PRWeek Top 150 2009 Analysis – Who is best placed for 2009?

Following my recent podcast for PRWeek  on this years Top 150 (note requires subscription) I promised some detail on my findings. Since then there has been some debate about the worth of the table itself. From my point of view the table has two potential uses.

1. Ranking who are the largest (by income) PR Agencies in the UK
2. Showing how the PR industry is performing and the strategies that appear to be employed

Given that a substantial number of the largest entrants do not submit audited numbers (we will call these the Sarbanes agencies) I can understand why some have criticised its validity for the first use. Though I would humbly suggest that it is likely that the majority of the agencies that don’t submit figures would still occupy similar places to those estimated. Just not necessarily in the specific order.

But I definitely think the table has value for the second use. Allowing for agencies that have not submitted figures, or only have figures for one of the years, there are still 121 agencies in the list for which full figures have been supplied (we will call these the Audited agencies). These agencies account for approximately 60% of the combined income of the Top 150 and around two thirds of the staff. As a sample of the performance of the industry this is still a significant snap shot.

So I am going to leave the debate around point 1 to others and focus on the areas I discussed on the podcast around point 2.

What do we find?  

Summary table:

  Income change Staff change
Top 150 overall 11% 1%
Audited agencies 10% 2%
Sarbanes agencies 12% 0%

Income

Pretty consistent. And don’t think that’s because the Sarbanes estimates are all just the same. In fact the estimates range from a 22% reduction for one agency to a 36% increase for a couple of others.

Staff  

Again fairly consistent and again the estimates for the Sarbanes agencies do vary a lot from a reduction of 29% in one to an increase of 24% in another.

Different strategies  

But it is when you dig deeper, as I stated in the podcast, that you find the really interesting numbers.

Here are tables that stratify each of the groups based on their change in staff numbers year on year.

Audited agencies

Change in staff

No. of agencies

2008 Income £’m

2007 Income £’m

Change

2008 Staff

2007 Staff

Change

2008 Income / head£’000

2007 Income / head £‘000

Change

Significant increase

53

198

167

19%

2,252

1,905

18%

88

 88

0%

Little change

17

59

55

7%

639

623

3%

92

88

5%

Reduction

51

234

226

4%

2,435

2,698

-10%

96

84

15%

Total

121

491

448

10%

5,326

5,226

2%

92

86

8%

Sarbanes agencies

Change in staff

No. of agencies

2008 Income £’m

2007 Income £’m

Change

2008 Staff

2007 Staff

Change

2008 Income / head£’000

2007 Income / head£’000

Change

Significant increase

7

83

68

22%

793

701

13%

105

97

8%

Little change

7

113

99

14%

739

737

0%

153

134

14%

Reduction

9

159

150

6%

1,054

1,155

-9%

151

130

16%

Total

23

355

317

12%

2,586

2,593

0%

137

122

12%

 

A “Significant increase” with regards to staff numbers is defined as 5% or more; “Little change” is defined as 0-4.9%.

What you can see from the tables is that they are consistent in showing the following:

– The Reduction group is the largest by value of income in both cases. By value almost half of agencies reduced headcount in 2008 according to these numbers.

– The Reduction group increased income per head by the biggest percentage – 15% in the Audited agencies case 16% in the Sarbanes case.

– The Significant increase group achieved the highest income increase in both cases (19% Audited; 22% Sarbanes) but the smallest increase in income per head – 0% Audited and 8% Sarbanes.

Analysis  

1. The data consistently tells the same story whether audited or estimated. This is despite the significant variability in those estimates.

2. The headline numbers hide a wide variation in strategies that agencies have apparently being employing:

– Staffing up for growth
– Maintaining staff levels and apparently looking for margin improvement
– Reducing headcount to enhance profitability significantly

Implications

The question this poses is which of these groups are best placed for this year?

Have those that have gone for staff growth acquired the cream, and those with the most marketable skills, and so will be best placed to weather the storm? Have those that have gone for maintenance taken the right route as their teams and their client relationships may therefore be the most stable?

Or have those that have gone for an early reduction in headcount made the right call by reducing their cost bases before the recession bit the hardest?

I would be very interested to know the thoughts of those of you who have first hand experience of this discussion.

2 thoughts on “PRWeek Top 150 2009 Analysis – Who is best placed for 2009?

  1. interesting analysis and congrats on it. On the Sarbanes thing, here is what PR Week US said on the matter. It is largely a holding company choice that figures are not released as all the big brands have US GAAP compliant numbers.

    It’s time for agencies to stop hiding behind SOX
    February 06, 2008

    We continue to wait in vain for revenue and staffing figures from the major holding company agencies. While many have perhaps forgotten that full and transparent disclosure of this information used to be standard practice, PRWeek – we can assure you – has not.

    We continue to object to the specious reasoning that caused the holding companies to withdraw from participating in all industry rankings.

    We object strongly to the perpetuation of the myth that Sarbanes-Oxley (SOX) mandates that holding companies not disclose this information. Make no mistake: these companies have elected not to reveal this information to shareholders and stakeholders, much less the readers of marketing titles. This decision goes against the spirit of increased and accurate disclosure that the act was meant to foster.

    To be sure, Sarbanes-Oxley compliance is an expensive and labor-intensive undertaking. But even though their revenues are not publicly disclosed, holding company agencies have been GAAP-compliant in their reporting for years. There are no barriers to full transparency, other than a stubborn lack of candor on the part of the holding companies, and perhaps the fact that some agencies might have been less than buttoned down in their reporting in years past.

    That is all the more reason why responsible firms must fight the lack of disclosure. For an industry that is the biggest proponent of openness and candor, the stance against transparency is increasingly indefensible.

    The rankings form for the PRWeek Agency Business Report is available for download at http://www.prweek.com. The deadline to receive forms is February 29. If you have any questions, please e-mail rankings@prweek.com.

    From the February 11, 2008 Issue of PRWeek

  2. Thanks for stopping by David and the kind words about the post. Regardless of holding company positions it is possible in many cases to get figures for these agencies by pulling the individual subsidiary accounts from Companies House (depending on group structure). The profit figures may be spurious as they could be impacted by group transactions, but the fee income and staffing figures should be pretty accurate. The only real issue being these will often be a year older due to filing timescales. For example I have just pulled the subsidiary accounts for one of the Top 10 agencies that have claimed SOX for the year ending Dec 07 (no names as I need to stay independent for obvious commercial reasons). This showed this agency making fee income that was 20% higher than the figure for the agency in the 2008 PRWeek rankings. It also showed the agency having 20% more staff than the ranking table implied. However it is worth noting that over a third of its turnover was from outside the UK and I am unsure if the PRWeek rankings are meant to only look at UK based income? If so then the opposite situation might be the case i.e. that the PRWeek figures would have overestimated by 20%.

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