PRWeek UK Top 150: Smaller shops steal a march on UK giants

Revenue for the UK PR industry rose again in during 2015, although many of the bigger players were outperformed by smaller agencies in terms of growth rates.


K revenue earned by the PRWeek UK Top 150 PR consultancies was £1.056bn in 2015, up a healthy 8.4 per cent on the £974.5m generated in 2014*. But perhaps the most interesting story is at the tail, where for the first time, the lowest ranked shop had revenue of more than £1m.

Across the table, growth appears a little slower than the 10.9 per cent reported in 2014, although direct comparisons are problematic**. A few major firms such as Chime – following its majority acquisition by private equity firm Providence last September – and Exposure did not provide figures this time. And some associated agencies have been amalgamated into a single entity, creating new, larger entrants (such as Havas PR, ranked 14th with estimated UK revenue of £24.5m).

Sector competition

Performance of the industry’s biggest consultancies varied between strong and subdued in 2015. On a positive note, many again boosted revenue by several millions of pounds. Edelman arguably performed the strongest, adding £5m, or 10 per cent, to retain the top spot; a performance that followed UK growth of 10.9 per cent in 2014. For UK CEO Ed Williams, the ability to compete against advertising and marketing is proving a boost for the business. It is a prominent trend as PR continues to diversify.

"The clients we’re engaging with now are much more ambivalent about channels and much more engaged with ideas," Williams tells PRWeek. "Hence we end up pitching for work against ad agencies, marketing agencies, pure digital agencies. And the investment that we’ve made in creative, in production, in planning, is another contributor."

Several EMEA chiefs have singled out the UK as among the strongest performing countries in Europe. Hill+Knowlton UK CEO Richard Millar describes 2015 as a "record year" for the business.

Others, such as FTI, emphasise the positive benefits from closer collaboration between the UK and offices overseas. "It was humming," says FTI UK chief John Waples of his agency’s performance. "It was a year when you felt the agency worked both on a domestic level and on an international level."
But there have been challenges in other UK consultancies. Restructuring or reorganisation – whether in the form of mergers, redundancies or changing job roles – affected Bell Pottinger, MSLGroup, Freuds and FleishmanHillard, which have been forced to adapt to the changing requirements of today’s PR consultancy.

As in 2014, the weakest performers in the table’s upper echelons were the Huntsworth-owned Grayling (down 22 per cent to £17m) and Citigate Dewe Rogerson (down 15 per cent to £10.2m). Both are still in recovery mode under Huntsworth CEO Paul Taaffe, who joined in April 2015. However, the return to growth of Huntsworth’s Red Consultancy (up four per cent to £12.8m) provides grounds for optimism.

Other notable climbers among the Top 50 include Newgate (up 64 per cent to £9.3m), Brands2Life (up 19 per cent to £11.6m), Pegasus (up 39 per cent to £8.9m), Lewis (up 36 per cent to £6.6m), and M&C Saatchi PR (up 38 per cent to £5.7m).

There is a similar picture a little further down the list too. Standout performers ranked between 50 and 100 include Berkeley (up 33 per cent), W (up 20 per cent), Seven Hills (up 23 per cent), Hope&Glory (up 28 per cent), Touchdown PR (up 53 per cent) and PFPR (up 47 per cent).

We continue to see the larger boutique agencies with the resources to adapt to the changing digital and social media landscape, and the flexibility to fund that change, reaping the rewards.

Gaining ground

Not that it has been a boom year right across the board. Of those agencies that submitted figures, 20 saw revenue decline, slightly more than the 17 who experienced a dip in fee income in 2014. Nevertheless in many instances this is in comparison with a strong previous year: Lansons’ revenue fell seven per cent to £10.9m, but in 2014 fee income had risen 25 per cent; TVC’s 12 per cent decline (to £7.6m) followed growth of one third the previous year. There is a similar pattern for 3 Monkeys, The Big Partnership and Hotwire.

2015 will go down as a year when the smaller agencies gained ground like never before. As mentioned previously, in a first for the table, the 150th ranked agency generated revenue in seven figures. Last year the Top 150 contained 15 firms with fee income below £1m. This year one agency with revenue above £1m missed out on the Top 150 entirely (see table, below).

Other statistics point to the same trend. In 2014 growth was spread fairly evenly across large, medium and small firms, averaging 14.6 per cent for the top 50 consultancies, 16.9 per cent for agencies ranked 51 to 100, and 17.9 per cent for those from 101 to 150. For this year’s table, revenue growth for the largest 50 was just 10 per cent, against 17 per cent for mid-tier firms and 21 per cent for the bottom 50. (Growth for smaller firms is from a lower base, of course.)

Rise of the boutiques

Fifteen smaller agencies broke through the £1m barrier in 2015 – seven did so in 2014 – and average growth among those 15 was an eye-catching 42.5 per cent.

Alex Myers, CEO of Manifest – where revenue grew 81 per cent to £1.6m – is bullish about the prospects for boutiques: "Smaller agencies have always lived or died by results, rather than reputation – and they have always delivered better work in terms of creativity, integration and return on investment. Now it seems ‘big’ brands understand that more and more, perhaps because it’s a situation mirrored in their own industry as disruptive players arrive."

Given their growth, will some smaller players become acquisition targets for the sector’s bigger companies – or other potential buyers – this year? The return of agency M&A was another striking theme of 2015, and this is changing the complexion of the table.

Among the larger agencies, the bringing together of Omnicom’s FleishmanHillard and Fishburn to form FleishmanHillard Fishburn has created a new name in the top 10, with estimated revenue of £28m.

M&A is not always a sign of a healthy sector, of course. Eyebrows were raised about the FHF deal at the time, with some critics saying it was a marriage of necessity as both agencies struggled. CEO Jim Donaldson rejects this reading of the situation, however: "I get annoyed by the assumption that mergers come from a bad place," he says, emphasising ambitions for strong growth and highlighting early account wins for the new entity.

Certainly, the trend of larger agencies buying smaller, specialist shops to beef up capabilities continued apace last year, and resulted in some strong growth. Four Communications’ revenue surged 62 per cent to £23.3m after a buying spree that included financial PR agency Broadgate Mainland; revenue at Speed Communications more than doubled to £4.75m after it was combined with Bray Leino following the sale to the latter’s owner Writtle Holdings.

We can expect more of the same in 2016. Earlier this year saw the merger of 3 Monkeys Communications and Edelman's Zeno. And Golin’s acquisition of integrated creative shop The Brooklyn Brothers in February should boost the former’s ranking next year.

Four CEO Nan Williams sees the return of sector M&A as a positive sign: "Increased investment in PR is a sign of great health and recognition that investors can make very good returns. PR’s heritage is coming into its own as social media, content and integration increase, which makes it a very attractive sector."

PRWeek labelled 2014 a "vintage year" for UK PR. While there were still plenty of positive signs in 2015, the mood is a little more sober, with a greater recognition of the challenges (and, in some cases, sacrifices) required to thrive in the modern comms landscape. But as agencies continue to tool up, innovate and grow in confidence, it bodes well for 2016.

* Direct comparisons with 2015 are not possible because eight of the Top 150 entrants declined or were unable to provide 2014 revenue figures. For these, PRWeek took the 2014 revenue figure to be the same as in 2015 to calculate the aggregate total for 2014.

** Last year we asked agencies to provide fee income. This year we asked for revenue.

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