Despite the market turmoil, local communications agencies have proven particularly resilient - though they may face tough fee negotiations this year.

Jennifer Cohen, head of FD Beachhead, which services listed clients such as Woolworths and Discovery, says though the number of merger and acquisition deals has slowed, there is still strong demand for financial communications advice.

"The drivers of corporate reputations around the world are shifting with the recession, as a result of the high-profile bailouts in the financial services sector," says Cohen. "Issues such as governance and risk mitigation are taking prominence in the minds of consumers and investors."

Reputation Institute in SA director Dominik Heil says PR and communication is even more important in a recession. "If you don't communicate in a time of crisis, stakeholders lose trust in the company, which means they won't support, endorse or recommend it to other people."

Heil says ultimately a company's reputation can affect the bottom line because a good reputation can help a company convince investors to put their money into a company they trust.

"Not being proactive about communications can be just as damaging as getting bad press coverage," says Heil.

The institute's annual survey of company reputations shows that SA's Top 10 listed companies by revenue all saw their reputation ratings decline in the past year, except for SABMiller. "Sentiment in SA is much less optimistic and consumers' trust in the private sector has been knocked," says Heil.

"The financial services sector, for example, faces a particularly difficult challenge of trying to communicate new initiatives since people are less willing to trust what they say," says Heil.

College Hill managing partner Nicholas Williams notes the reduced levels of M&A activity and stock exchange listings. "Financial communications needs to focus on the fundamentals in more turbulent economic times. Investors are looking to companies to articulate clearly on the investment case and need to understand growth opportunities in the absence of a booming marketplace," he says. The agency recently advised on the Vodacom listing and counts Barloworld, Datatec, Liberty International, PPC, Gold Reef, Pioneer and Illovo among its listed clients.

Most PR consultants agree that now's the time for companies to improve transparency, disclose more about their risks and keep a steady flow of honest and trustworthy communication flowing.

"You don't want to be falling off the radar at a time like this," says Heil.

Cohen says, however, that communications should be seen as an executive function. "For companies to really communicate effectively, they need to view it strategically. This is not something to be left to the marketing department and this is not about spinning.

"Companies need to dovetail messaging across their media relations and investor relations strategies," says Cohen.

Williams says one of the biggest challenges in the SA market is that the media sector is under-resourced. "Journalists are stretched and the trick is to ensure that information is correctly interpreted and understood," says Williams. "It all comes back to the traditional work of media relations firms - building relationships and networks with journalists across different media."

Magna Carta Public Relations MD Michelle Anderson says there hasn't been a slowdown in new business despite companies cutting back on marketing and advertising. "Clients tend to fall back on traditional media work at times like this."

She says communication agencies in the small to medium category may battle in the current market because they service clients that may view communications as a luxury.

But the industry still faces a challenge in terms of evaluating what the effect of their work really is. According to the Institute of Public Relations (IPR), about 80% of the spend on PR evaluation is on measuring what has appeared in the media - not on measuring the effect on the audience.

"We have to move beyond the old idea of measuring column inches," says Williams. "It's about quality not quantity."

SA companies are also starting to catch up with more developed markets where electronic technologies are being used by communications firms to help firms speak to and communicate with their audiences. "Companies are beginning to explore the power of online media, blogs and sites such as Twitter and YouTube," says Cohen. "These channels are becoming more influential, though they are still not a substitute for advertising."