Danny Rogers: Q1 results show comms spend challenge

This week we have heard financial updates from the big marcoms groups, the barometers of PR spend.

Danny Rogers
Danny Rogers

Crucially, this set of results referred to the first quarter of this year, which anecdotally has been the toughest so far for comms professionals.

PRWeek’s Top 150 report last week documented 2008’s performance, which on balance showed a slowdown rather than a collapse in expenditure on comms. But the beginning of 2009 has proved significantly worse.

WPP, Omnicom and Publicis all reported a drop in global marcoms spend by clients of around five per cent. However, the UK market seems to have performed worse than average.

More worryingly, and for the first time in this recession, there are indications that PR spend is falling more steeply than ad spend; in WPP’s case, significantly so.

WPP boss Sir Martin Sorrell put this down to the project nature of PR, meaning that as the recession hits a trough, clients can quickly cut their costs by postponing or scrapping PR projects.

Certainly, talking to mid-sized independent PR agencies, February and March were ‘carnage’ with annualised revenue falls of between ten and 30 per cent. We are hearing reports of pitches taking months to resolve, if at all, and budgets being renegotiated.

As reported here last week, there is fear that HP’s decision to hold an online reverse auction for its PR contracts could be emulated by many clients.

The brighter news is that things may have levelled out a little during April. Recruitment consultants report an uplift in PR hires and there is evidence of fresh budget being released.

Interpublic Group, owner of Weber Shandwick and GolinHarris, did not break down its Q1 figures but said ‘PR business, taken together, had only a slight organic decrease’. The group’s boss, Michael Roth, described PR agencies as ‘showing resilience’.

One thing is for sure, if PR is to ride out this recession, the key will be genuine belief and passion in the discipline itself,
along with the improved ability to measure its output and outcomes.

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