It is a given that large companies, with revenue in the billions, have generally flocked to the global PR mega-agencies, citing large pools of the best talent, influential clout, global capabilities (multi-office locations), as well as depth of resources and knowledge base.
Within this group, smaller companies, those under the $2 billion in revenue mark, have also followed suit, most likely to bask in the reputation and influence of the top echelon of PR agencies.
But there is a dynamic shift occurring with this middle-market sector, and for good reason. Just consider the top of the latest rankings: Edelman grew to more than $600 million in fees with 4,000 employees, while APCO Worldwide grew to $120 million in fees and Waggener Edstrom to $115 million. At what point is big too big for the common brand, the non-mega brand? Mega-agencies grew disproportionately to what the middle market was looking for.
Smart independent firms, the ones that have collaborated and shared businesses with like-sized firms for years through partnerships such as Pinnacle, IPREX, and Worldcom, to name a few, have understood this. They foresaw that the middle-market, highly focused on cost efficiencies and value, would shift to mid-level agencies. Through shared business practices over the years, these mid-level agencies now compete with mega-agencies in terms of global capabilities. Further, these mid-level agencies understood "glocal” strategies – as in global and local – long before it became a marketing buzzword.
Also, through collaborative efforts, partner agencies have access to the thought leadership of senior practitioners leading worldwide mid-level agencies, which affords a competitive depth of knowledge and resources not unlike that of the mega-agencies.
For example, the Worldcom PR Group, (of which our agency is a partner), has 108 partners in 96 countries across six continents. It has shared clients including major global tech companies with business managed across several European partner firms. It also handled an international toy manufacturer brand recall crisis across several Asian partner firms from Singapore to Vietnam. The group has also worked with domestic US companies with global interests, supported by partners in Brazil, the UK, Australia, Mexico, and France, among numerous others. Worldcom partner firms have also supported international cause-related organizations that needed to build awareness and visibility in specific markets.
Moreover, demands are changing within the middle-market sectors. The global economic downturn of the last few years has created new anxieties. Agility and nimbleness moved up as a priority, and independent agencies, based on their simpler structures, could more easily meet these demands - and swiftly. Trust also moved to the top of the ladder and with it, a focus on personal relationships - stronger traits found among independent firms.
The entrepreneurial spirit of independent agencies is attractive to companies who are, themselves, successful entrepreneurs. Entrepreneurship's underpinning - "ownership," with a "the buck stops here" attitude, is a common ground in this sector.
As for “best talents,” there is significant evidence that people at large agencies, let's say at the VP level, are leaving to start their own spin-off middle-market agencies. “Best talents,” so intrinsic to the business world's perception of mega-agencies, become a moving target at the VP level -- those who recognize they have nowhere to go “up” within their own agency. Many will also leave to join independent agencies where they can create a bigger footprint for themselves. As such, there will be more independent agencies in the next five years that will carry the bulk of the PR demand. The middle market swing will result in a “talent swap” for the mega agencies, so the argument that mega-agencies have the brightest and the best will no longer quite hold true.
In reality, mega-brands will always tilt to the mega-agencies, but with the dissolution of borders affording immediate access to specific partner expertise, expanded resources, and intellectual properties, independents will become unlikely competitors in the under $2 billion in revenue client market. They are likely to get a larger piece of the pie.
Stefan Pollack is president and CFO of The Pollack PR Marketing Group. The agency has offices in Los Angeles and New York and is a partner in The Worldcom PR Group.