Too much has been written about the economic downturn of the past 18 months and the attendant challenges it has caused all business sectors, not least the PR and communications industry.
But the findings in PRWeek's Agency Business Report 2010 tell a more positive story than expected. Revenue was down 5% across companies that also reported last year, and there were 276 fewer jobs at those firms (down 3.6%): revenues at the top 20 firms fell 4.3% on average. M&A activity was slow in 2009, with Ketchum's merger with Pleon and Next Fifteen's acquisition of M Booth & Associates notable deals in the PR sector.
In a year of transition, the performance of three midsize agencies stood out. WCG moved from 11 to six in the standings, posting a 36% revenue increase between 2008 and 2009 and acquiring 48 more staff, organically and through acquisitions. Cooney/Waters Group rose from 29 to 17, boosting revenue 18% in the period. And Allison & Partners added $1.5 million in revenue, or 12%, moving from 20 to 14.
Sarbanes-Oxley is a curious beast. Set up in 2002 in the light of corporate scandals such as Enron, the bill was intended to open up corporate America and prevent reoccurrences of such events. In reality, it has restricted access to information about public companies and made it difficult to assess even the most basic operational data.
But that is the way the law is interpreted and it means the standings in this report are, by definition, incomplete – because PR and communications agencies in holding companies decline to submit exact revenues and headcounts. However, we do know that, in 2009, PR revenue was down almost 15% at Omnicom, 6.5% at Interpublic, and 6% at WPP.
The policy of the publicly traded agencies is good news for independent PR giant Edelman because, with 2009 revenues in excess of $288 million, it retains the top spot in our standings, even though it would accept it lags behind Interpublic's Weber Shandwick in reality. Edelman consciously increased staff numbers by 5% in 2009, to 1,715, despite flat revenues.
First-quarter trading this year is encouraging and, if the economy escapes a double-dip recession, the signs are PR firms have weathered the storm and look set to prosper in the calmer waters of 2010.
Steve Barrett, editor-in-chief, PRWeek