There’s no getting around it - PR has boomed over the past 18 months. The industry’s post-lockdown bounce led to record-breaking growth for agencies, but there’s evidence to suggest a more challenging period lies ahead.
It’s worth remembering that for many agencies around the world, recent financial gains came hot off the heels of Covid relief packages. Government-backed loans, furlough schemes and tax breaks insulated agencies from the economic pain of Covid and provided the foundation for growth. It’s been a great time to run a PR agency.
Global economic headwinds
The simple truth is all professional services are subservient to economic forces. Public relations is no exception.
Inflationary pressures are being felt worldwide. An energy crisis, war in Europe and rising interest rates prompted JPMorgan CEO Jamie Dimon to warn markets to “brace themselves” for an “economic hurricane” last month.
What’s more, the stock market has tumbled and the US Federal Reserve increased interests rates by .75% for the first time since 1994, with further increases expected. It certainly feels as if recession is looming.
PR market cooling
There’s evidence of the PR market cooling too. According to the PRCA’s latest Confidence Tracker, eight out of ten (83%) global agency leaders are ‘very confident’ or ‘quite confident’ about their organisation’s future. On the face of it - that’s positive news. But it represents a 4 percentage point decrease since February and it’s the first-time confidence has fallen in more than 18 months.
The PR market has been on fire since late 2020. Many PRCA members posted 20-30% year-on-year growth, with healthcare and tech sectors leading the charge. But all indications suggest we’re entering a new, cautious economic period.
The state of salaries in PR is another indicator of the industry’s economic performance. The recent Confidence Tracker showed more than two-thirds (67%) of agencies around the world have increased salaries in the past six months. They’ve done so for two reasons.
- To help staff fight the rising cost of living.
- To stop their people from leaving.
In fact, 27% of agency bosses admitted to increasing salaries for ‘talent retention purposes’.
Finding people in PR has always been hard work. But finding outstanding candidates - particularly at mid and senior level - is proving to be incredibly difficult for even for the largest agencies. Keeping your best people has never been more important.
One agency CEO recently told me “We have RFPs flying in left, right and centre, but we can’t raise a team for love, nor money.”
They’re not alone. The Confidence Tracker revealed 4 in 10 (40%) of agency leaders have had to turn down work in the past six months due to lack of staff.
It’s clear that challenges lie head, many of which are triggered by financial and geopolitical factors beyond the industry’s control. But if the last two years have proven anything, it’s the resilience and commercial viability of PR. Businesses need it like never before.
Yes, the PR market may be cooling, but the industry’s recent performance and its burgeoning business reputation mean it’s exceptionally positioned to meet the challenges that lie ahead.
139 CEOs, directors and department heads took part in the latest PRCA Confidence Tracker, which assess market confidence in public relations around the world.
Written by Koray Camgöz, director of communications and marketing at PRCA
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