Danny Rogers - Fee growth? Yes, but in specific areas

It feels like a pivotal point in the year. We emerge from the (unusually long) spring bank holiday period to reassess the health of the British comms sector in 2011.

Fee growth: Danny Rogers
Fee growth: Danny Rogers

The Top 150 Consultancies report published today - the best single indicator of the previous year's trading - reports healthy budgetary growth in 2010. Near double-digit growth in a 12-month period, when the wider UK economy barely grew at all, is an admirable achievement.

Although there were variations between PR firms, and between niches of operation, the most encouraging statistic to this observer was that about half of significant UK consultancies grew fee income by more than ten per cent in 2010.

But what about 2011?

'Steady' appears to be the message emerging. WPP's first quarter results, announced last week, revealed 'solid performance' by its PR and public affairs arm (Hill & Knowlton, Burson-Marsteller et al.). This division grew by 5.6 per cent from January to March, slightly ahead of Q4 2010. More encouragingly, this comms growth rate within WPP is gathering steam, something which hopefully is being reflected by other PR firms.

Chime, owner of Bell Pottinger, the UK's biggest PR consultancy collective, remains a 'buy' stock on most relevant analysts' reports.

Another upbeat indicator is the apparent appetite for mergers and acquisitions within the sector. We have seen a tranche since the beginning of this year and business consultancy Grant Thornton last week predicted a continuing 'surge' in media sector M&A for the coming months.

But the areas of growth remain very specific in nature. Recognising this, the best consultancies are targeting social media and digital business for expansion. They are also thinking globally, as the Western markets stagnate and growth accelerates in Asia and the Middle East. But the other big area of growth appears to be in genuinely creative, media-neutral brand thinking.

It was significant to hear Sir Martin Sorrell say that WPP 'to some extent benefits from uncertainty, particularly in the mature economies'. He was making the valid point that at a time of continuing economic fear, risk-averse companies prefer to invest in brand equity, rather than expand production capacity.

Indeed, this could well explain the current buoyancy in above-the-line advertising (WPP saw 12.9 per cent growth here). If this is the case then PR firms certainly need to become much more integrated, selling creative ideas that can truly span converging comms channels.

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