As I watched the Prime Minister this morning unveiling the rescue plan for the UK financial system and saw the massive stock market drops across the world I have to say I switched a gear in my thinking and planning. I have been banging on about the PR industry in an economic slowdown for a little while now, but I was still hoping that I was wrong.
So what’s going to happen? Maybe what happened last time will provide a clue. The trouble is of course that the advertising dominated holding companies that own most of the big PR frims conceal the PR figures behind the excuse of Sarbannes Oxley so, as far as I know it, my little chart below (the 2007 column is our estimates) is about the only financial data out there on the global firms, but putting aside its accuracy or otherwise for individual companies (and I’m happy to be corrected by the way… just give me the figures), the general picture last time was not good. Of course, last time we had a tech bubble and a financial bubble and the big firms had only just got to a global scale properly and were much less well managed.
|PR Firm||2007 Rev (USDM)||2001 Rev (USDM)˜|
|Hill & Knowlton||220||306|
˜ 2001 was the last year that PR firm released their worldwide revenues, which was published by the Council of PR Firms, PRWeek and O’Dwyers
* includes BSMG Worldwide
Richard Edelman will tell you that the fact that we are a private firm and don’t have to give profits to outside shareholders meant that last time we could hang on to more of the good people and so were better placed when the economy turned around. The figures above bear out the wisdom of this strategy then. I’m still glad I work in a firm where every shareholder is in the firm, but I suspect this economic downturn and financial crisis will have different effect on the big firms for a number of reasons.
1. Many of us are now winning big business off the global ad agencies . . that was only sporadic in 2001
2. A number of us have good digital offers that open up new revenue streams (again, sometimes at the expense of the ad guys)
3. We are better spread globally (I’m very glad Edelman Europe has owned offices now in Russia and Abu Dhabi for example)
4. The case for PR is so much better understood by the business community
5. The case against advertising has really built up since 2001 . . I think marketing budget cuts may be made there first this time
6. Our offers have diversified and matured in areas like CSR, employee engagement and CEO counsel
7. Companies from the ‘developing economies’ are spending on PR outside their own market in bigger numbers than ever
There are probably others too and so while I am becommming resigned to the fact that I will be navigating my firm through choppier waters over the next couple of years, I do think we and some of our bigger competitors are better placed than last time.
Anyone have any views from the small and medium side of the consultancy world?
[tags] PR Week, PR global rankings, Weber Shandwick, Fleishman-Hillard, Edelman, Burson Marstellar, Hill & Knowlton, Ogilvy PR, Ketchum, Porter Novelli [/tags]