FRONT PAGE: Agencies feeling the bite of economic downturn

Fresh fears of a downturn in the PR industry have been sparked by a prediction that one in eight consultancies could disappear within two years.

More than half of the 972 agencies polled by Plimsoll Publishing have seen their margins fall over 2007-08, and almost a third of those (172) are running at a loss.

A spokeswoman for Plimsoll told PRWeek that agencies most likely to cease trading or be
acquired are those already heavily indebted.

Weber Shandwick CEO Colin Byrne said he believed a downturn would last until the middle of 2009 and advised agencies not to put all their eggs in one basket.

‘The problems will be for pur­ely local agencies with purely ­domestic business, especially in vulnerable sectors such as retail,' said Byrne.

Edelman CEO Robert Phillips said the agencies best placed to survive the tough times will be those that focus on higher-level consultancy work, are aware of the converging role of corporate reputation and consumer brand marketing, and have significant digital capabilities.

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