Bell Pottinger falls victim to PR disruption

By Peter Thal Larsen (Reuters)

A prime rule of public relations is to not become the subject of the story. Bell Pottinger has broken that maxim in every way imaginable. The UK corporate communications firm is in meltdown following its work on a highly divisive campaign in South Africa. Though poor management is partly to blame, disruptions prompted by the rise of online media also played a role. It’s a red flag for an industry that has so far avoided the woes of traditional publishers.

Even the most silver-tongued spin doctors would struggle to defend Bell Pottinger’s activities in South Africa. Working for a company controlled by the powerful Gupta family, it devised a campaign to highlight persistent economic divisions in a way that was likely to inflame racial tension. The resulting political firestorm culminated this week in the resignation of Bell Pottinger’s chief executive and the firm’s expulsion from the UK public relations trade body. Clients and staff are defecting; founder and former chairman Tim Bell says the firm will “almost certainly” fail to survive.

The saga highlights broader pressures facing the industry. A business that initially set out to influence media gatekeepers at newspapers, magazines and television stations has been forced to adapt as new channels of communication have opened up. Some PR firms have diversified by offering to handle investor relations for big corporate clients, advising on big takeover deals, or by expanding into political lobbying.

Others have pushed into campaigning with the help of social media. But this brings risks. Firms that previously acted as behind-the-scenes intermediaries for potentially unsavoury clients are more accountable for the messages they transmit or the Wikipedia pages they edit. The promise of hefty fees, such as the 100,000 pounds a month that Bell Pottinger earned for its South African work, has also lured some firms into far-flung markets where they lack local knowledge.

Even as traditional media struggles with fragmenting audiences and declining advertising, the PR industry has continued to expand. The sector’s total revenue rose 5 percent to $14.2 billion in 2015, according to the Holmes Report. But this upward trend masks turbulent changes. Bell Pottinger’s downfall is a reminder of the risks that such shifts pose to the industry’s own reputation.