EDITORIAL: PR confidence is what is at stake

Sir Martin Sorrell's grim pronouncements on the health of the

marketing services sector last week will no doubt have sent a shiver

down many a PRO's spine. But while the results for WPP's PR interests

represent something of an anti-climax on the previous highs recorded by

the group, it is far too soon to surmise that PR has caught a cold.

The group's PR revenues have, in fact, showed continued growth and the

slowdown is mainly confined to the technology market - Ogilvy's problems

in this area, in particular, have been well documented by PRWeek in the

UK and the US.

The real danger to the PR industry is firmly linked to levels of

confidence, both in terms of innovation and investment. Anecdotal

evidence points to a healthy level of new business out in the

marketplace, with pitches continuing even through the traditional summer

lull.

What is clear is that some companies are moving towards hiring on a

project rather than a retainer basis. While some view retainers as a

life-raft at a time of uncertainty, project work can be highly

profitable if an agency has the flexibility to handle an increase in ad

hoc new business.

And therein lies the rub. In a business that counts its people as its

main assets, staffing levels often tend to be cut back as a pre-emptive

measure to keep an agency fighting fit. However, knee-jerk lay-offs will

only serve to undermine the very flexibility required to ensure the

health of the industry, in both the short and long-term.