A look back at PRWeek's 2000 Agency Business Report is revealing. The main feature reviewed business performance in 1999 and reflected the unbridled zeal of an industry experiencing a significant upswing. “The words, ‘I've never seen anything like this before,' have been commonly heard,” we reported. “Tales of 25%-40% organic growth in the first quarter don't raise eyebrows. Perhaps the industry really is in hyperdrive.”
Fast forward one year and our report's headline was “Party's over,” as Q1 2001 had taken the wind right out of those dot-com infused sails. PRWeek asked, “Where does the agency business stand today, after the binge is over?”
As we present Agency Business Report 2009 in this issue, the differences between the dot-com fall and today's market headaches are strikingly apparent. The industry has neither binged nor partied during the past two years; it has innovated, retrenched, invested in structure, stretched, and grown.
This year's reflections on the challenges are focused so much more on external factors, many beyond the control of the agency CEO, rather than the deliberate business choices (in the form of ill-advised acquisitions, leases, clients, and brand extensions) that led to severe problems when the tech balloon deflated.
But there are salient lessons for firms to learn in this downturn. First, I predict the next phase of PR will facilitate an intensive focus on serious, consistent metrics. There will be considerable self-interest in this activity for agencies, who will continue to compete for their place in digital strategy and execution against everyone from direct marketing firms to startup new media shops. Demonstrable impact and results will be a key differentiator. PR agencies will have an increased sense of urgency about closing the gaps in measurement that have long persisted.
Next, PR firms will be rededicated to supporting and enhancing the role of corporate communications. This community is at the heart of the PR industry, and is now facing an incredibly challenging period of intense public, media, and internal pressure, coupled with budget cuts and greater demands for digital and organizational strategy.
Agencies have been forced to renegotiate terms with many clients, whether through fee reductions or payment terms. To grow these pieces of business again, they'll need to help corporate clients with creative ideas that will move the needle, and not resonate only within the communications realm.
Finally, the PR firm will recall that one of its most compelling USPs is its expertise in media relations, and how those skills translate effortlessly to many aspects of the digital frontier. PR firms are growing to realize that embracing PR's legacy is a powerful way to avoid being tethered to it forever.
Julia Hood is publishing director of PRWeek.