PRWeek's Top 150 PR Consultancies grow 9% despite tough year

Last year was one of mixed fortunes for the UK PR industry. The economy remained tough, the Cabinet Office confirmed it would close the COI and work became more project-based.

Top 150: the industry’s definitive guide to the UK’s top PR firms
Top 150: the industry’s definitive guide to the UK’s top PR firms

By year's end, flagship marcoms groups Huntsworth and Chime reported damaging client fee cancellations amid global economic uncertainty. Chime's Bell Pottinger, still the largest agency in the Top 150, suffered a seven per cent drop in fee income after losing US government contracts.

Yet companies that submitted figures still grew by an average of nine per cent. Excluding Bell Pottinger (which would have grown if the US account had not been lost), the figure is 11.5 per cent. Kingston Smith W1 partner Esther Carder says growth was spread evenly throughout the sample with about half the consultancies growing by ten per cent or more.

The industry's total fee income jumped to £900m, up from £839m in 2010 and 2009's figure of £814m. It now exceeds the pre-recession 2008 figure of £858m.

Overall growth has been boosted by a series of acquisitions. Four Communications bought travel specialist BGB Communications and arts and culture specialist Colman Getty, contributing to a 43 per cent growth in fee income. Engine Group bought PRWeek's 2011 Agency of the Year Mischief PR and merged it with Slice PR, while The Big Partnership took a majority stake in rival McGarvie Morrison Media.

The public affairs, healthcare and consumer sectors performed well, as did independent agencies. And with huge growth from digital agencies, such as We Are Social and WCG, this continues to be a key opportunity for the PR industry.

As both Freud Communications' chairman Matthew Freud and the PRCA's CEO Francis Ingham argue in their columns below, now is the time for PR to shine.

Francis Ingham, chief executive, PRCA

2011 was a great year for the PR industry. Tough, but great nonetheless. That is the only sensible conclusion you can reach on the back of these figures.

Despite some of the most uncertain trading conditions in living memory, consultancies within our industry still managed to grow by an average of almost ten per cent. That is a remarkable figure, and proof both of the resilience of our industry and of the value that clients recognise consultancies deliver.

An industry growing at ten per cent a year doubles in size over seven years - that is the kind of economic powerhouse any country would die for, and something our Government needs to be aware of as it searches for growth.

Of course, within that headline figure there are variations and contrasts. The consultancy wing of our industry is dominated by London - you have to get to number 37 before the first non-London-based agency pops up. And certainly, some sectors performed better than others. That is inevitable and natural, though accentuated by current public sector cuts. Equally, from our data we know that margins have been squeezed and agencies continue to cut them rather than turn work away.

But the direction of travel is clear - at a time when many other industries are under extreme pressure to even stand their ground, ours is growing strongly.

As the nature of the creative services changes, this is our big chance to use the obvious value we bring to grab a much larger slice of the spend that is out there. These figures suggest we are in good shape to do just that.

Esther Carder, partner, Kingston Smith W1

In last year's PR Week Top 150, the PR industry showed a return to growth of just under ten per cent, and this year is little different with growth of nine per cent. Considering the economic climate and government cuts, this is quite an achievement. Time will tell, as accounts are filed, whether this has continued to translate into healthy profits.

Encouragingly, this growth was evenly spread across the sample with approximately half of consultancies showing growth of ten per cent or more.

Of course there were some losers as well. Bell Pottinger saw a drop of about £5m, presumably not helped by the reduced income from the US government contract. If it is excluded the average growth is a healthier 11.5 per cent. As ever the biggest swings tend to be as we move further down the table. However, this year in particular the smaller consultancies seem to have done well, with only two of the smallest 30 suffering a decline, and 23 of them showing above-average growth for the Top 150.

PR consultancies seem to be in quite a good place right now compared with some of the other marketing disciplines. They have taken advantage of their ideal positioning to grab social media budgets and this has helped them plug some of the gaps that contraction in other budgets has left.

But consultancies still have to deal with more income moving towards project rather than retainer accounts. So they need to ensure that staff costs stay under control in order to preserve what have historically been fairly good profit margins.

Matthew Freud, chairman, Freud Communications

I have always liked lists and charts, but we should remember that they usually depict a relative hierarchy.

For decades our industry has been close to the bottom of the marketing food chain. PRWeek's Top 150 then has traditionally been an annual ranking of the tallest dwarves.

But things have changed. Our industry is growing while those around us are largely in decline. The basic economic model for media and marketing is broken. The consumer is no longer willing to consistently pay for content and media owners are no longer able to guarantee the attention of their audience to advertisers. But PR was never allowed a seat at this commercial table, our remuneration was not driven by circulation or media spend. We seek to influence media positively or mitigate its negative effect. That is hard to measure, and harder to price.

Digital distribution has decimated the ability of those producing media to benefit from the exponential increase in its influence. Consider the Daily Mail: two million copies sold every day but 100 million users online. These 100 million do not pay directly for the product and the advertising yield for an audience 50 times greater than their print equivalent is discounted by perhaps 90 per cent.

But for our industry, a positive story in the Mail is now 50 times more valuable than it was before, a negative one 50 times more damaging. There is no dilution in the impact of content because it is delivered through a multitude of devices.

However, today's tables do not show explosive growth in fee income. As ever, we are timid and insecure about our charging model. Two words banned from the Freuds vocabulary are 'per month'. Something as important as the reputation of a business and the protection of a brand deserves to be contracted on a serious basis. Building and protecting reputations is a long-term endeavour. If we deliver, clients will be happy to pay more than the stipend charged by small agencies offering thin service. PR should be strategic, muscular and well resourced.

It may just be that the giants of our world are getting smaller, but I emphatically urge my fellow dwarves to rise up and seize this day. It has been a long time coming.

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