Crunch time for Manchester PR agencies?
Manchester PR agencies have been recruiting and getting fat on impressive account wins for some time. That’s alright.
It seemed that the MEN media section and other Manchester / North West / trade publications have had little trouble finding positive stories. But now that we are all going to be Okies and live in Hoovervilles (if recent front page editorials from the nationals are anything to judge by), how will this affect the city’s PR outfits?
The Drum magazine quoting Plimsoll, an industry analyst, paints a bad picture of the industry as a whole. Findings for 1,000 UK agencies surveyed include:
- 30% of workforce could have to go
- 75% of agencies need to reduce headcount
- 116 agencies need to consolidate immediately or their survival is in question
- 20% of agencies are running at a loss
I spoke to an PR supplier the industry on Friday and these figures are being reflected in bahaviour. So much so that agencies are cutting back on £200 extras that would not have been questioned before.
There is a good side though. There is hope.
Firstly, until something happens it is not 100% definite that it is going to happen. It sounds like tautology I know. The slow down could be brief, shallow; cheaper oil and lower interest rates could work. I am not sure I believe this, but….
Secondly The Drum carried out a poll that found, after digital, PR was viewed as the marketing discipline most suited to survive in a recession.
Thirdly, as Bron Earnes of Hasilmann Taylor (not Manchester based, but I will accept her viewpoint) says agencies working to 20% margins that closely revue spending and forecasts should survive. A conclusion could be that the industry might be better placed after a down turn because good agencies, which are keen, will survive. It could mean a better service to clients and a better perception of the industry.
Fourthly, as Charles Tattersall of Citypress says established players and smaller agencies with lower cost bases and fees could also do well. Some agencies will do well and adapt.
It could be an opportunity for some. Indeed while the PR supplier said that while some agencies were making redundancies, there was some that were just full on with their expansion.
October 14th, 2008 at 10:56 am
During the tech downturn in ‘01/02, loads of senior people were laid off from the tech agencies. A lot of talent left the industry altogether, and I think the general quality of PR in that sector fell as a result. When spending resumed, a lot of people who had become freelancers, or taken a break to have kids, started growing their businesses to become new agencies. All of a sudden pitches were full of new names. The strong agencies that had survived the downturn on their 20% margins were suddenly being undercut by small, hungry teams with low overheads. The lesson? Surviving the downturn is one thing; surviving the recovery is often more of a challenge.
October 15th, 2008 at 8:35 pm
The problem with a lot of PR agencies is that they got complacent. The vast majority of agencies in the North West do not have a Scooby about digital. They simply are not engaged with the medium. And for that simple fact they deserve to go under so that quality competitive agencies who think ahead can actually provide a service their clients think they are getting
October 16th, 2008 at 7:53 pm
Even if they’re only looking on from afar, a lot of people have a lot of time for Simon and his Push On lot. But, Simon, the ‘deserving of going under’ bit is a slightly harsh. Equally though, PR kids not getting involved properly with digital has been lazy and some will regret it eventually.