Among a raft of statistics, it cited the public relations industry – not because private equity firms lavish largesse directly on communications professionals, but because City public relations firms were a major beneficiary from all the bids, deals and stock market flotations they initiated.
There are leaner times ahead for City PR. To the extent that the upheaval in the credit markets affects banks’ willingness to lend support to private equity acquisitions, fewer deals will be done and for the most part they will be of lower value. Diminished mergers and acquisitions activity means less money spent on financial PR.
Some firms have been quicker than others to read the runes and are already diversifying.
Nigel Whittaker, for many years the in-house communications chief at B&Q, set up Reputation Inc just after the turn of the century. At the time he was probably a bit ahead of the market.
Even five years ago companies had not quite cottoned on to the importance of reputation and the damage that can be done if boards are not aware of how people other than shareholders perceive the business – witness BAA and the Heathrow debacle. Now they are catching up fast.
But so are some financial PR firms.
The caricature of the City PR industry is that it never raises its sights above the next deal. Its routine business is the communicating of financial results, with a small advertising and design business based on the production of annual reports. This pays the rent, but the jam comes from bids and deals. Most firms have never thought much beyond that. Rarely have they matched their ambitions to the wider needs of their clients – in political lobbying or reputation management.
This is what is changing. The biggest houses may not yet have overtly set up reputation management businesses, but they are adopting the body language, the jargon and techniques that niche firms such as Reputation Inc have pioneered. Not before time they have realised that real financial public relations extends well beyond the stock market.