Agencies reject talk of looming closures

The PR industry has slammed a report this week that claimed one in four independent agencies was facing imminent closure.

‘Inevitable’ Jonathan Jordan
‘Inevitable’ Jonathan Jordan

IT firm AlphaZulu Software said it had conducted qualitative research with 125 agencies in January.

It claimed 11 per cent of those questioned had already started to investigate exit strategies and that 65 per cent were not currently trading profitably month-by-month.

But PRCA director general Francis Ingham said the res­ults were more pessimistic than the feedback it had been rec­eiving from members.

‘Like the rest of the UK economy, PR is not immune to the laws of economics,’ said Ingham. ‘But this report is ill-informed and makes a sad attempt to exploit people’s anxieties.’

One of the agency world’s most senior figures, who asked not be named, went further. He railed: ‘This sort of dipstick research creates a totally false impression of what is happening in the industry.’

Financing is the biggest ­issue for agencies, according to the survey. Almost three- quarters of respondents said they were having significant difficulty getting paid by clients and 58 per cent said they were having problems obtaining support from banks, the survey claims.

This theme does tie in with research compiled by The Federation of Small Businesses, which found that larger companies were increasingly paying fees late, causing 120 businesses to close per day.

Burson-Marsteller UK chief executive Jonathan Jordan said it was inevitable that the market would slow after experiencing strong growth over the past few years.

‘PR cannot be a luxury and it needs to be demonstrating its role for clients,’ said Jordan. ‘It’s going to be a Darwinian survival of the fittest.’

CIPR President Kevin Taylor warned that the PR industry is not immune from the effects of the current financial situation.

‘The challenge facing consultancies is to immerse themselves deeply into the heart of their client’s business and become the key means of communicating with customers and communities of interest.  It will be a big challenge and demonstrating value will be vital.  There will inevitably be some casualties; but there are also opportunities to grow the influence and reputation of our client organisations and emerge from this downturn in a stronger position as a result.’

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