Clients and agencies brace for the storm

Being somewhat preoccupied with the internet these days - this week sees the relaunch of PRWeek's global website - I couldn't resist logging onto the PRCA's web chat on the economy and PR.

Helen Dickinson of John Lewis and Geoff Beattie of Pleon joined PRCA director-general Patrick Barrow on the sofa last week for a remarkably upbeat interactive broadcast on the growth prospects for PR and the likely impact of the economy.

The consensus was that PR is showing no signs of a slowdown, and the frenzied activity of headhunters and competition for decent staff were strong indicators of buoyant agency business - a surprise considering the wider economic environment.

This also seems to be borne out by Willott Kingston Smith's latest survey of the financial performance of marketing services companies, which shows a steady increase in the fortunes of agencies, with operating profits at around 11 per cent. In addition, two thirds of agencies have apparently enjoyed an increase in gross income.

However, weather analogies were thick on the ground in the web chat, with both client and agency pointing to the economic equivalent of Hurricane Rita looming out on the bay.

Given the gloom on the high street, Dickinson was an interesting choice of client to put in the hot seat. Inevitably she confirmed what we all knew about the state of the retail sector, but recognised she was fortunate to work for an organisation where PR is part of the DNA - her ex-managing director was once a PR man.

With this freedom, Dickinson favours retainers over the rush to projects that makes agency forecasting so difficult, and hasn't cut any agencies to date. But she has written to her eight-strong roster indicating the need for careful housekeeping, and is tempering enthusiasm for creativity with a hard look at the bottom line.

I suspect, however, that not all clients are as enlightened. If they were, sitting out PR's Rita would be a doddle.

As the PRCA points out, consultancies need to look constantly at ways to prove ROI and add value, and have greater confidence in their offering.

But clients in general also need to be more realistic about the need for their agencies to maintain a decent profit margin. They must also avoid the temptation to take advantage of tough times by driving down fees and pushing overservicing, and think about the cost to agencies before they invite ten or more to compete in their beauty parades.

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