It is not easy to estimate the value of the entire UK PR industry, although PRWeek’s Top 150 Consultancies 2010 shows the top 150 agencies in the UK made a combined total of around £814m in fees in 2009. This compares to a figure of £858m in 2008.
Looking ahead into 2010, the signs are ominous. The Bellwether Report for Q2 showed a 7.9 decrease in marketing budget revisions for the ‘all other’ category, which encompasses PR and events.
This was down on the 3.5 per cent decrease in Q1 and has led to fears of a double-dip downturn, supported by revenue predictions in the ICCO World Report, which suggests there could be a further five per cent decrease in the PR industry on top of a five per cent drop in 2009.
Whether this prediction turns out to be true or not, the impact on the UK PR industry will be felt. Robert Phillips, UK CEO of Edelman, says: ‘My concern is the impact on consumer, and therefore client, confidence that talk of a double-dip recession brings.’
The news is not all bad. PRWeek editor Danny Rogers says many PR bosses are upbeat, and already talking about the return of double-digit revenue growth. ‘Things feel better than a year ago,’ he says, ‘however the market remains jittery owing to a flat economy and looming government cuts and tax increases.’
The recession is broadly thought to have benefited the PR industry on some level, as many agencies have reported clients are moving spend away from advertising and into PR. Phillips says this shift away from traditional advertising into the PR and digital space is helping to counterbalance potential cuts elsewhere.
But Weber Shandwick European CEO Colin Byrne warns that the UK PR industry must shape up to ‘stop the ad agencies eating our lunch’. ‘We still haven’t figured out measurement to the satisfaction of CMOs used to ad agency metrics, and we still haven’t got an effective method of charging clients for our ideas and creativity, as opposed to time spent implementing campaigns. PR agencies are increasingly driving big creative ideas that were once the preserve of the ad industry.’ Rogers backs up this view. ‘PR teams need better skills and tools at their disposal, otherwise they will be increasingly threatened by advertising and digital specialists, and management consultants.’
The buzzword for the media landscape is unquestionably ‘digital’. Rogers says: ‘The continuing digital revolution is changing the ground rules of both brand promotion and corporate comms.’
Phillips adds: ‘Digital has changed everything, forever. We need to stop thinking about it as a channel and recognise it as a fundamental behavioural shift.’ Byrne agrees: ‘PR is best placed as a marketing discipline to drive the digital revolution.’
But in all the excitement about the brave new world of digital, it can be easy to forget that print and broadcast media will continue to play a vital role even as social media continues to increase in influence. ‘In print media, the Telegraph’s expenses revelations reminded us of the power of really good print journalism,’ Rogers says.
‘And the British tabloids, particularly the Daily Mail and News of the World, are constant thorn in the side of anyone who starts believing they are above the law.’
Byrne points to Weber Shandwick research that shows that traditional media continues to be strongly influential in the UK, even taking into account the rise of digital. The research shows the Daily Telegraph is the most agenda-setting newspaper post-election, and the BBC’S Today programme has the same accolade for broadcast. Television as a medium recently re-asserted its power through the leaders’ debates in the run-up to the recent General Election.
The BBC remains the dominant force in broadcast media in the UK, but a new contender is emerging. Rogers says: ‘Sky is a real threat both in terms of content such as sport, movies and entertainment, and news. Sky News continues to break massive stories.’
In terms of key news stories, two of the most dominant events in the past year were the ongoing BP Deepwater Horizon crisis, and the general election. ‘BP’s handling of the Gulf of Mexico oil leak showed how crucial both long-term stakeholder comms strategy and natural comms skills really are,’ Rogers says. The coalition government, meanwhile, has heralded the start of a new era. ‘The future lies in new alliances and coalitions – and not just in politics,’ Phillips says. ‘Business, government, NGOs and citizens are all expected to play their part in solving the big issues such as climate change and economic recovery.’
The ICCO World Report highlights FMCG, retail and utilities as the key areas for growth within the UK.
Consumer and brand marketing, corporate and strategy, digital and new media, healthcare, and technology all have growth potential.
Rogers says ‘legacy’ brands such as British Airways, the BBC, British Gas, BP and Marks & Spencer remain bellwethers in terms of corporate reputation.
‘Meanwhile global consumer brands such as McDonalds, O2, Orange and Nintendo also consistently demonstrate the power of strategic and creative public relations,’ he adds.
‘In the tech field Apple and Microsoft continue to set new benchmarks in digital comms.’
Car firms are key brands, followed by financial services and retailers, Byrne adds.
The ICCO World Report does not see public affairs as being a key area for growth in the UK market.
Byrne says the sector is a strong area of business in the UK but concedes it is still small compared with the Washington public affairs landscape.
He says: ‘Public affairs is a very heavily scrutinised and partly self-regulated sector, which means that good firms have nothing to fear but bad operators who drag down the reputation of the whole sector do.’
Rogers adds: ‘The UK has a thriving public affairs community, which has bucked the recessionary trend thanks to a febrile and changing political scene here.’ However the the possibility of regulation is a big challenge facing the industry. ‘The UK community is making big strides in terms of self-regulation in the hope of staving off meaningful state involvement,’ he notes.