Reading between the lines: PRWeek Global Agency Business Report 2016

Global revenue across the sector may be up, but PR failed to reach the heights it aspired to in 2015. To combat this, integration and convergence are now key battlegrounds for client work as firms look to forge ahead in the next 12 months.

Image via  Niuton may / Flickr; Used the Creative Commons Attribution 2.0 Generic license. Cropped and resized from original
Image via Niuton may / Flickr; Used the Creative Commons Attribution 2.0 Generic license. Cropped and resized from original

Listen to the rhetoric that comes out of PR firms and you would be forgiven for thinking this is a golden age and the industry is breaking through to become the dominant force in communications.

And it’s true that, in a world increasingly defined by PESO communications, that rhetoric should be reflected in reality. Agencies ended 2014 claiming to have fundamentally retooled for an integrated future and set fair for a big year of growth and progression.

Dig into the figures and big developments in 2015, however, and the picture becomes murkier.

Total global PR revenue reported for this year’s PRWeek Agency Business Report showed growth of 5%; lower than the 12 months prior. Growth in the top 50 global firms — which are a good bellwether as they account for 80% of total PR revenue — was cut in half in 2015 compared to the previous year, from 8% to 4%. Growth in the U.S. was a little better, remaining steady at 7% compared to 2014 — but it is hardly earth-shattering or proof that PR has crossed the Rubicon into a glorious integrated future — especially when compared with growth posted by the advertising sector in the same period.

Some big firms did deliver on 2014’s promise — Weber Shandwick, Edelman, Golin, and Cohn & Wolfe — albeit typically to a lesser extent than the previous 12 months. Others are navigating senior leadership transition or still talking of stabilizing, pivoting, and transforming: MSLGroup, Ketchum, FleishmanHillard, Ogilvy PR, Burson-Marsteller, and Hill+Knowlton Strategies.

The leader of the world’s largest PR agency, Richard Edelman, believes we have reached a "pause moment."

"Six of the top 10 firms are in zero growth or negative," he notes. "That’s a bad sign. We’re missing the opportunity. We have to take more chances and persuade CEOs having PR working with CMOs is good for companies."

He sees the intersection of corporate reputation with brands as the sweet spot for the industry, and social media, community building, and social listening as inherent to PR’s skillset. "We can’t let this data play get away from PR," he explains. "We have to aspire to customized content based on data, and micro-targeting based on paid amplification."

It’s clear that integration and convergence are key battlegrounds. Amid the talk of transition, integrated working, and the dovetailing of communications with marketing, holding companies are encouraging their constituent agencies to work more closely together. And agencies across all disciplines, especially PR, are discovering distinct advantages in terms of engaging clients by cracking interagency working and making it a win-win-win for all parties.

The rise of ‘horizontality’
WPP CEO Martin Sorrell has long been a proponent of "horizontality" to describe this process, and the holding company’s success with 45 cross-agency client teams such as Team Ford, Team Dell, and Team Bank of America illustrate the theory in practice.

Cohn & Wolfe got a special mention from Sorrell in WPP’s full-year financial statement for 2015, and CEO Donna Imperato explains her vision five years ago of "a future made up of agencies integrating communications across disciplines."

"Most of our growth is coming from the integrated marketing arsenal of digital and social, but also mobile and content," she says. "I see vast opportunities that are going to become more important for our business. The only difficulty is growing too fast and finding the right talent to service that kind of work."

Following its aborted "merger of equals" with Omnicom, which collapsed two years ago, Publicis Groupe CEO Maurice Lévy restructured his organization into four solutions hubs at the start of this year to foster integration, with PR sitting within a Publicis Communications hub alongside the French holding company’s advertising firms.

Ron Guirguis, newly appointed U.S. CEO, notes his new employer MSLGroup is the only PR agency within Publicis, which in turn is the only holding company with just one PR firm.

"Publicis Communications, the alignment of the [other three] solutions hubs, and the creative agencies [Publicis Worldwide, Leo Burnett, BBH, and Saatchi & Saatchi], enables us to partner seamlessly in a transversal way," says Guirguis. John Wren, president and CEO of Omnicom Group, will point to the Nissan United cross-discipline model and Philips OneVoice across its comms functions as examples of integration in action at his network.

In February, the holding company promoted Porter Novelli global CEO Karen van Bergen to CEO of the newly formed Omnicom Public Relations Group to address "growing demand for seamlessly integrated teams" across the group’s PR portfolio and beyond.

"It was established to address client needs for more integration with other Omnicom agencies and access to a broader pool of PR talent," explains van Bergen, who cut her teeth on the client side at McDonald’s and running OneVoice at FleishmanHillard. "I get four for one with Philips, building customized teams with the best talent in every market and expertise they need."

Other Omnicom cross-agency accounts include Procter & Gamble, through the MMK+ structure (Marina Maher Communications, Ketchum, Fleishman, and Porter), and Pfizer Accelerator across all disciplines. "It’s especially relevant for big global clients," says van Bergen.

So it seems most firms at least have their eyes on the integrated prize and know their desired destination — even if they are at different stages on the journey.

An independent stance
For Edelman, there is continued appeal in being the independent and neutral Switzerland" of PR, not tied to any holding company and in theory able to work with all of them.

"Despite horizontality, a lot of companies choose not to use it," says the agency’s iconic president and CEO. "If you’re really good at what you do, I’m not concerned. This has been around for five years when Sorrell started the move toward horizontality and we [Edelman] got aced out of Pfizer."

But he noted his agency still does a lot of business with, for example, HP, even though the tech giant consolidated with Omnicom firms in 2014. "Our HP work tends to be more digital than PR," he notes. "We work for HP’s marketing organization."

Edelman says it is sometimes a cost and price decision, such as another tech company, SAP, which also went to Omnicom in 2014. "They bundle it to make it efficient overall," adds Edelman. "The big negotiation and spend is the advertising — the PR gets thrown in."

He says he was more concerned five years ago than he is today and notes a counter-trend evidenced by Edelman’s recent inroads into Omnicom’s Nissan account in France and around driverless cars in the U.S., "where we do really good work and we get the client."

"We redefined the business so we’re not just a PR firm," he explains. "We’re digital, experiential, communications marketing. If you want it in one place, you can get it with us."

Mutual benefits
Fleishman’s new CEO, John Saunders, notes a similar trend at the third-largest firm in the market and looks forward to teaming up with longtime colleague van Bergen to supercharge the offer across Omnicom to their mutual benefit.

"I envisage lots of scenarios where Karen will be with the CMO and CEO somewhere in the world and point them to the right assets throughout the group, using the most appropriate resource," he says. "It’s in our interest to be in the conversation with Omnicom — continuing to work those relationships will be a drumbeat for how we behave."

He echoes Edelman’s point that PR firms secure work from more than one master.

"The integration of communications and marketing depends on the category. We help [CCO] Kelly McGinnis on a few projects at Levi’s, but most of our work is funded by brand marketing."

Fred Cook, CEO of Interpublic’s Golin, also sees new tranches of client work opening up within brands and organizations due to the convergence of marketing and communications. He wants the agency’s acquisition of U.K. creative hot-shop The Brooklyn Brothers to fast forward the process.

"We’re dealing more with CMOs and Brooklyn Brothers will be a giant step in that direction," he says. "The walls are breaking down more and more."

It’s not just client walls breaking down that is stimulating growth and helping PR firms realize their potential — it is also opening eyes within holding companies. On paper, Ogilvy should be the perfect location for truly integrated marketing services, with its unique heritage and all disciplines operating under the same umbrella.

Stuart Smith, 18 months into his tenure as the firm’s global CEO, says: "It’s about being well-connected in the [Ogilvy and client] buildings. It’s about speaking the language our marketing colleagues speak, and talking about the role of earned media in activating a campaign platform, which is more their language than ‘we know how to do some good PR for you.’"

He explains this is because Ogilvy PR can play both sides of the equation, on the one hand being a good agency in its own right that integrates with its Ogilvy & Mather colleagues, on the other bringing in marketing groups of its own through the PR door and creating value across the group through "earned influence that takes us out of the earned media box."

"Ogilvy can do integration by borrowing from the rest of the organization and, by being more porous, we should be able to move more quickly in that direction than other PR agencies," notes Smith. "I can walk down the corridor and borrow two creatives for a pitch. We’ve done that several times recently."

CEOs and client work

The nature of leadership dictates that many agency leaders spend less time doing what they really love — client work — the higher up the organization they climb, but the CEOs of major PR firms increasingly insist their senior staff have regular interface with clients, and they’re leading from the front. Weber Shandwick’s CEO Andy Polansky says "all our senior people spend a substantive amount of time on client work," adding "it’s part of our model and part of what makes us successful."

Hill+Knowlton’s global CEO Jack Martin is also determined to flatten the structure at the WPP firm and get people concentrating on client work, starting with himself.

Percentage of CEO time spent on client work

Ron Guirguis, MSLGroup 30%
Andy Polansky, Weber Shandwick 30%
Fred Cook, Golin 33%
Richard Edelman, Edelman 35%
Rob Flaherty, Ketchum 45%
Stuart Smith, Ogilvy PR 45%
Don Baer, Burson-Marsteller 50%
Jack Martin, Hill+Knowlton Strategies 55%

 

Exploiting one’s ‘unique positioning’
MSLGroup’s Guirguis is also looking to exploit the unique positioning of his firm within its holding company Publicis to grow business.

"Publicis is a 3,000-person enterprise in the U.S.," he says. "Conversations with ad agencies aren’t just show-and-tell presentations — they’re preset deep-dive account conversations about where we can help, add value, and extend campaigns."

Guirguis says another element unique to MSL and Publicis Groupe is its single P&L across the agencies and the U.S., which deals with any lack of incentive to collaborate.

"Everybody says they’ll collaborate, of course," he explains. "Then you get busy, you don’t have extra staff, you don’t have time, ‘our budgets are nowhere near their budgets.’ I know that’s the way it’s been in other holding companies."

His objective is to create collaborative structures at scale, and not just for key accounts, because "when you start doing that across 100 clients, it’s an entirely different proposition."

Guirguis says it’s sufficiently exciting that his ad partners’ eyes light up and they promise to pull MSL into every conversation with this offer.

"The group is fully committed to influence as part of the integrated communications mix, and MSL is the tip of the spear."

The most successful agency in the past two years in delivering growth numbers and embedding integrated attitudes and services within its organization is IPG’s Weber Shandwick.

CEO Andy Polansky describes the firm’s special sauce as follows: "We created a powerful global network, which we continue to enhance and add depth to. We then added specialist expertise in our practice areas. Then we focused more on client-centricity and created a career path for those passionate about client work versus running an office and a practice."

The agency integrated another layer to the matrix, which Polansky dubs "the engagement discipline:"

"We’ve added hundreds of people globally with different skillsets: strategists, creatives, data scientists, journalists, and so on."

One thing’s for sure: PR won’t reach its true potential until it shakes off the lack of self-esteem that characterized its legacy and stops behaving as though it is still confined to the little kids’ table.

"I’m not in love with our inferiority complex and proclaiming the demise of the 30-second spot and the ‘advertising dinosaurs,’" says MSL’s Guirguis. "[Advertising is] not going anywhere and they’re really good. Let’s not pretend we can do this better than they can. Let’s pause and look at it from the client’s perspective: ‘We’ve got business challenges or opportunities and we’re looking for the best integrated communications solution.’" 

Additional reporting by Diana Bradley

Case studies


Integration across PESO

Weber Shandwick
Barbie: The Doll Evolved for Mattel

As Barbie turned 57, brand owner Mattel engaged its PR AOR Weber Shandwick to help Barbie evolve and change to stay relevant and be a positive representation of women.

Mattel’s evolution of Barbie placed her in a context more reflective of the real world girls see around them, including three new body types: tall, curvy, and petite.

Weber worked with Mattel and Barbie’s brand team for six months on elements such as leak and launch strategies (including a launch-day war room), scenario plans, crisis simulation, influencer marketing, social counsel, and a global messaging toolkit.

The campaign launched with a Time cover story titled: ‘Now can we stop talking about my body?’ and a celebrity event. It became the number one global news story of the day, with five billion global impressions and 97% neutral or positive coverage sentiment — one of the most effective campaigns in the brand’s history.

"It’s a great example of how we approach campaigns in an integrated way across paid, earned, and owned channels," says Weber CEO Andy Polansky. "The biggest engine for growth continues to be our strength in content marketing, digital, and social."


Creative content and media relations

Burson-Marsteller
50th anniversary of Moore’s Law for Intel

Gordon Moore founded Intel and, before that, the iconic company Fairchild Semiconductor that introduced the spirit of innovation that preempted the tech revolution in Silicon Valley.

Moore’s Law was based on a paper he produced in 1965 predicting the growth of semicon-ductors that proved so accurate that industry planning and manufacturing projections were based on it for decades after.

As the 50th anniversary of Moore’s Law approached in 2015, Intel’s PR agency Burson-Marsteller suggested a creative execution based on its media relationships and knowledge.

Burson knew that influential Pulitzer Prize-winning New York Times op-ed columnist Tom Friedman was writing a book about the pace of change and how it has affected everything in technology.

Moore is now 86 and lives in Hawaii. Burson brought him over to San Francisco to celebrate the 50th anniversary of his groundbreaking work. He was interviewed by Friedman at a large live event at the Exploratorium supported by Intel, for which Burson produced video and other content and stimulated conversations on social media. And Friedman wrote a Times column about the anniversary that included favorable mentions of Intel.

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