THE TOP 150 PR CONSULTANCIES 2002: Overview - Tough times. As the economic downturn often led to reduced PR budgets, just three of the top ten PR agencies recorded any growth in fee income during a year characterised by cutbacks

Last year saw a marked turnaround in the fortunes of the PR industry in the UK when compared to the banner growth year in 2000. A poor economic outlook in the first three quarters was worsened by the tragic events of 11 September, which dominated the global news agenda for the rest of the year.

By the end of the year, a further undermining of corporate confidence saw profit predictions slashed and swathes of redundancies in many sectors, which consequently impacted the PR fee income of much of the industry.

Although the combined fee income of the Top 150 surpassed £600m once again this year (having broken the barrier for the first time last year), there was a negligible difference from 2000.

The bad news affected all levels of the industry, but in particular the largest agencies.

Seven of the top ten agencies in the league table posted either no growth or negative growth - the first time in many years that the highest echelon of the industry saw such disappointing performance.

A slow year in most sectors - with the exception of healthcare and public affairs and new practice areas such as corporate social responsibility - meant that average growth among the top 50 agencies was only 8.3 per cent.

Within the top 50 agencies, a staggering 21 firms did not grow at all or posted negative growth.

Weber Shandwick extended its lead at the top of the table with income of £41.3m, an increase of almost £10m on last year following its merger with sixth place agency BSMG in October.

The merged entity posted negative growth of 17 per cent and reduced its headcount during the year by 80 staff, from a mixture of the closure of a subsidiary printing company, duplication of roles with the BSMG merger and economic cuts.

This was in spite of several large new business wins and a three-way merger in the financial practice involving Golin/Harris Ludgate, Weber Shandwick's own team and Square Mile Communications.

Citigate Dewe Rogerson continued to hold on to second place with £31.2m in fee income, despite posting a negative growth figure of six per cent as IPOs and the equity market slumped.

Despite turning in marginal negative growth, Hill & Knowlton moved up one place to third with £28.8m income. The loss of the Marconi account, reported to be worth £5m a year, was, however, a major disappointment for the agency.

Fourth-placed Bell Pottinger Communications dropped from the third place it achieved last year, seeing its fee income fall on last year by six per cent to £28.6m. Bell Pottinger Communications also reduced headcount by 20 per cent.

Countrywide Porter Novelli's £20.6m marked a drop of one per cent with the agency stemming some of its losses in the tech field partly by reducing staff numbers in that practice.

Movement in the order of the top ten places in the table was largely static (with the exception of H&K and Bell Pottinger) due to the economic conditions, but Edelman PR Worldwide soared four places to enter the top ten for the first time on income of more than £12.5m.

Medium-sized agencies faired slightly better than their larger counterparts, with the agencies ranked between 51 and 100 growing on average by an impressive 10.4 per cent.

There were some clear disparities of performance among large, medium-sized and small agencies, even in the same sector.

The dot.com bubble implosion and the general downturn that damaged so many agencies operating in the tech sector clearly had a different and more limited effect on small agencies when compared to their larger counterparts.

The most spectacular rise of the year among medium-sized firms was recorded by London-based Mantra PR, a £1.8m tech and corporate agency that rose from number 113 to 65 on the back of several important client wins.

Compared to larger rivals - Text 100 (which dropped a place to number 50 on fees of £2.8m), fellow OneMonday subsidiary August.One Communications (which fell from number 26 to 31), and Omnicom's tech giant Brodeur (which dropped seven places to 34 and saw its fee income fall by 25 per cent) - medium-sized tech agencies recorded a good year.

The smaller agencies - the firms ranked 101-150 in the league - grew on average by more than 17 per cent.

Smaller agencies, and particularly those outside London, were largely sheltered from the damage the economy inflicted upon the large, established players in and around London.

The fastest-growing agency in the Top 100 was Fleishman-Hillard, which also leapt to the top of the top table for top performer over five years, growing by 94 per cent including in its income figures Fleishman-Hillard UK, CPR Worldwide, CPR UK Healthcare and CPR The Remedy. F-H also acquired GPC International and Herald Communications - a £1.8m consultancy - during the year.

Financial specialist Buchanan Communications continued to lead the highest fee income per head table with £179,278 per head, a rise from £156,628 last year, when it also topped that table.

There was further evidence of the toll the economic problems of last year have taken on the firms in the Top 150. There are now fewer staff employed in the Top 150 agencies than there were in 2000. In addition, the same agencies are servicing fewer clients than they did in 2000.

Last year there were 7,488 people working in the Top 150 companies. In 2000, there were 7,902.

This compares with a smaller change in the total number of clients being serviced by the Top 150, with 6,568 clients on the books in 2000 and only 6,429 in 2001.

CRITERIA FOR ENTRY

The PRWeek Top 150 ranks PR consultancies by calendar year fee income, and also shows turnover, year-on-year growth, and other performance figures. We do not accept entries unless they have been approved by the company auditor. All entries are also reviewed independently by chartered accountants Willott Kingston Smith.

Fee income

This includes fees (i.e. the amount paid by a client for the project, or for consultants' time) plus mark-up on disbursements. Income relating to non-PR activities such as advertising, direct mail, design and so on, is not included

Turnover

This includes gross disbursements made on behalf of clients. It may also include income from non-PR activities

VAT

All figures exclude VAT

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