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.

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.'

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