Editorial: Making sure the PR price is right

The announcement of WPP’s half year results earlier this week provided a powerful vindication, not only of the group’s decision to diversify beyond its core above-the-line business, but also of the general trend towards PR acquisitions in the advertising industry.

The announcement of WPP’s half year results earlier this week

provided a powerful vindication, not only of the group’s decision to

diversify beyond its core above-the-line business, but also of the

general trend towards PR acquisitions in the advertising industry.



WPP’s public relations businesses, including Hill and Knowlton and

Ogilvy PR Worldwide, emerged as the fastest growing segment of its

overall business.



A PR growth rate of 22 per cent, described as ’a triumph for PR’ by the

Times, outstripped the growth of its above-the-line businesses by 13 per

cent. Its PR operations have also continued to improve their operating

profits and margins - again outstripping the advertising business which

traditionally operates on slimmer margins.



What this kind of growth rate suggests is that consultancies should

beware of selling themselves short. The main sticking point on last

year’s rumoured deal between WPP and Dewe Rogerson was reported to have

been price. The agency was believed to be looking for pounds 25 million,

a price deemed by WPP to be too steep. But the fact that talks fell

through may be a blessing in disguise as it is now allegedly in talks

with Incepta, with a rumoured price tag of pounds 30 million.



There are increasing pressures on independent consultancies to sell, but

PR is rapidly becoming a premium product. It is currently a growth

business while advertising is not. And if the round of consolidations is

set to continue, consultancies must be confident of their value, and the

offering they can bring to the advertising agency table.



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