PR Week published its 2010 league table of the Top 150 PR agencies in the UK last week. The main headline was that overall the agency market was estimated to have grown by 0.75 per cent during 2009.
As comforting as this figure might be to all of us working in, or with, the PR industry my own take on the figures suggests that the picture may not have been quite so rosy. I estimate that a reduction of around 5-10 per cent is probably a more realistic range and is more consistent with David Brain’s analysis yesterday from a global perspective.
This conclusion is based on an analysis of the changing make up of the table and other supporting evidence.
For clarity PR Week’s 2010 league table is based on income generated in calendar year 2009. Similarly the 2009 league table is based on income generated in calendar year 2008.
Analysis of the league table positions
The table below shows the income that an agency had to achieve in each of the last two years in order to be ranked at the particular positions shown in the league table;
|
Position |
2008 income £’m |
2009 income £’m |
Change |
|
10th |
18.92 |
16.49 |
-12.8% |
|
25th |
8.35 |
7.52 |
-9.9% |
|
50th |
4.79 |
4.10 |
-14.4% |
|
75th |
2.87 |
2.64 |
-8.0% |
|
100th |
1.80 |
1.63 |
-9.4% |
|
150th |
1.14 |
0.44 |
-61.4% |
The table shows that to achieve a particular position in 2010 requires significantly less income at all levels compared to the 2009 league table. For instance to be ranked 25th in the table this year required an income of £7.52m, but to achieve the same position last year require £8.35m, a 9.9 per cent reduction.
Excluding the change at the 150th position the reductions are between 8.0 and 14.4 per cent with an average of 10.9 per cent.
In producing this table I have made adjustments for new entrants and mergers to make it more accurate:
2010 New entrants
Of the agencies that were new entrants into the Top 150 this year six of them would have been included in last years list had they submitted their figures. I have added these into 2009’s list for consistency.
Mergers
The numbers are also affected by the mergers of Grayling/Trimedia, Ketchum/Pleon and Tonic/Huntsworth Health. In these cases I have also combined the income for the three combinations in 2009’s list as well in order to compare like with like.
Other evidence that doesn’t fit with the headline estimate
Agencies joining and leaving the list – is it a fully representative sample?
It would appear that Stephen Waddington’s challenge to the industry to submit their numbers for the benefit of all has gone unanswered by some. 30 agencies (excluding those that have merged) that were in the top 150 last year do not appear in the 2010 league table.
Between them these agencies had total income in 2008 of £67.2m and varied in size between £13.80m and £1.13m. Given that the 150th position agency in the 2010 league table has income of £0.44m these agencies would have needed to have suffered a reduction in income of between 61 per cent and 97 per cent to have not made the cut.
This seems highly unlikely and what I suspect is more likely is that these agencies just didn’t submit figures this year. Obviously individual agencies could have any number of reasons why they chose not to, or were unable to, submit figures. However the absence of 20 per cent of last year’s list begs the question as to whether relying on just those who have submitted represents a valid sample. Have some agencies chosen not to submit numbers for fear of how they might look? Is the table therefore more likely to be biased towards those that performed better?
It is impossible to calculate a sensible estimate of the impact of these absences, but it does seem reasonable to question whether the sample, that the 0.75 per cent growth figure was based on, is truly representative.
Performance of the major Marcoms groups PR brands
The major global Marcoms groups that publish figures for PR specifically performed as follows in 2009:
|
Like for Like change in income |
|
| WPP |
-7.4% |
| Interpublic |
-4.5% |
| Omnicom |
-10.6% |
WPP is organic change from 2009 analyst report
Interpublic from PR Week article 17 March 2010
Omnicom is organic change from 2009 analyst report
It is obviously possible that the UK elements of these businesses performed better than the rest of the world. However given that the UK recession was amongst the longest and deepest and in the absence of any specific data to the contrary, I would take these figures as they stand.
Between them these three groups account for approximately £2bn in PR revenues worldwide and these figures would also indicate a reduction of approximately 5-10 per cent.
Conclusion
It was clearly going to be a challenge for PR Week to pull together a robust analysis this year due to the optional submission nature of the list. However I think there is significant evidence to suggest that the headline performance of slight growth is more than a little misleading.
But what do agency heads think? Is my estimate of minus 5-10 per cent nearer the mark?
Interesting analysis Adam. Can I ask why the No 1 spot was not included? It woudl be good to see what effect this has.
This is an interesting article.
I should point out our estimate of a 0.75 per cent growth was calculated not by PRWeek but on our behalf by accountants Kingston Smith W1, which we make clear within the copy.
It is my personal policy not to question accountants on matters of calculations.
Thank you both for commenting.
@Crispin I omitted the No.1 position as Bell Pottinger have held this for the last three years and so effectively that is only a comment on their specific performance which at 9% like for like growth has already been highlighted as significantly outperforming the market http://www.prweek.com/uk/news/search/990828/Industry-good-shape-recovery-Chime-Communications-reports-growth/ I also started at 10 because 6 of the eight companies between 2nd and 9th are either estimated figures or no comparative is stated (Freud).
@Cathy I realise that the figure was calculated for PR Week by Kingston Smith and I am in no way questioning the execution of the calculation itself. I was able to replicate the result pretty accurately myself by looking at the change in income of the agencies for which submitted figures existed for both years. I am just questioning whether this figure is consistent with other evidence in the wider market and whether, in such a turbulent year, the absence of a sizeable number of agencies makes the sample used significantly less representative to draw the conclusion that “an average growth for PR agencies in 2009 of approximately 0.75 per cent. A small increase, but growth nonetheless, of which the industry can be justifiably proud.”
The bottom line is accountants can tell different stories with the same set of numbers, just like PR people can do the same with words
so I wanted to highlight to the community that there are alternative conclusions to be drawn on the basis of the same data. Which is right definitively would require more information about the agencies that aren’t in the table.
Thanks again.
If we had our way every agency would enter the Top 150, and then we could form a bullet-proof picture. Obviously we can only work with the figures we have.
The transparency we encourage with the Top 150 is really valued by the industry I think. Not many other industries have this kind of resource to gauge performance by. It’s just unfortunate that some agencies choose to absorb details about their competitors but won’t give details about themselves.
@Cathy as I said in my post this year was always going to be a real challenge. I think that both PR Week and the agencies involved are to be applauded for having achieved sufficient submissions to be able to pull the table together at all. By my count 55 agencies who suffered negative growth still submitted figures showing that the community spirit you refer to does exist.
In fact it is only because of this that I was able to do my analysis at all. So whether your headline growth is right, or my suggestion, or some other interpretation, we all wouldn’t have been able to have this important discussion about the performance of the industry without the data to base it on. And that in my book represents success.
Good luck putting together the sector specific ones and FWIW if I can be of any help just let me know.
Best
Adam
Here in the U.S. market it’s still not clear if the larger advertising and PR firms will fully recover in 2010.
Many larger agencies are populated by a legacy workforce that has obsolete skills from a bygone era of marketing history. Therefore, agency customers are now building internal social media organizations.
However, they too are challenged by the apparent digital savvy talent shortfall in the marketplace.