Danny Rogers: Cautious optimism for a prosperous 2010

Danny Rogers, PR Week UK, 09 December 2009, 06:00am

It is satisfying to send PRWeek's last magazine of 2009 to press on a positive note.

Danny Rogers

After more than two years of gloomy predictions about the sector, our in-depth look at PR spend in 2010 throws up genuine optimism. Surveys, analysts and individual PR bosses are noticeably more bullish than they were this time last year.

The consensus is that public relations has survived the recession because clients are regarding it as an essential board-level discipline; they are viewing it as more cost effective than advertising, and because of the huge interest in influencing social media.

We should, of course, put such optimism into context. This has been the worst global recession for 80 years. The first quarter of this year, in particular, was deeply depressed in most sectors.

The PRCA's latest benchmarking report provides insight into what has happened over the past 12 months. Around 50 per cent of PR agencies have shed staff, and more than half have lost revenue. But about one-third of agencies actually saw revenue grow, while half improved their profitability.

It is good to see that, for most marcoms groups, the third quarter of 2009 was a marked improvement on the second. Share prices in PR-dominated groups continue their upward curve.

As ever, our optimism must be cautious. The biggest worry is a 'double-dip' recession because soaring equity markets may have little real foundation other than quantitative easing, and because we still do not know the true balance sheets of big financial institutions.

Another concern is the UK Government's determination to slash millions of pounds from public sector comms budgets, which would cut off a rich seam of funding and resources.

As a result, real growth must come from the private sector, and analysts are eyeing consumer, tech and healthcare PR as the biggest prizes. Above all, growth will come from the new digital channels, where PR professionals will be fought tooth and nail by other marketing disciplines.

So we approach 2010 in a strong position, but with a fresh set of ambitions. With this in mind, all at PRWeek wish you a happy festive season and a successful new year.

Danny Rogers is BSME Editor of the Year

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All Comments

Graham Goodkind - 10 December 2009

I share the optimism, but then I'm naturally optimistic. I'd insert the word "cautious" though. I think the recession has changed client behaviour in the respect in which they buy and procure PR services. And we'll see the effect of that roll-on, long after a recession.

A much more project-led landscape is one I think many agencies will have to get used to. Whilst potentially good for profitability, its makes a nightmare of resource planning. And forecasting.

Marc Schmid - 10 December 2009

Coming from the public sector the budget squeeze presents us with opportunities to build a business case for closer central control of communications and better collaboration between LSP partners. To do this though we have to go on the front foot rather than sit back and wait for finance depts to work out where the efficiencies will be made. If teams have moved closer to the top table CEOs will recognise the value of communications in terms of reputation management but now it is up to us to demonstrate how better co-ordination of all marketing spend can contribute to the organisation's efficiency programme.

esther porta - 13 December 2009

Nobody has a crystal ball but at last two facts seem crystal clear:

1. Unemployment is rising at an unprecedented rate, now mostly in secondary supportive industries, like creative services.

2. Government spending continues unchecked \(for now).

Put those two together and it's no surprise that, for many, public sector work has become a lifeline. Countless creative firms have started churning out tenders for jobs that might have seemed less than inspiring, and perhaps more hassle to win than they were worth, just a few months ago.

Everyone we work with who's playing that game says they are astonished by how many bids are going in every time the public sector invites tenders. Yet even if you can win in that lottery, the future for some of the most accessible channels of public spending for growing businesses is far from certain.

Take the Regional Development Agencies, for example. They look seriously at risk, whichever of the major parties is in charge. If the writing is on the wall for them, no one should kid themselves. Come next spring, the axe is going to fall in all areas of public spending, and hard. It looks like politicians of all sides are depending on next spring shooting forth a revitalised private economy, ready to take up the slack that the public sector will leave behind as savage post-election budget cuts hit home. Will that give us the dreaded double dip? Or will it stabilise an economy that is on the rise? I am guessing the second, but I'm not totally convinced.

But in truth it doesn't matter, because the question for everyone right now should be ... what does it all mean for ME?! We know that capitalism has not come to an end and there is no longer any excuse to stay stuck like a rabbit in the headlights. It's tough, but in many ways it is still business as usual.

If you are running a small to medium sized creative agency, it means what you have always known. You need to stay nimble on your feet and be looking for new customers. If you have a balance between public and private sector clients, you may want to alter your focus a bit come the autumn. And if you are entirely focused on the public sector, you should prepare to fight for budget. If you are already suffering through the private sector economic decline, you need to solidify your customer relationships with companies that will do well in recovering economies and try to bag a few of them as clients.

Everyone does well on a rising tide, but the plain truth is that, whatever shape this recession turns out to be, we will have to wait a good few years to feel that surge tide floating us all high again with both private and public sector growing. I am afraid there is no escaping the fact that it is going to be a lot of hard work and we are going to see both winners and losers for quite a while to come. If you want to be on the winning side, now is time to think through your strategy and to put in place plans to protect and grow your business.

Rose Lewis, Pembridge Partners LLP www.pembridge.net

Danny Rogers - 16 December 2009

Thanks for your views here. Much appreciated. Keep them coming...

Danny

Stephen Waddington - 05 January 2010

Like Graham I'm naturally optimistic but like Rose my concern is growth and when it's going to return to the economy.

Public spending versus GDP is currently running at 45 per cent according to UK Public Spending. If that is cut back by 10 to 20 per cent by the new Government before growth returns to the economy. That's a hit on GDP of anywhere between 4 to 10 per cent.

There's the deep U shaped recession that Sir Martin Sorrell predicts for Europe. Or even a W. Figures for the level of government spending on PR and communications are hard to come by but such cuts would inevitably have a significant impact on the industry.

In the PR industry we've been managing businesses on monthly cycles for some time and that isn't going to change anytime soon.