The growth is in global PR as UK plc struggles

If you were to talk to UK agency heads of the international consultancies right now, you might imagine they are head in hands, asking why the worst recession since WW2 this had to happen on “my watch.” Truth is, the ones I have spoken to, are pretty upbeat. Why you might ask? Well, first of all, thus far none of them have lost their jobs (no, in PR, this recession has so far claimed the jobs of the lower to middle ranked execs but we’ll come on to that particular time bomb in a future blog.) So while a pay rise seems unlikely until 2011 the MDs’ current £200K salaries should still pay the mortgage. Mortgages concerns aside, the reason these international heads seem relatively upbeat is because despite everything, many of these consultancies seem to be doing OK.  The days of 20% year on year growth are behind us, and history tells us this was always likely to be unsustainable, but most of the international agencies are either up on last year, or down a bit. What it doesn’t seem to be the case (as yet) is the "Darwinian survival of the fittest" that one WPP owned UK agency head predicted. So what are the reasons for this? Well, healthcare continues to thrive and because of the nature of that market the bigger consultancies tend to dominate the corporate international budgets. But there seems to be something else. What appears to be happening is that the large corporates are cutting back on ad budgets and re-locating some of that budget to PR. Because of the how big companies tend to purchase, and their uniform approach to reputation management, the international PR firms are in a decent position to mop up this expenditure. (The fact that most of the ad agencies and the international PR agencies share the same parent companies should also help.) Whether they are well placed to embrace the opportunities within digital and social media remains an interesting question, but perhaps for the future sustainability of the PR market we should wish the international players every success. Better the budget remains in PR than is lost forever with a direct marketing or branding agency. Further evidence for this international shift comes from Huntsworth’s recent decision to merge Tri Media, their European and UK operation, into Grayling and to shift Citigate’s emphasis from predominantly UK centric to a worldwide perspective. So as ever, the agencies are simply following the money, and whilst the UK remains right on the edge of PR best practice, the combination of the shabby state of UK plc and the highly competitive PR market brings significant pressure on yields. Therefore the agencies with international credentials are targeting the international business.