This week’s City Insights survey - which separates financial PR
companies into the premier league of those who handle FTSE 100 clients
and the rest - will come as little surprise to those who follow the
sector. Although the message is somewhat crushingly delivered to those
further down the scale, the dominance of certain agencies among blue
chip clients is well understood.
What is more surprising - and worrying - is that the survey claims that
clients almost never differentiate between financial PR advisers based
on quality of service. The reputation of agencies rests entirely on the
quality of their client list and the visibility of the deals they
handle. Changes of adviser are said to be prompted usually by a change
in client management rather than by the pursuit of excellence, although
the negative factor still applies - incompetence will get you fired.
The survey paints a depressing picture of a sector in which the juiciest
accounts are carved up between a few top players while the rest struggle
to compete. It also suggests a rather sheep-like mentality among clients
in selecting their advisers. The reality is somewhat different.
Naturally, high profile mergers and acquisitions will continue to
attract the biggest fees because so much is at stake. For the same
reason, such deals will always carry a ’safety first’ element in hiring
But many of the so-called ’second tier’ PR firms are experiencing
vibrant growth. And clients are becoming acutely aware of the need for
quality advice at the highest level - not just in financial PR but
across the board in corporate and public affairs. The ability of
financial PR firms to think ’outside the box’ will therefore become
Meanwhile the survey rightly concludes that even the top agencies are
vulnerable to losing key individual staff to smaller rivals or
breakaways. Which brings us to Shandwick Consultants, where the shock
waves caused by the loss of five senior players to form the Hogarth
Partnership earlier this year, led the parent group to issue a profits
warning along with its interim results last week.
The reaction of the City to this news emphasised the volatile nature of
people businesses - at least as far as the markets are concerned. But
the group’s strategy of focusing more on global client relationships -
and it has now set up a unit to tackle this - should eventually reduce
its reliance on individual staff. Put bluntly, the bigger the account
and the more widely spread, the more difficult the relationship will be
to dismantle. And the less likely it will be for the client to jump ship
when individuals leave.