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2016 Global Agency Business Report Summary

Core Content

The 2016 Global Agency Business Report highlights the evolving landscape of the public relations (PR) industry, emphasizing the growing demand for integrated communication services and the challenges agencies face in adapting to this new reality. Despite some stagnation in growth compared to previous years, the need for PR services remains high, driven by the increasing complexity of client needs and the integration of PR with marketing, digital, and social media strategies.

Main Trends and Insights

Integration as a Key Battleground

• Integration and convergence are central to the industry's growth and client engagement.
• PR agencies are forming cross-agency teams to offer more comprehensive solutions, such as Team Ford, Team Dell, and Team Bank of America.
• Weber Shandwick is noted as a leader in delivering integrated services, with a strong focus on content marketing, digital, and social.

The Rise of 'Horizontality'

• Martin Sorrell of WPP promotes "horizontality" as a model for integrated communications.
• Ogilvy PR is positioned to benefit from its unique heritage and ability to collaborate with other Ogilvy agencies.
• Burson-Marsteller exemplifies the use of media relationships and creative content to support major client campaigns, such as the 50th anniversary of Moore's Law for Intel.

Leadership and Client Engagement

• CEOs of major PR firms are increasingly involved in client work, with some spending up to 55% of their time on such activities.
• Andy Polansky of Weber Shandwick emphasizes the importance of client-centricity and specialist expertise in driving success.
• Fred Cook of Golin and John Saunders of FleishmanHillard also highlight the value of collaboration and integration across disciplines.

M&A Activity

• M&A activity is on the rise, particularly in the U.K. and EMEA regions.
• Smaller agencies are gaining visibility and performance, with some like Manifest (I) and Four Communications experiencing significant revenue growth.
• FleishmanHillard Fishburn, formed by the merger of two struggling agencies, has become a top 10 U.K. agency with £28 million in revenue.

Challenges and Opportunities

• Growth has slowed for the top 50 global PR firms, from 8% in 2014 to 4% in 2015.
• Smaller agencies are more agile and can adapt to the digital and social media shift, often outperforming larger firms in terms of growth and innovation.
• PR agencies must retool with new skills, including data analysis, digital marketing, and content creation, to meet evolving client demands.

Key Players and Performance

• Edelman remains a top performer, with 10% growth in U.K. revenue.
• Cohn & Wolfe and MSLGroup are also noted for their integration strategies and collaborative approaches.
• Richard Edelman highlights the importance of investment in new talent and creative thinking to stay competitive in an integrated future.

Key Statistics

• Global PR revenue in 2015 was $10.2 billion, up 5% from 2014.
• Top 50 global firms saw growth cut in half from 8% to 4%.
• U.S. growth remained steady at 7%, while U.K. growth was 8.3%.
• Smaller U.K. agencies like Rooster PR and Manifest (I) achieved 7-figure revenue, with 42.3% average growth.
• Four Communications and Speed Communications saw 62% and 100% growth, respectively, through acquisitions.

Conclusion

The PR industry is undergoing a transformation, driven by the need for integration and the rise of digital and social media. While challenges persist, particularly in retaining talent and adapting to new business models, the overall demand for PR services remains robust. The growth of smaller agencies and the increased M&A activity signal a dynamic and evolving sector, with a clear focus on innovation, collaboration, and client-centric solutions.