Interesting post by analyst relations firm, Lighthouse, about research that shows a massive slow-up in the PR industry in 2006 and predicted for 2007 [via Andrew Smith].
This deserves more investigation but I don't have time right now to do it justice (anyone else?).
It is interesting because I know of a few regional firms here in Yorkshire that were approached for acquisition and PR Week in the UK was awash with buy-out stories.
But in apparent contrast to this, here's a stark precis from the report:
"Roughly two companies in five experienced falling sales last year. One quarter are in serious financial difficulty. On average, firms in the poorest-performing quartile suffered a 25% fall in sales, while their invoices took on average 79 days to be paid."
The Lighthouse post gives some possible reasons for the report's findings such as saying "PR firms are often short on financial prudence" - although they obviously haven't worked for Yorkshire agencies ; )
Pther reasons why PR firms are losing cash come (coincidentally) from both Charles Arthur and Andrew Smith.
I'm not going to get embroiled in the old ' PR flacks are crap' / 'hacks are crap' debate. There's good, bad and ugly in both trades and the internet is changing it all anyway!
Speaking of which, if the internet is killing off PR and journalism then what's left for me? Industry analyst?
Technorati tags: PR industry; public relations; financial performance
Simon,
I find these statistics puzzling. I saw the PRCA data too. It bears absolutely no resemblance to the reality the bigger firms have been living for the last few years now. I will not say it's been a boom like the mid to late 80s (for those of us that can remember them) but the last 3 years have seen significant growth for Edelman in the UK and for most of the bigger agencies that I talk to regularly. As a private company I can be open about our figures. Revenue this year in Europe will be up 14% (all of which is organic growth). In the UK (two offices in London and one in Edinburgh) we will be up slightly more than that. Margins have improved and are well into double digits. One of the biggest constraints on growth for us at the moment is quality talent. I know that my friends at Weber Shandwick and Fleishman Hillard have done well too (though they have to be a little more cautious than me about talking about it as they work for publicly quoted firms that hide their figures behind the convenient veil of Sarbanes Oxley legislation). The big financial boutiques have had one of their best years ever on the back of M&A and IPO activity. The healthcare sector (and I'm happy to report we are about number one in the UK health PR scene now) has been booming for a number of years. Technology PR is growing fast too. The reasons for success are many . . . but the biggest structural one is the one that you write about all the time . . .the rise of the conversation as a way of managing brand and corporate reputation. And in this, PR people are the best placed to help clients so please don't do anything as dull as become an analyst. This is the right business at the right time. Don't lose the faith mate.
Posted by: David Brain | January 08, 2007 at 10:18 AM
Simon, thanks for mentioning my post on the Lighthouse AR blog. Just to clarify David's comment, I was refering to the annual multi-client study that Lighthouse takes part in, which tracks 1000 PR firms. It's much broader than a survey of the PRCA membership, since it includes more firms.
It would be mistaken to think that it's all doom and gloom: many firms are growing and others are shrinking. However, it's a harder market and the bar is continually raised.
But I agree, industry analyst is a great career to switch into...
Duncan.
Posted by: Duncan Chapple | January 08, 2007 at 05:03 PM