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PR agencies 'facing tough conditions'

11/07/2013

The print industry has been struggling for a while now as advertising budgets are squeezed and ciruclations drop.

This has seen many papers seek to diversify - embracing the web and paywalls has been seen as one potential way to ease their money worries. The latest PRWeek's Top 150 PR Consultancies report shows that things are not all rosy in the PR garden too.

Agencies in the top 30 recorded an average growth rate of five per cent in 2012, down significantly on the figure of 9.2 per cent in 2011. Indeed, only one agency in this elite list managed to better its 2011 performance - The Red Consultancy.

Mike Morgan, chief executive officer of the group, said: "All downturns are tests of agency strength, but this one has been a marathon… The overall market remains tight and tense due mainly to downturn-driven caution.

"Add to that increased competition, some evidence of an overall raising of standards right across the agency marketplace and you've got a buyers' market. Good agencies are succeeding by responding to those conditions by working harder at keeping clients creatively and commercially satisfied."

There was also a massive disparity in the results. Profit margins varied from +69.2 per cent to -0.1 per cent, nearly half (46 per cent) of all companies saw their profit margins fall in 2012.

Gavin Devine, MHP Communications chief executive officer, pointed to the issue of brittle confidence in the sector as one of the main reasons for PR agencies being held back in 2012. He added, however, that 2013 has been much more successful so far and there is a lot of new business at the moment.

One company hoping to boost its business is Liquid and the PR firm has just picked up five awards at the Public Relations Consultants Association awards. It was honoured with two accolades at the South West and Wales event, two in the Midlands and one in the South East.