One of those agencies, The PR Network, has now commissioned research by The Pulse Business. A total of 1,500 senior industry professionals were asked: In the future, will clients consider the Virtual PR Agency Model as a credible alternative to the traditional PR Agency Model?
- 45 per cent said 'Yes because this model is adaptable and agile'
- 15 per cent said 'Yes because this model makes better use of client budgets'
- 15 per cent said 'Yes because some clients prefer a hybrid model, eg a smaller in-house team supported by specialists'
- 10 per cent said 'Yes because more clients are moving to project vs retained work'
- 7 per cent said it is too early to say
Asked what were the factors driving the growth of virtual PR agencies and presented with various options, 42 per cent of respondents cited 'some or all of the above'. More specifically:
- 16 per cent the lack of flexible working in some traditional agencies
- 11 per cent said the range of technology platforms that allow people to work in diferent locations
- 9 per cent said a lower cost of entry into the market
- 9 per cent said the ability to compete on fees thanks to lower overheads
It is clear that there is interest in the model, but how big could such agencies get? Top half of the PRWeek Top 150? Top third?
Nicky Imrie, co-founder of The PR Network, says that the firm's turnover in 2017 was £1.6m, with a core team of five and significant freelance support. "Based on current projections we'll hit the £2m mark in 2019, if not before," she says - a figure that could put the agency around 115th in the Top 150.
Adds Imrie: "The nature of the virtual agency means it's infinitely scalable... [but] it took over a decade to build up our own network, and having access to the people with exactly the right experience is crucial to winning a brief."
Former Hotwire boss Brendon Craigie, who last year launched "location agnostic" agency Tyto, says there is no reason such an agency could not grow to 100 staff. Of Tyto itself, he says: "We are looking to build a £3m+ top 100 firm within three to four years."
"We draw our inspiration from the tech industry where you can find global 500-plus employee tech businesses with a location-agnostic model, which gives an indication of the potential for this way of operating," he adds.
"You don’t find other industries with remote employment models calling themselves virtual businesses. It makes us seem very dated. This is the modern world of work."
Both Craigie and Sam Williams, co-founder of another virtual agency, say they have heard "zero concerns" from clients about their structure.
Williams, who leads Barley Communications, was asked whether virtual agencies could get to multi-million revenues, or whether such firms were likely to have more modest ambitions.
"I struggle to see why an agency couldn't get to that size. Our decision to set up as a virtual agency is absolutely no indication of lack of ambition," she says.
Alongside client concerns, Williams says the only other potential barrier to growth would be interest among potential staff - but says she is finding "lots of people" interested in virtual work.
Are clients really as receptive to a virtual agency as the above commentators would like to claim? Among those responding to the survey were two in-house professionals, neither clients of The PR Network.
Bobby Leach, VP group corporate affairs at ConvaTec Group, commented: "I have a small team and we utilise and value specialist support when and where applicable. Much of what we do is project-related or requiring specialist skills, and the large agency model still doesn't cover all of our requirements."
Commenting on the survey, npower head of PR Zoe Melarkey says: "In-house PRs need to have open minds about the right agency support. Sometimes, a traditional agency model is best placed to support in-house teams, especially for more complex organisations.
"However, it's interesting to see this model emerge as a complement to that setup... Given the current move away from big retainers to a project-by-project approach, a flexible resource means agencies don’t have to keep a huge array of talent 'on the bench'."
Of course, agencies created on the virtual model do not have a monopoly on flexibility - as proved by several initiatives from conventional agencies, latterly the decision by one small UK agency to stop opening its doors on Fridays.
An M&A perspective
A final question: are virtual agencies viable targets for acquisition by larger firms?
Mark Madsen, an industry M&A broker who has worked on several of Four's recent acquisitions, told PRWeek: "Virtual agency concept is fine as a lifestyle option for the brand owner, but it is very difficult to sell the bigger ones. The issue is who owns the relationship with each client in the larger virtual agencies - the people owning the relationship can dictate terms to the brand owner on a sale."
However, he went on to say: "In smaller virtual agencies, it [a sale] is perfectly possible to sell them, as the buyer is more than likely taking on one key relationship holder who owns the brand. The freelance staff that they employ, and who form their biggest cost, can be replaced by the buyer's existing staff... making a deal quite attractive. I have a deal like this going through at the moment."