities,” says Semikhatova.

Not all experts share the same approach. “I strongly believe that the advertising budget and PR budget must be separate, since the goals of what can be referred to as the company's 'emergency room' are different from the tasks of those responsible for long-term preventive treatment,” says Valekh Rzayev, head of the marketing, advertising and PR directorate at KRT Group.

“Both those branches can supplement each other well within a single marketing policy. All that is needed is to take into account the specifics of the activities and the product. A high-quality, competent PR campaign gradually brings down the share of advertising in the process of representing the company in the media. And this happens throughout the world.”

“It is impossible to calculate how much the companies have to spend on PR, just as it is impossible to say exactly how much benefit PR activities bring to the company,” holds Ilya Shershnev, development director of Swiss Realty Group (Moscow). “The main thing is to understand that PR is necessary and to spend as much money, time and effort on it as the company can afford.” According to Shershnev, Swiss Realty Group approves its advertising budget for a certain period, with the amount tending to increase by 20-30 percent each time. “As regards the PR budget, I'd rather not fix it or impose any restrictions on it,” says Shershnev.

Even if the PR budget is included in the budget for marketing, the funds allocated for PR campaigns are usually indicated in separate expense items, such as expenses paid for the publication of reports on the company's projects and activities in the mass media. “In the real estate market there is virtually no such expense item as paid publications,” says Andrei Patrushev of Paul's Yard. “To the credit of leading journalists reporting on real estate, such means of promotion are hardly ever used.”

“Companies resort to advertising (i.e. paid publications. - Vedomosti) for PR purposes when they are not satisfied with what is said of them in the media, when it seems to them that their position is misinterpreted or that it is receiving no publicity at all,” holds Yekaterina Kutumova. “That is what prompts them to express their ideas on certain issues 'for money'. But we in Colliers International do not consider such expenses expedient.”

Washing dirty linen in public

Most companies operating on the market are privately-owned firms which are not duty-bound by law to share information concerning their business with the press. However, given the companies' commitment to informing consumers of their business and projects, realtors and investors are compelled to share their good news and to comment on less pleasant incidents and rumors.

All the ins and outs of the realty business have long ceased to be a secret for the public, which enables realtors to be as open to the media as possible, Roman Cheptsov claims. Even more so, since the media are mostly interested in the opinion and comments of a realtor as a professional consultant, rather than in the information about the real estate company proper.

In Semikhatova's opinion, to cooperate successfully with the mass media the company needs a clear-cut information strategy, which helps the company to provide comments and respond to journalists' inquiries faster and more efficiently. “It's a pleasure to work with editions and journalists who have a profound understanding of internal processes of the sector,” holds Semikhatova. “Like in any other sphere, it's a pleasure to work with professionals. At times certain journalists do not understand or are not willing to understand how important a word can be. Opting for a [wrong but euphonic] word combination for the sake of a figure of speech may result in serious internal and external problems for the company. Press-service staff follow a firm set of rules, one of which is not to provide false information. If we believe that for some reason we would not like to be mentioned in some publications, we prefer to keep silent, but when we speak we give only the truth.”

It is worth noting that one of the key tasks of the Creative Union of Journalists in the Real Estate Media, which unites the leading real estate market observers in Moscow, is to set up a union of professional journalists who firmly reject the possibility of writing paid reports or taking for granted the opinion of advertisers. Needless to say, the members of the new union will be duty bound to observe common ethical norms such as providing reliable information and accurate quotes.

When requested to provide comments for the press many realtors are faced with the tricky task of responding quickly and at the same time accurately. “For me, the phone calls I receive from midday to 1 p.m. on Sunday are extremely annoying,” Ilya Shershnev of Swiss Realty Group (Moscow) complains. “Quite often I only fall asleep at that time, which is why even earlier calls would be more convenient. At the same time I would not say that bothers me too much. I am ready to work 24 hours a day, even when I am on vacation. As for the rest, everything is fine; trust and mutual assistance are the main instruments of PR on the Russian market.”

Good news is not as attractive for the journalists as negative information, PR experts note. “And how can a company attract media attention if its prospects are good and it is not embroiled in any scandals? Houses are built, new projects launched. How boring!” says Semikhatova.

“Projects that develop and expand fast are really of no interest to anyone,” Patrushev agrees. “Each company should have its own information strategy determining what, when and in which editions to publish so as to attract most attention to the company and to make the best impression.”

“There are many factors affecting the degree of the company's openness. There are such things as commercial secrecy, certain secrets of the trade and ideas, which for the time being should not be shared with anyone,” says Patrushev. “Besides, there are, after all, working stages of the projects, the publicizing of which is not exactly appropriate, since things change rapidly and information becomes outdated fairly quickly.”

“The main problem PR services are often faced with is to awake journalists' interests, to present news in such a manner so as to make it interesting not only to the PR service of a certain company but to the readers of the edition as well,” holds Semikhatova. “You have to remember that the cause and the immediacy of the information is crucial. Otherwise, the press-release will be thrown in the waste-paper basket.”

In Kutumova's opinion, the company must be open if it wants to enjoy the reputation of a professional market participant, though any PR-service must carefully screen information provided to the public, because certain data is likely to do more damage than good and entail undesirable consequences for the company's operations.

“I used to work in the media as a chief editor for many years myself; maybe that is why I treat journalists as members of my family and highly appreciate professional skills and expertise, and take their mishaps and failures close to heart,” says Valekh Rzayev. “That is why I never take any offence at criticism, but I take no delight in 'odes to joy', especially paid ones.”

In Rzayev's opinion the main problem PR-officers are faced with is a conflict of interests - their desire to be open to the public even at certain times when their employers are shunning publicity. Another problem is their inability to respond to journalists' inquiries quickly and efficiently, taking into consideration the format of the edition.

“The company's openness must not run counter to its interests. That is self-evident,” says Rzayev. “But how you draw that thin and dangerous line is a matter of the PR-officer's social and professional responsibilities. It is impermissible to wash dirty linen in public, that is, to shed light on the internal problems of the company which could later be used against your firm. As regards the less important problems, those on the contrary can even be shared, which attaches a certain charm and helps to win confidence.”