Is Cuba ready for an ad industry?

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Does the US government's shift in Cuba policy mean the island nation is ready for a robust advertising and communications industry? Not so fast, says Burson-Marsteller's Ramiro Prudencio

While President Barack Obama’s decision to restore diplomatic relations with Cuba represents a historic shift in dealings with the island nation, just what it might mean for US businesses, including public relations firms, is less clear.

Companies will need to carefully watch how the US policy and regulatory spaces develop, as well as what signals the Cuban government sends, in order to evaluate just what this may mean for them. Where there are opportunities, they may find non-US competitors there already. Cuba, or more specifically the Cuban government, has been doing business with non-US companies for decades, after all.

Initially, the telecommunications, finance and travel sectors will benefit from the loosening of restrictions on bilateral commerce; these sectors are early winners as they align with Cuba’s interest in developing its travel and tourism industry and need for US dollars.

The agricultural, pharmaceuticals and logistics sectors — all of which have been doing business with Cuba under special arrangements for several years — stand to benefit further. As with nearly all economic activity in Cuba, business will be with or through the Cuban government, and US law presents challenges to doing so, as the embargo will remain firmly in place for the foreseeable future.

From a communications perspective, companies viewing the tropical island will find a more desert-like landscape. After the Cuban Revolution in 1959, the new regime worked to undo what it considered the ills of capitalism. Advertising was one of the first areas targeted. Once Fidel Castro described advertising as "alienating and noxious," billboards, commercials and even brochures quickly became a thing of the past. The strict control exerted by the Cuban regime on economic activity and political expression assured that only the government engaged in communications campaigns.

Fifty-six years later, and despite Cuba’s increased opening to foreign investment to make up for the shortfall created by the end of Soviet subsidies after 1990, advertising and PR remain anathema. As if stepping into a bygone era, visitors arriving in Havana are amazed that there are no billboards with branded products — though many with political slogans — no TV or radio commercials, or basic print ads. What little there is — and it is minimal, at best — is directed at foreign tourists. There is nearly no competition since foreign companies invest through partnerships with the government, and the average Cuban state-mandated salary rose by 1 percent to a whopping $20 per month last year.

Recent reforms have created a small but increasingly dynamic entrepreneurial class – and the beginnings of marketing efforts can be seen. Handbills have become prevalent among restaurant and bar owners catering to Canadian and European tourists, while Etecsa, the state-owned phone company came up with the "innovative" idea of publishing a Yellow Pages phone directory for these small businesses two years ago. Etecsa got 500 advertisers, which is a considerable number considering that phone penetration in Cuba, both mobile and landline, is among the lowest in the world.

So, are there PR opportunities in Cuba? The answer is both yes and no. The traditional services agencies have limited application in the near term. The media is state-controlled and solely serves political objectives; the public has very limited disposable income, and consumer marketing is not yet possible. Access to the Internet is limited, and there is no social media as we, outside of Cuba, know it.

How these services develop will depend on if and how the Cuban government decides to create more space for markets. In some ways, this is analogous to China in the late 1970s. Deng Xiaoping and reformists eventually led China down the path of major reform and a mixed economy. It remains unclear whether the Cuban leadership wants true economic reform or small tweaks. So far, small tweaks have been the norm.

There is, however, a role for communications in building visibility for interested companies and demonstrating their commitment to addressing Cuba’s economic priorities. As non-US corporations have been active in Cuba for decades, it will be incumbent on US companies that want to invest on the island to show what they bring that is different and better than their competitors. There is also a role in building support in Washington for a rollback of the Helms-Burton Act and other provisions that serve as significant barriers to US-Cuba trade.

The pace and direction of a new US-Cuba relationship is difficult to predict, as are the near-term opportunities for companies and agencies. However, this week’s announcement heralds a new era, one with new policies and the promise of greater and closer contact between these neighboring nations.

Ramiro Prudencio is president and CEO of Burson-Marsteller Latin America.

This article first appeared on prweek.com.

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