Last year was tough for PR agencies, particularly top 50 firms and especially in the U.S., which suffered from an uncertain post-Trump inauguration period, shrinking PR and marketing spends, zero-based budgeting at clients, and continued transformation of operating models.
In the U.S., year-over-year revenue at the top 50 agencies grew just 1%, 3% globally. When all firms reporting for the Agency Business Report 2018 are taken into account, the growth numbers rise to 2% in the U.S. and 4% globally — better, but certainly not stunning. Karen van Bergen, CEO of Omnicom Public Relations Group, who oversees billings of $1.4 billion, went so far as to call 2017 the worst year since the financial crisis of 2008.
PR agencies now represent an $11 billion industry globally, up from $10.6 billion in 2016, and the top 20 firms make up 63% of the total. And there was certainly some great work produced in the period.
In the U.S., the industry is worth $5.36 billion, up from $5.24 billion in 2016 — the top 20 comprise 70% of that. But overall growth figures of 7% enjoyed in the U.S. for each of the previous three years — 5% to 8% globally — have stalled.
Most large agency CEOs we spoke to enjoyed a better Q4 in 2017 and Q1 2018, but they are only "cautiously optimistic" about the calendar year.
In the midsize agency category, the story is a lot rosier, with many firms posting impressive high-double-digit growth. Prosek Partners, W2O Group, ICR, Zeno Group, ICF Olson, Marina Maher Communications, M Booth, and Carmichael Lynch Relate all continued their impressive runs of recent years.
Small firms also gained traction through smart integrated offers backed by data and research, with the selling point of giving clients senior consultancy from agency principals that larger operators can’t always deliver.
This year started with a bang, especially at WPP where Burson-Marsteller was merged into the smaller, but better-performing, Cohn & Wolfe, and holding company founder and CEO Martin Sorrell was ousted in mid-April.
The latter bombshell has led some analysts to predict the breakup of not just WPP, but all of the holding companies, an apocalyptic prospect that would certainly make the 2019 Agency Business Report a very different product.
Buckle up — it’s going to be quite a ride.