Under-pressure PR firms fighting back to provide quality in turbulent times

IT is a turbulent time for those working in the Public Relations (PR) sector.

With the economic downturn and the pressures to reduce costs, PR and advertising has been among the top candidates for cuts.

The pressure increased with the announcement (August 2010) of a government consultation on the Local Authority Publicity Code, which guards against campaigning with public funds.

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Bradford Council's former leader Eric Pickles, the Communities Secretary in the coalition Government, said: "Taxpayer-funded lobbying and propaganda weakens our democracy. So-called town hall newspapers are already closing down scrutiny from independent local papers.

"Now lobbyists are being used to sidestep transparency laws and shadowy figures are peddling more regulation and special favours."

About the same time, the Guardian published an article attacking the business ethics of some of the country's largest PR consultancies.

These are, indeed, difficult times for the sector and this year's Faculty of Business and Law survey of top public relations and advertising agencies in the region provides an indication of how companies are faring.

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The survey shows mixed fortunes experienced by agencies in the region. While some companies reported significant year on year increases in turnover (the highest being Thompson Brand Partners with an increase of 48 per cent), others reported substantial decreases (the lowest being Northern Lights PR with a decrease of 26 per cent).

It is good news that more than half the top companies in the Top 40 increased turnover, however at the same time almost one in four report a decrease.

Of those organisations responding to the survey, Brilliant Media had the largest turnover at 138m, over four times larger than its nearest rival, growing significantly over the previous year. But this is only part of the story.

Despite its increase in turnover, profitability at Brilliant has shrunk by a massive 88 per cent, whereas at Brass and Harris Associates, profits have increased on a decreased turnover.

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According to John Morgan, CEO of Brass (formerly Brahm and Swamp): "The downturn has forced consultancies to examine their internal structures and activities to be more focused on the client: in Brass's case this has involved a complete re-engineering of the business."

In these difficult times not all have survived: regional giant Ptarmigan was taken over by Bell Pottinger this last financial year.

Other challenges, include the removal of retainers and planning fees, shrinking budgets and procurement practices – especially in the public sector – which emphasise cost above value in commissioning.

Several companies working with the public sector have been particularly hard hit by the short-notice termination of contracts, including Northern Lights PR. "That, combined with an exceptional year in 2009, reflected in our figures this year," admits MD Victoria Tomlinson.

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Acceleris, also with a specialism in the public sector has had to rapidly rebalance its portfolio with more private sector clients and has stripped out its media-buying activities, which MD Peter Davenport says was not covering its costs. Both companies are now performing better and have attracted new business wins recently.

For other agencies, such as Pelican PR, the choice has meant greater specialisation. Says Michael Bennett, of Pelican PR: "We have decided to move from being a generalist PR agency to specialise in just four market sectors which we now know in great detail. That way we can compete nationally as well as locally."

Several companies are looking to markets further afield, identifying and developing international opportunities for expansion.

Two of the region's major PR players, Grayling and Golley Slater, are part of larger national and international network organisations that have some cushion by undertaking regional activities for large, country-wide accounts.

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However, both say that the vast majority of business is generated locally.

Golley Slater's Claire Rushton, who moved back to the region after a spell in London, has been impressed with the talent in the region and believes that professionals here are hungrier, more passionate and more resourceful than some London-based counterparts who can be more complacent with their larger client bases.

She says it is frustrating to see national organisations based in the region, looking to London for agency support when there is more than enough capability in the region to service their needs.

While larger companies are able to offer a range of services on their own, many are working with small, highly specialised boutique agencies.

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The shape of sector is changing and many survey respondents said that not only are the silos between the specialisms collapsing, but that partnership working is the way for the future.

Victoria Tomlinson, of Northern Lights, is a strong advocate of partnerships and is convinced that it is a spur for creativity and innovation allowing agencies to focus on their core strengths.

The growth of social media is a further theme which features strongly in the survey findings this year.

The need to work with for example, Linked-In, facebook, twitter, wikis and blogs alongside more traditional forms of communication is clearly moving up the agenda.

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The final word on the PR sector goes to Carol Arthur, of Northern Lights, who is chair of the Chartered Institute of Public Relations Yorkshire and Lincolnshire Group.

"I believe there is a greater understanding of what public relations and communications in general can do for an organisation and this presents us with great opportunities. CEOs get the importance of a good reputation and understand that we can add value at all levels of their business.

"I'm pleased to see professionals responding by taking professional body membership, training and qualifications more seriously than they have ever done so they can step up to the challenge, because whatever the next couple of years brings in business terms, in communications we can never stand still."

Anne Gregory is Professor of Public Relations and Director of the Centre for Public Relations Studies in the Faculty of Business and Law at Leeds Metropolitan University

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David Devins is Principal Research Fellow at the Policy Research Institute in the Faculty of Business and Law at Leeds Metropolitan University.

Methodology

A database of PR companies operating in the region was compiled using last year's contacts supplemented by new entrants from a variety of information sources.

An e-survey was conducted which asked a range of questions associated with the financial performance of the company and the challenges and opportunities facing the sector

A total of 139 companies

were invited to participate in the survey and 46 returned questionnaires. Those not responding were re-contacted to see if they would be willing to participate –12 declined to take part in the survey with the remainder not responding to further requests.

A response rate of 33 per cent was achieved and the researchers would like to thank those who spared the time to complete the questionnaire for their contribution to the research.

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