Here are eight observations culled from the in-depth analysis, agency profiles, rankings, deep dives, sector reviews and infographics contained in PRWeek’s Agency Business Report 2021, which was unveiled on Tuesday:
Given how challenging 2020 was and the intense nature of the crisis and recession wrought by COVID-19, it’s a great tribute to the whole PR agency sector that global revenues remained flat during the year, albeit with 3% fewer staffers. So the perception that everyone worked harder from home than they did in an office environment is not an illusion – it is now backed up by hard data. In the U.S. global revenues actually rose 2% year on year, on the back of increased demand for healthcare communications, employee engagement, crisis response counsel and strategic reputation advice. Again, that 2% increase was achieved with the same amount of people as 2019, so PR pros worked hard for their money. As BCW CEO Donna Imperato noted: “Our people have been working from early morning until late at night, and it’s concerning.”
BATTLE FOR NUMBER ONE
Weber Shandwick is now only trailing by $9m in the fight to be the largest PR firm in the world, after Edelman declined almost 6% in 2020, more than Weber. Both agencies bounced back toward the end of the year and are looking forward to a promising 2021, with Edelman boss Richard Edelman expecting his firm to breach the $900 million annual revenue mark this year.
TOP 50 INCREASE REACH
The top 50 firms in the U.S. now account for 87% of overall agency revenues, up a little over 2% from 2019, so power is consolidating at the top of the food chain. But the nature of the top 10 has evolved significantly in recent years. Real Chemistry, recently rebranded from W20, now stands at number five on the U.S. table, at $334 million, ICF Next is seventh at just over $195 million. Now it no longer includes Kekst CNC and Qorvis Communications under its umbrella, MSL is essentially a mid-sized firm in the U.S., under the leadership of Diana Littman, with revenues of $60.2 million. WPP firms Hill+Knowlton Strategies and Ogilvy PR are now also much more powerful globally than they are in the U.S., something they will be working hard to remedy in 2021 and beyond.
Agencies have made great strides in gender diversity since the days when pretty much every top 10 firm was led by a middle-aged white male, although the talent pool was diluted when Barri Rafferty left the top role at Ketchum and moved to the client side at Wells Fargo. Julianna Richter helped even this up when she started at Ogilvy PR as its new global leader. At some firms, such as BCW, almost two-thirds of global offices are run by women, which is a much better reflection of the overall gender profile of people working in the PR industry. One area still resolutely male and Caucasian is agency holding companies, where the eight executives leading those organizations all tick that box. The only woman of note leading an agency holding company is Wendy Clark at Dentsu, which declines to take part in the Agency Business Report.
Clearly diversity was top of mind for everybody in business and across the whole country in light of last year’s racial reckoning. The PR industry was no exception. The phones of diverse and minority-owned agencies were ringing off the hook with potential clients wanting advice on how to introduce more diversity into their own organizations, as well as positioning their brands and corporations correctly to demonstrate authentic purpose in this area. Agencies such as Weber Shandwick stepped up and were transparent about diversity numbers across their ranks, prompted by campaigning from pressure groups including HoldthePRess, even if the numbers weren’t necessarily flattering. Unfortunately, WPP and Omnicom forbid their constituent agencies from releasing numbers, which comes across as defensive and evasive. I urge them to adopt more transparent policies that are more in tune with the times. While there have been significant diverse senior appointments within the C-suites of PR firms, including Edelman appointing Lisa Ross as U.S. CEO, the agencies’ most senior executives are almost uniformly white.
PERMISSION TO BE PURPOSEFUL
Edelman doubled down on its Trust Barometer IP in 2020 to advise clients on the correct response to crises and inform their approach to purposeful business. CEO Richard Edelman noted the data showed a 10-to-1 trust advantage for brands and corporations to speak up on the issue of race, for example. This also led to big idea activations such as helping KFC put up equity for Black store managers to become franchisees and enlisting Wu-Tang Clan’s RZA to produce a new jingle for Good Humor ice cream on its 100th anniversary to replace its legacy tune that turned out to have racist roots. “It’s inspired our teams to feel they’re doing something meaningful,” said Edelman. And consumers are increasingly holding companies accountable for that messaging.
BACK TO REALITY
As vaccines become more ubiquitous and the country cautiously starts to open up again, agencies will exist in an environment with less real estate and more hybrid and flexible working. Most firms talk about a future where staffers spend two or three days a week in the office, but those can’t be the same days for everyone. Gail Heimann noted that the incredibly difficult year “showed what everybody in the industry was made of” but conceded it was “hugely difficult for our people and clients.” She added that some client teams will relocate to satellite offices situated closer to clients. Allison+Partners saved $150,000 a month in employee travel expenses and let a lease expire in New York City. CFOs will find it hard to wean themselves off those savings when the world reconvenes in person, and travel will be thought through much more strategically in future. Other agency leaders described being comfortable working with talent, especially creative talent, which will be based remotely in locations to suit them rather than their employer, possibly on a part-time basis. As MikeWorldWide’s Bret Werner said: “If you think when this is over we go back to normal, you’re mistaken. Everyone will have lasting effects from this.”