The PR industry was stronger than ever in 2007, as many firms grew consistently across practice areas and without significant numbers of acquisitions to bolster revenues.
Total reporting firms that were comparable to last year were up 15%, and these firms needed 13% more staff to achieve that revenue.
As noted in previous years, agencies have learned how to service clients more efficiently in terms of headcount. This is one of the aspects of the industry's continued maturation that ensures greater stability as tougher economic times are expected.
Top 10 firms followed the trend, generally, with the exception of Ruder Finn and Text 100, the former declining 8% in the US, the latter 3%. RF attributed its losses to troubling issues facing clients in certain sectors, while Text says it faced tighter budgets at the end of 2006.
For the rest of the top 10, double-digit growth was the norm. Generally, firms saw increases in the hot areas of digital work, but on the larger scale it is clear that global communications programs are fueling much of the growth.
A number of firms moved up the rankings significantly, including ICR, which is 9th in the tables, compared to 13th in 2007, and 5W, which moved up to 27th from 32nd. Capstrat had an outstanding year with 38% growth that moved it from 35th to 23rd in the tables. Shift Communications also saw 38% growth, and moved from 47th to 36th.
But the standouts are Liggett Stashower, Peppercom, and WeissComm. Peppercom's revenue increase of 42% helped it move from 40th to 25th in the tables. And WeissComm made a stunning leap from 43rd last year to 20th this year, with a 77% increase in revenues. Liggett Stashower reported a jump of 138%, which moved it from a boutique-size $2.8 million firm to bumping up against midsize at $6.7 million.
Agencies did not grow through acquisition, as few were in evidence. Edelman's technology practice continued to benefit from its 2006 purchase of A&R Partners, but deals on that scale were not the norm in 2007.
However, two deals gained particular notice. One was the acquisition of Chandler Chicco Agency by InVentiv Health, a conglomerate of companies focusing on the healthcare industry. The other was the acquisition of healthcare specialist Dorland by Huntsworth Health Co. Both of these deals speak to the ongoing strength of the healthcare sector, where specialist knowledge and reputation are critical differentiators for agency partners.
For the past five years, most of the holding company agencies, such as those owned by Interpublic, Omnicom, and WPP, have refused to disclose revenue figures, citing Sarbanes-Oxley. MWW Group has been a notable exception to that rule. It has disclosed its revenues for the past several years, in spite of its ownership by Interpublic. This year, the firm was able to demonstrate a significant 13% increase.
But this year, for the first time, most of the holding-company firms did provide a revenue range for inclusion in their agency profiles. Though not exact figures, these numbers do help us formulate a better understanding of the way the industry is growing.
Hill & Knowlton, for example, sees most of its revenue coming from business outside the US, as do Burson-Marsteller and Ogilvy. Among Omnicom firms, Fleishman-Hillard reported the highest revenues, heavily weighted to US business, while Ketchum did not specify US and non-US numbers, but claimed between $200 million and $300 million in total revenues.
These agencies have moved towards greater transparency and are to be commended for doing so. Except for MWW and Carmichael Lynch Spong (which gave an indication of revenues of "under $50 million"), the Interpublic firms continue to withhold specific details of performance, a position they may find increasingly untenable as the trend towards greater openness is more universally embraced.
Keith O'Brien, editor-in-chief, PRWeek
Michael Kriak, CFO, Haymarket Media