Show me Numbers

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

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.
 

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.

PRWeek were kind enough to invite me to do this week’s podcast on the newly announced Top 150 2009. Not sure if Wadds previous kind words influenced this and a big thanks to Peter Hay and Cathy Wallace who trusted me with the figures pre publication so I could do my analysis. Fortunately I managed to avoid doing a Blears/Quick at PRDebate on Tuesday  

Podcast can be found here and the Top 150 2009 can be downloaded by subscribers here. 

I will be publishing my analysis behind some of my comments in the next couple of days for anyone who is interested in more detail.

Update: Embed code now available so view podcast below.

Following on from my post on Monday about the PR Week Top 150 I thought it might also be interesting to analyse the rankings from an ownership rather than a brand perspective.  As I previously stated the largest player in the Top 150, if ownership is taken account of, is WPP with £81m combined fee income across its brands. Based on a little bit of analysis I think the Top 15 allowing for ownership and partial ownership would look something like this. (Hope I have these right anyone who wants to point out an error please do so).

1. WPP – £81m (Hill and Knowlton, Finsbury, Burston Marsteller, Cohn and Wolfe, Buchanan, Ogilvy, GCI, Clarion)
2. Omnicom – £62m (Ketchum, Fleishman Hillard, Porter Novelli, Gavin Anderson, Pleon, Fishburn Hedges*)
3. Huntsworth – £57m (Citigate, Trimedia, The Red Consultancy, Grayling, Huntsworth Health, Haslimann Taylor)
4. Bell Potinger – £53m (part of Chime Communications**)
5. Brunswick – £44m
6. Financial Dynamics – £42m (part of FTI Consulting)
7. Interpublic – £36m (Weber Shandwick, Golin Harris)
8. Publicis Groupe – £28m (Freud Communications, MS&L)
9. Edelman – £21m
10. Havas – £21m (Maitland, Euro RSCG, Cake)
11. Next Fifteen – £19m (Lexis, Bite, Text 100, Inferno)
12. College Hill – £13m
13. M Communications – £10m
14. The Photon Group -  £10m (Hotwire, Frank PR)
15. Lansons Communications – £9m

* Fishburn Hedges is owned via BBDO Worldwide
** WPP holds a 21.8% stake in Chime Communications
Analysis based on company websites and/or publicly available annual reports.

Between them these 15 account for £505m or approximately 65% of the total fee income of the Top 150 of £781m. As you can see of the Top 10 only Brunswick and Edelman are not part of a wider group.

So why the title of the post? I suspect you have already worked this out, but if you haven’t it is because if each parent above were treated as an individual entry then the number of entries on the rankings would fall by 25. This revised listing would then fit the Pareto principle a lot more closely.