- The good news is that the industry grew last year. On average, the Top 150 agencies saw an eight per cent rise in their fee income. The bad news? It’s a drop from 11.5 per cent average growth in 2012.
- Agencies in different sectors suffered different fortunes. Those in corporate, public affairs and healthcare had a predominately strong year. Take, for example, the top healthcare specialists: Chandler Chicco Companies was up 26 per cent, Tonic Life up eight per cent, Pegasus up 24 per cent and Red Door up eight per cent. But many of the well established consumer agencies saw their fee income shrink. Frank PR faced the biggest drop of 21 per cent in fee income, but its competitive set also suffered with The Red Consultancy down seven per cent, 3 Monkeys Communications down two per cent and Splendid down ten per cent. The Communications Store was also down six per cent, Focus PR dropped by 18 per cent and Midas PR was down 17 per cent.
- There was a ‘squeezed middle’, with the mid-sized agencies suffering the biggest losses. This would suggest clients are either choosing smaller – and often younger – agencies or going for the global reach and integrated offers of the larger networks.
- There was a 13 per cent increase in project work at the expense of retained accounts. This may explain some of the fee income decreases as clients are stricter on their spending. For example, Frank PR’s chairman Graham Goodkind says his agency actually has more clients, but they are spending less individually.
- The agencies that improved their profitability did so by making their staff more efficient. This was not achieved through scrimping on salaries or shedding staff. Instead it may be that the most successful agencies have shifted away from low-value activities and markets and made their working practices more efficient. Securing the best talent will be a key priority for agencies this year.
Top listed groups with PR interests by market capitalisation
|1||1||WPP (UK) Axicom, Buchanan, Burson-Marsteller, Chime Communications (part owned), Clarion Communications, Cohn & Wolfe, Hill + Knowlton Strategies, Ogilvy Government Relations, Ogilvy Healthworld, Ogilvy PR, Public Strategies, RLM Finsbury||16,677||13,877||20|
|2||2||Omnicom (US) Fishburn, FleishmanHillard, GPlus Europe, Ketchum, Kreab Gavin Anderson, Mercury Public Affairs, Porter Novelli, Portland||10,941||10,195||7|
|3||3||Publicis (France) MSL Group, Publicis Consultants||10,572||8,606||23|
|4||4||Interpublic (US) Golin, Rogers & Cowan, Weber Shandwick||4,870||3,911||25|
|5||5||Havas (France) Cake Group, HavasWorldwide, Maitland||2,047||1,521||35|
|6||6||Chime (UK) Fast Track, The Good Relations Group, Harvard, Open Health, Teamspirit||341||215||35|
|7||7||Huntsworth (UK) Citigate Dewe Rogerson, Grayling UK, Haslimann Taylor, The Red Consultancy, Stephanie Chhurchill PR, Tonic Life||161||141||14|
|8||9||Next Fifteen (UK) Bite Communications, Lexis, Text 100||68||49||39|
|9||8||Creston (UK) Nelson Bostock, Red Door Communications||64||55||16|
|10||10||Enero Group (previously Photon) (Australia) Frank PR, Hotwire Group||50||17||194|
Notes: Individual companies listed are PR agencies; other marketing outfits are omitted.
Market capitalisation figures provided by Kingston Smith W1 as of 5 June 2014. Foreign currencies were converted to sterling using exchange rates on that date.