Agencies weather storm, suffer only 7% dip in 2001

NEW YORK - The dot-com collapse, economic malaise, and September 11 conspired to turn 2001 into what Brodeur CEO Andy Carney called 'the perfect storm', but with total revenues falling only 7% from the all-time high of 2000, PR agencies toughed out the tempest.

NEW YORK - The dot-com collapse, economic malaise, and September 11 conspired to turn 2001 into what Brodeur CEO Andy Carney called 'the perfect storm', but with total revenues falling only 7% from the all-time high of 2000, PR agencies toughed out the tempest.

Initial estimates, published by The Wall Street Journal, suggested agency revenues would drop as much as 15% on average. But the PRWeek/Council of PR Firms Agency Rankings show the average decline to be a more moderate 8% among the 20 firms, and around 6.7% for the shops ranked 21-280.

"The agencies were not recession-proof, but the figures prove that PR outperforms the ad industry in times of GDP decline," commented Kathy Cripps, Council president. "It was a tough year, but most agencies proved very resilient."

The rankings do, however, highlight the severity of the lay-offs last year. The total number of employees for firms reporting their figures fell from 22,860 to 18,383, nearly a 20% drop. Cuts at the top 20 agencies were even more severe, with staff numbers for those shops falling 24%.

Much of the damage was inflicted by the tech market dive. Revenues from tech fell 18.4%, from $1.16bn in 2000 to $946m in 2001. Accordingly, the share of agency revenues derived from tech fell from 41% to 34%. Revenues from the financial sector suffered a similarly steep slide, from $184m to $152m.

Business from other areas held up well, however. Health-care was the star performer, with revenues from companies in this sector rising 21.3% to $528m. Healthcare now constitutes just under 20% of all PR firm business - up from just 15% in 2000. Revenues from nonprofits, government work, professional services firms, industrial corporations, and the consumer sector all rose well ahead of inflation.

Merging with BSMG helped Weber Shandwick Worldwide displace Fleishman-Hillard as the biggest firm in the rankings table, despite a revenue decline of 21%. Hill & Knowlton rose to the third spot, previously occupied by sister agency Burson-Marsteller, achieving impressive growth of 10%. Ketchum also moved up, going from seventh to fourth and growing 12% on the back of a handful of acquisitions.

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