Based on the Holmes Report’s recent Global PR Rankings the combined group will have PR income of $1.8bn, which it estimates will make it the largest PR holding company in the world.

But what about the implications for the UK PR market?

As many of the key agencies and their parent groups don’t disclose UK PR figures the data is rather sketchy – see caveats below. However based on a combination of the PRWeek Top 150 estimates for Brunswick and WPP, Omnicom, Publicis and Interpublic‘s UK agencies, as well as Huntsworth’s accounts, we can have a decent stab at what the top 5 players will look like if the merger goes ahead.

The table below shows revenue in £m for the key PR agencies within WPP, Omnicom, Publicis and Interpublic from PRWeek’s 2013 Top 150 analysis.

According to the PRWeek 150 estimate, Brunswick’s 2012 income was £53.2m.

According to Huntsworth’s 2012 annual report its UK revenues were £64.3m. This includes revenues relating to healthcare (Huntsworth Health) whereas for most of the groups above health work is often classified within a different division. The UK healthcare headcount is 23% of the total according to the report. Adjusting for this suggests a public relations UK income figure of around £50m.

On the basis of these estimates the top 5 will look as follows post merger.

1. WPP £107.0m

2. Publicis Omnicom* £92.0m

3. Brunswick – £53.2m

4. Interpublic – £52.5m

5. Huntsworth – £50.0m

Their combined fee income of c. £355m gives these five c. 18-20% of the UK market based on previous estimates from 2011 of c. £1.8bn-£2bn.

*Update – Kreab Gavin Anderson has been excluded from the analysis on the basis that Omnicom only holds a minority stake.

Caveats

All the caveats relating to the PRWeek Top 150 figures apply here, the key one being they are estimates of course!

Also bear in mind that it could well be the case that some of the estimates above include revenues relating to the UK arm of a multinational agency that were derived from work outside the UK. Equally there could be agencies within each Marcoms group that are based outside the UK that do work with UK clients.

There is also the issue of agencies that aren’t labeled “PR” and so aren’t included in this analysis that will be doing some PR based work.

These are just the ones I can think of, there are bound to be a few more.

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.