AGENCY RANKINGS 2002: Looking back, moving forward

Over the last decade, the public relations industry has experienced tremendous growth, increasing an estimated 220% to over $6 billion worldwide.

Over the last decade, the public relations industry has experienced tremendous growth, increasing an estimated 220% to over $6 billion worldwide.

In the US, public relations spending outpaced the nominal gross domestic product (GDP) growth rate by 2.4 times. The total number of PR professionals increased exponentially, and entrepreneurial practitioners continued to open new agencies. The only factors inhibiting further growth seemed to be a lack of sufficient office space and a narrowing talent pool ... until 2001.

Some thought the public relations industry was recession proof, but as the global economy slowed in 2001, the industry's cyclical nature became obvious. According to the Council of Public Relations Firms' Industry Documentation and Rankings, worldwide PR industry revenues decreased by less than 3%; total US revenues decreased only 7%. In fact, during times of GDP growth, public relations revenues skyrocket; further, the public relations industry outperforms advertising during periods of GDP decline.

Regardless, as clients slashed budgets and halted projects, public relations agencies were forced to cut costs, lay off talent and even close doors.

In 2001, the total public relations employee base decreased 22% to an estimated 19,900 employees in the US and 41,835 worldwide.

Of the 279 agencies participating in this year's revenue documentation and rankings, 26% reported revenue decline of greater than 10%. For agencies with large technology practices - the hardest-hit industry sector - the difficulties of 2001 were exacerbated. However, smaller, more nimble firms were able to navigate the tough waters and end the year strong. Firms with revenues below $7 million continued to show the strongest growth; in fact, 31% of all ranked firms grew more than 10% in 2001.

Despite the economic slowdown, the rankings revealed some other positives.

Emerging public relations markets such as Denver, Dallas and Houston showed impressive growth. The healthcare sector grew nearly 8%, and the practice of public affairs (up nearly 16%) remains strong, followed closely by social education (14%).

The start of 2002 was a welcome new beginning. According to Jaime de Pinies, chief economist at Golin/Harris International and economic consultant to the Council, the public relations industry should show signs of recovery, projecting 4%-7% growth for 2002 (based upon historical analysis of the public relations industry and Council research). The professional services, financial products and services, and industrial products and services industries are expected to come back strong. According to the Council's financial survey of first-quarter activity, 45% of surveyed firms expect revenue growth this year, 55% of firms achieved their first-quarter forecast and members won 200 new clients that have never before hired a public relations firm ... a sign of future growth for the industry.

Throughout the year, the Council of Public Relations Firms will continue to track public relations revenues and its link to US GDP performance.

This will help agencies anticipate and react to changing business cycles, providing CEOs and CFOs with necessary tools to run their businesses more effectively and profitably.

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