Report highlights industry divergence

The PR industry is highly polarised, with a small number of firms

representing most of the growth in fee income, research shows this

week.

Plimsoll Publishing, which has reported on the state of the PR sector

for the past six years, says the gap between the winners and losers this

year is now markedly greater than before.

David Pattison, a Plimsoll senior analyst, said: 'The industry is

growing at six per cent on average, but there's a band of 70 companies

growing at about 50 per cent a year and about a quarter companies losing

20 per cent a year.'

Among the 70 companies growing fastest, the report says 31 could be

putting themselves in financial risk in pursuit of new business.

'It does not mean the business is an overall success just because it is

seeing growth - maybe they are borrowing more money or taking less

margin. There is evidence that companies are putting themselves at

risk,' said Pattison.

The report looks at the most recent accounts of 1,000 companies and

predicts that more than one third will not see growth at all this

year.

Less than half of these companies were making efforts to reduce their

asset base, the report warns.

The highest market-share earners listed in the report include Joe Public

Relations (up 120 per cent), Fleishman-Hillard UK (up 126 per cent) and

Gnash Communications (up 95 per cent).

Some of these gains are the result of mergers within holding groups.

'The sector is moving towards 120 or 150 companies capturing more of the

market,' Pattison added.

The research comes as the PRCA announced plans to treble normal

expenditure on marketing for a six-month research and marketing campaign

to support its members during difficult market conditions.

The 'Building Market Confidence' project will be funded with £100,000 from the body's cash reserves.

- Leader, p8.