LONDON: As UK PR firms attempt to get a handle on the new media economy, industry growth has slowed to 14% and profits have fallen by 9%.
According to rankings compiled by PRWeek's UK sister title, the top 150 agencies in the UK grew 14% to nearly pounds 500 million (dollars 800 million) in 1999, compared with a 17% increase in 1998. At 11%, growth among the top 10 firms was even slower.
A separate survey by consultancy Willott Kingston Smith found that while marketing services companies are currently experiencing a boom in business from Internet-related marketing, this expansion is not necessarily boosting profitability. WKS attributes the 9% drop in operating profits among PR firms to the increased employment costs of bringing skills in-house. A large number of agencies also undermined their profits, the survey concluded, by restructuring to create specialist new-media divisions.
The ranking also saw the decline of the independents: for the first time, there are no independents among the 10 leading PR agencies. Edelman, with revenues up 1% to dollars 14 million, slipped from 9th to 11th place. Ketchum also dropped out of the top 10, with fee income dropping by 8%.
Among the top 10 players, the fastest growing was GCI/APCO, with fee income up 55% to 18 million dollars. The fastest growing agency overall was Ogilvy, which grew by 115% to 8 million dollars.