Agency bosses are convinced the industry has turned the corner and are increasingly bullish about increasing profit, revenue and headcount next year.
The latest PRCA PR Leaders' Panel showed confidence returning to the PR market after a troubled 2009. Some 84 per cent of agency heads expected an increase in staff numbers, while 88 per cent predicted higher turnover and 82 per cent expected more new business.
'This year has affected different agencies in different ways. Some continued to grow and increase their profitability levels; others cut head count as turnover fell and profitability tumbled,' said PRCA director general Francis Ingham. 'I am certain the year holds uncertainty, and we would be unwise to expect no turbulence at all. But we enter 2010 in a much more optimistic mood overall than we entered 2009.'
Major marcoms groups WPP, Omnicom and Interpublic all recently reported third-quarter year-on-year revenue drops in their PR divisions on a like-for-like basis. But steep share price rises over the year, especially for the PR-centric groups, indicate that investors retain confidence in the industry.
Media analyst Jonathan Barrett at Singer Capital Markets said: 'Share price imp-rovements have been driven by the thought that they are not heading into the abyss like last year. Conditions remain uncertain but people are generally confident.'
Numis Securities media analyst Lorna Tibian added: 'The PR industry has performed well in 2009. Cyclically it has been more resilient. PR is one of the last marketing disciplines to go and is always going to be there unless everything goes under.'
Hill & Knowlton global chairman and CEO Paul Taaffe said 2009 had been a challenging year, but he was optimistic about 2010. 'Recovery will take place at different speeds across different geographies and sectors. Brand and reputation will be increasingly influenced by online consumers, so we expect a continuing shift in marketing spend from traditional advertising into digital and PR, and the first real commercial returns on the promise of the social web.'
Edelman president and CEO Richard Edelman said: 'This is the first recession in which PR outperformed advertising. We are now seen as a critical asset in re-establishing trust in business. 2010 will see more global consolidation such as Ketchum Pleon or MS&L and Publicis.'
HOW I SEE IT
- Lord Chadlington, Chief executive, Huntsworth
Money has been moving from advertising into PR, particularly in the consumer arena, which grew in 2009. We are already seeing a move back to annual contracts. We expect market growth in 2010 and more in 2011.
- Harris Diamond, Global CEO, Weber Shandwick
This year was better than expected. Our largest clients helped us because they did not cut back like they have in previous recessions. We are expecting a good year in technology, consumer and healthcare. We expect business to improve in 2010.
- Dave Senay, President and CEO, Fleishman-Hillard
In a year of global economic turbulence when many PR companies around the globe faced a series of challenges, I was not surprised to find that the UK PR sector had come out of the year stronger than ever before. The strength of talent and creativity in the country is core to the positive response combined with the dramatic rise in the UK of digital communications. This will be the real growth maker in 2010 and the UK is well placed to maximise its opportunities in every single area of PR.
- Kevin Taylor, President, CIPR
2009 was not an easy year but the industry fared well compared to other sectors. The industry has shown it is robust. But PR professionals should not expect a miraculous upturn in the New Year. There will be steady improvement. Agencies need to be constantly raising their game.
80 - Net percentage of PR bosses that expect staff numbers to rise in 2010
76 - Net percentage of PR bosses that expect profits to increase in 2010
84 - Net percentage of PR bosses that expect turnover to increase in 2010
76 - Net percentage of PR bosses that expect more new business in 2010