Danny Rogers: Global PR networks likely to thrive this year

Now that budgets appear to have turned the corner, it is worth musing on how the PR consultancy sector may restructure during a moderate recovery this year.

Danny Rogers
Danny Rogers

Last week, two former agency bosses - Michael Hayman (ex-The Communications Group) and Nick Giles (ex-Text 100) - launched a new consultancy called Seven Hills. Hayman claimed: 'We are the first significant post-recessionary agency to come out of the UK market.'

He was referring to the theory that recessions traditionally prompt a flurry of new start-ups - because executives become frustrated in big employers; office space and talent become cheaper; and therefore small, flexible consultancies can undercut the big boys but still charge decent fees. Certainly, the last recession saw the creation of Frank, Blue Rubicon, Brands2Life, Tulchan etc, all of which have grown into very strong businesses today.

Will it happen again? It depends on how quickly the big players recover and incentivise their best staff, and, probably more importantly, how easily start-ups can access necessary investment. There is also a big question as to whether potential start-ups could compete in what is an increasingly global PR market, particularly in the corporate and financial area.

On this theme, we are likely to see the truly global PR networks thrive during 2010. Many global brands are looking to rationalise their PR rosters and renegotiate fees with a smaller number of big networks. While Western economies will only grow sluggishly this year, global agencies should also be able to exploit potentially lucrative markets in the BRIC countries, as well as in the next wave of emerging nations such as Mexico, South Korea and South Africa.

Hence we have already seen some large-scale consolidation, with Huntsworth merging Trimedia into Grayling, and Publicis Groupe rationalising its agencies.

At the opposite end of the spectrum, many local freelance PR professionals are enjoying a bumper period, as PR agencies farm out project work rather than risk increasing their headcount in an uncertain market.

So we may indeed see a polarised PR industry by the end of the year, with mid-sized agencies squeezed from the trends outlined above. As a result, there may be growing pressure on such agencies to sell up or take a whole new direction, especially if they are not leaders in their own particular niche.

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