Most of the large agency full-year 2019 financial numbers are in and the process of drawing conclusions ahead of the annual PRWeek Agency Business Report issue has started.
Edelman has returned to growth and decided to release its 2019 figures early this year, posting overall fixed-rate global growth (ignoring currency fluctuations) of 2.1%, 1.6% in the U.S. This compared to a cold shower in 2018, when Edelman posted its first revenue decline in a decade.
Under CEO Ed Williams, EMEA growth was higher, at 2.4%, and the U.K. performed particularly well, growing 7% in 2019, so if there is to be a Brexit slump it certainly hasn’t kicked in yet.
The U.K. acts as the hub of Edelman’s global work for Shell and Unilever and is still the nexus of the firm’s European business, though Edelman expects growth in Germany under the leadership of Christiane Schulz, hired away from rival Weber Shandwick last August.
Technology, financial services, energy and corporate are driving the growth at Edelman. The crossover of consumer work into more corporate elements including issues, reputation management, purpose and even public affairs.
Brand work – or what used to be called consumer - is flat and no longer acts as the engine for supercharged growth it used to be when the world’s largest PR firm was posting double-digit revenue increases, which were also fueled by acquisitions.
Some content creation and social media management work has definitely been taken in-house by clients – branded films and other content is not as big a business for PR firms as it has been, with ad agencies also taking their slice of the action.
Edelman has been quiet on the acquisition front recently, though it did snap up Kenyan consultancy Gina Din Corporate Communications in Africa this week. CEO Richard Edelman is open to further purchases in the public affairs space to fuel the portfolio of new hire Kirsty Graham, who joined from Pfizer in January as CEO of Edelman Public Affairs.
Elsewhere, Omnicom’s PR numbers were disappointing once again, declining for the fourth straight quarter. Full-year organic revenue in 2019 was down 2% to $1.3 billion, compared to overall growth across the whole business of 2.8%.
CEO John Wren was a little more diplomatic on the earnings call this year, choosing to highlight the continuing profitability of the PR division rather than a lack of “hunters” compared to “farmers” as he did in a prior year.
However, the fact remains that Omnicom still has two CEO vacancies in its PR offerings, at Omnicom PR Group and Porter Novelli, where Brad MacAfee is still pictured on the agency’s website as CEO despite having left in December.
Omnicom set up its PR group to help integrate PR with other disciplines in the holding company, though it’s unclear whether that is yet playing out positively in practice. The numbers suggest otherwise.
Publicis’ Power of One offer is much-touted by CEO Arthur Sadoun for helping the group win a number of integrated media and creative accounts, but the jury’s still out on what it all means for the group’s MSL PR function. And who knows when the much-vaunted Marcel AI phenomenon will start to coalesce into real business benefits.
WPP’s 2019 numbers are yet to be released, but John Seifert’s One Ogilvy integrated proposition seems to be foundering on the rocks as senior executives across the operation depart, especially in the PR part of the mix.
Interpublic, the smallest of the four major networks, is still on a forward trajectory, with its PR firms up in the low single digits in organic percentage terms in 2019 according to Constituency Management Group CEO Andy Polansky. But even usual stellar performer Weber Shandwick had a blip in Q4, when it was slightly down, admittedly against a strong growth comparable from the year prior. My understanding is that it commenced the new decade back on the right track.
There’s a growing sense that PR at the large agency level, especially within marketing services holding companies, is getting lost in the mix and is in danger of having its essential DNA diluted in a greater whole.
This can result in talent leaving for pastures new, seduced by agency brands that have a stronger identity and sense of self. PR is a people business at the end of the day, full of professionals who are super-passionate about what they do. They need a clear and compelling vision to buy into or they will seek more fertile pastures elsewhere.
Everyone is existing in a complicated marketing services environment on many different levels at the moment, driven by the integration processes that have dominated the industry in recent years, plus in-housing of some functions and severe clamping down on budgets from voracious procurement departments.
Then there are uncontrollable factors such as the coronavirus, which is particularly impacting PR firms’ events and experiential divisions, as witnessed by the recent cancellation of Mobile World Congress in Barcelona.
Meanwhile, midsize and smaller firms continue to thrive – Daniel J. Edelman subsidiary Zeno was apparently up by double digits in 2019.
Agencies have to continually figure out how to remain additive to their clients’ businesses. Nimbleness and flexibility are key. This is no time to be turning around a tanker.
There is certainly lots to analyze in detail in the 2020 PRWeek Agency Business Report – and the work starts now.