Arun Sudhaman 21 Sep 2020 // 9:11AM GMT
Last week, PRovoke's latest global industry study revealed an improved business outlook for PR agencies and in-house communications departments. The research, carried out by PRovoke, ICCO, APACD and Stickybeak, attracted 437 respondents from across the globe — finding an overall upturn in business and budget sentiment compared to the first two waves of the survey.
To provide a measure of qualitative analysis to the research, PRovoke followed up the research with a series of vox pops from agency leaders in North America, Europe and Asia-Pacific. These are excerpted below, and reflect an industry that is not only adapting to the challenges posed by the pandemic, but also prospering in some cases.
In general, the comments indicate a considerably more positive outlook than our last interrogation of agency views in April, which found an industry grappling with profound uncertainty amid the economic fallout and mental anxiety of a global pandemic.
In particular, as reflected in the survey results, client budgets are in recovery mode — and have proven particularly resilient in such areas as crisis, corporate reputation, purpose and employee engagement.
Indeed, the pressure on consumer spend may well spur some introspection when it comes to one of the defining trends of the past decade — the pursuit of consumer marketing budgets by big PR firms, sometimes at the expense of corporate reputation. At the same time, though, the shift to a fully digital model poses challenges for an industry that is yet to immerse itself in such areas as performance marketing and automation.
The question remains, furthermore, are we truly out of the woods? Or, as one agency head put it to me last week, is this the end of the beginning, rather than the beginning of the end?
"Our teams around the world really rose to the occasion, delivering significant support to our clients and genuinely looking out for each other. Despite the macro-conditions, we held the ship steady in most regions and segments and we even saw year over year growth in key areas of our business — including solidly among our top 30 global clients. I remain cautious and we will continue to run the business with a lot of discipline. However the underlying momentum is very encouraging, as is the go-forward opportunity to create more value for our clients and play a key role in the way business is changing."
AnnaMaria DeSalva, global chairman & CEO, Hill+Knowlton Strategies
"We remain cautiously optimistic as our business returns to pre-pandemic levels. We are growing and hiring in timely areas of capability including corporate, crisis, purpose, data and analytics, digital and creative. In particular, and as you might expect, we are seeing growth in client work on critical issues of the day including DE+I, environmental sustainability, ESG, social justice, safety and wellbeing. We are working with clients to navigate not just what to say, but tangible actions to protect and grow their business. While consumer work was impacted at the start of the pandemic, we are seeing renewed strength and momentum in brand work, especially across food and beverage, home, retail, hospitality and lifestyle."
Barby Siegel, CEO, Zeno Group
“Golin is seeing similar business improvement, and a return to modest growth in North America. This is driven by healthcare and corporate communications clients, as well as a return to pre-pandemic spending from sectors including CPG, retail and tech. Additionally, prospects are re-engaging in agency searches, which further fuels our firm’s pragmatic optimism. At the mid-year point, we were tracking about 30% fewer RFPs versus a year ago, and of those, more than one third were canceled at the height of the quarantine. However, we have maintained a fantastic conversion rate, winning an average of three out of every four pitches in the US, and while the sheer volume of opportunities are down, our new business revenue is nearly on par with 2019.”
Carrie von der Sitt, global head of growth, Golin
"Overall, BCW has had a relatively good year despite the challenges brought about by Covid-19. We served healthcare clients on the frontlines of the pandemic, spanning diagnostics, treatments and vaccines. We also helped clients across numerous industries communicate internally and externally through the business effects of Covid-19. We saw growth in our public affairs and crisis offerings and, in the wake of the death of George Floyd and mounting calls for social justice, we guided clients on how to build their own inclusion, equity and diversity programs. On the strength of this work, we are projected to be down only in the low single digits against our 2019 performance.
"As we look ahead to the fourth quarter and into 2021, we anticipate continued growth in both public affairs and corporate communications as clients prepare for the results of the 2020 US presidential election. We also anticipate additional calls for employee engagement services, as workforces continue their returns to the office, and for more clients to come to us for counsel on developing and formalizing their purpose and inclusion, equity and diversity efforts, as well as their approaches to social justice. Brand marketing, particularly in travel and tourism, has been the slowest to move closer to pre-pandemic budgets, and we expect that to continue through Q1."
Donna Imperato, CEO, BCW
"The Covid-19 recession has been a lot different than the financial crisis and the tech crash of the early 2000s, especially for the PR industry. Budgets have bounced back quicker than anticipated and the demand for services spiked in late Q2 and Q3 after cratering in March and April. Marketing leaders realized pretty quickly that the budget savings from physical events, travel, etc. more than made up for initial budget cut targets from finance, and they have reinvested those funds in PR, digital and social media, and other channels. Early-stage companies are still getting funded and the IPO window for tech seems to be wide open with Snowflake’s record-breaking IPO among other brand-name startups considering going public. The entire market still warrants watching as unemployment numbers are still high, public health experts are predicting it’s going to get worse before a vaccine is widely available, and who knows how the economy will react to the election. But overall, the PR industry is bouncing back faster than most people expected."
Jason Morris, president, Inkhouse Media
"Consistent with the PRovoke survey, we are seeing positive trends in our business — with increases across all categories of our portfolio: analytics, technology, advertising, integrated communications and scientific communications. In fact, W20 is heading toward 20% organic and 50% total revenue growth in 2020, a result of our foundation in data, analytics and digital which are exactly what’s needed to help clients quickly adapt to this rapidly changing environment. If this year has taught us anything, it’s that you can’t predict the future. However, it has also inspired us, as a leading healthcare company committed to following the data and the science, to be informed early and often and to be part of the solution — no matter what the challenge or crisis. The economic rebound will likely have ups and downs — but the need for our profession has never been greater, particularly in healthcare, and we have proven as an industry once again that we are adaptable and resilient."
Jennifer Gottlieb, global president, W2O Group
"I was thrilled with our performance in the first half of the year and am very optimistic for the second half. I’m so grateful to our staff who have continued to deliver tremendous results for our clients. And I’ve never been more grateful to our clients for their continued trust and work. I recognize that it’s been a very challenging year for many in our industry and all of us personally, but FleishmanHillard is having a very strong year."
John Saunders, CEO, FleishmanHillard
"In terms of the outlook going into the fall and new year, I think we will continue to live in an uncertain market, especially given the likelihood of a new wave of Covid in the fall/winter, and with no specific timeline yet on the rollout of a vaccine. That said, in the PR business certain verticals remain robust while others are suffering from a dramatic drop in business and hence in communications agency support. Ruder Finn is fortunate that our core areas of business which are healthcare, tech, corporate reputation and CEO leadership on issues and activism, remain strong and growing. We are less exposed to entertainment, travel, restaurants, etc. which were deeply impacted by the pandemic and where PR agency support demand declined."
Kathy Bloomgarden, CEO, Ruder Finn
"Research has shown that organizations that strike a balance between driving operational efficiency while also investing in the future through marketing and reputation management emerge the strongest from challenging times. As business outlooks improve, we’re seeing marketing spend rebound and being redistributed to where it’s needed most. It’s really more about where and how to spend your budget vs. what to spend. So alongside earned media relations, we’re seeing increasing client demand for analyst and influencer relations, digital and social media consultancy, brand reputation management and globalization support. This reflects how marketers and communications leaders are increasingly looking for an integrated model from their agency partners, being able to offer a range of communications support and services to fit their needs, building business resilience and ensuring future-readiness for the opportunities emerging in the market."
Katie Huang Shin, president, Axicom
"The overall Covid experience feels like we've come away with a 1-1 draw in a match we were expected to lose; so we'd definitely have taken that at the start of the crisis. Now we are very much looking at growth, having got back to pre-Covid billing levels in August and the briefs are flowing in again. Brands are not just looking to get back to normal, they are aiming to make up for three or four months of stagnation and we've seen a bullish approach to marketing from most of our clients."
Alex Myers, founder and CEO, Manifest
"Globally we’d concur with the findings from the PRovoke/Stickybeak survey. As a mid-size firm, we’re seeing an uptick in pipeline through to the end of the year across the majority of our offices with demand for consulting projects around positioning, messaging and propositions on the rise. Through the pandemic, we’ve pivoted along with the majority of our clients to supporting virtual events and increasing activity across digital channels —something that perhaps some in the B2B tech sector were unfamiliar with pre-lock down. I feel that this ability to flex with clients has to be a key strategy for all agencies as the industry continues to focus on maintaining and growing client budgets through the rest of the year and on into 2021."
Andy West, group chief development officer, Hotwire
"Our industry has taken a beating over recent months, but it hasn’t been knocked out — and to many of us who feared for the worst, that makes for a big sigh of relief right now. There is clearly a recovery happening, and while further closures and job losses are sadly inevitable, there is a clear route to renewed industry prosperity. The industry will of course be smaller — I’d predict 20% smaller in terms of revenue and 10% smaller in terms of people by the end of this year. It will also be utterly different in appearance and composition, with far more emphasis on digital delivery, and with the home-office balance having shifted radically, and having shifted forever. This Covid crisis has turbocharged changes that were underway already, and in the medium term these changes will make our industry’s strengths against our competitors all the more formidable. In the search for positives in these times, this must be the biggest one."
Francis Ingham, director general, PRCA
“We’ve noticed a significant increase in new business opportunities and campaign briefs for existing clients over the last month or so. In fact, September will be our highest revenue month ever in the history of Tin Man – which is amazing given the circumstances. I think brands are, quite rightly, looking to make up lost ground and agencies that have shown clients flexibility during Covid and are trusted for their quality of work will reap rewards now.”
Mandy Sharp, founder and CEO, Tin Man
“Clarity is lucky to operate in the tech sector which has been one of the more robust through this period. We saw slower new business activity through July and August but I'd put that down to holidays, with September looking to be our second biggest billing month of the year. Clients are definitely starting to plan for 2021 with additional confidence reflected in the budgets being allocated to creative. With a fair wind, we think we might see an uptick in revenues by the end of this quarter.”
Rachel Gilley, UK MD, Clarity
“Having just returned to my role as MD at WE in the UK after 10 months off for maternity leave (which was longer than expected due to Covid!), I can honestly say that things are in pretty encouraging shape. We are seeing clients now shifting into longer term planning mode vs. the more reactive stance of a few months ago. The resilience of our industry to navigate these choppy waters has impressed me no end, with employees continuing to be committed to brilliant client service despite the challenges of remote working and clients working more hand in glove with agencies than ever before. It has been a humanizing experience going through lock down together and the partnerships that have been born out of these uncertain months will no doubt cement stronger agency client relationships for the future. Budgets that were previously frozen or cut are returning and I’m cautiously optimistic for the months ahead.”
Ruth Allchurch, UK MD, WE Communications
“Now is the time for PR — if it wasn’t already. It’s one of the least impacted sectors in comms/marketing — just look at the holding company reports. We've definitely seen a pick up in H2 across the region — briefs that were pulled in H1 are also being discussed anew. Corp comms, issues and healthcare and some parts of consumer (grocery, skincare, e-commerce) have been strong all year. We are seeing real demand in analytics as clients look to understand the new unusual and rethink how they reach their audience.
"We need to remember there is just some bad luck at play here, not just bad planning. Agencies that over indexed in travel/hospitality and had clients that pulled budgets early are feeling the pain but have rapidly pivoted in many cases. Many multinationals who have an in “Asia, for Asia” strategy and relative autonomy have in many cases increased budgets in the region. Many that aren’t as committed or are in impacted industries have seen cuts. We’ve seen an uptick in Asian brands across the region as they step into the vacuum left by MNCs and are less encumbered by what’s happening outside their markets."
Darren Burns, Asia-Pacific president, Golin
“We see the business landscape in the Asia-Pacific region continuing to improve across all the locations we have a presence. Revenues were impacted towards the end of Q1 and through Q2, but there’s been a month-by-month uptick from the latter part of Q2 onwards and we’re now seeing a monthly revenue profile that’s pretty much in line with, or better than, last year. Thankfully, given our bias towards clients who operate in the tech space, we’ve been shielded from the challenges faced by many others, and in fact we’ve seen tech revenues grow throughout the period. The recovery in consumer is happening, but sluggish; and understandably travel and tourism remains weak. Right now, we are seeing a solid number of those clients across the region — who took a ‘break’ or reduced budget back in April or May — re-engaging in September and October, as their own business confidence returns.
"And new business is very active in China, Singapore and India in particular. We’ve seen a notable increase over the last six or eight weeks in Western-HQ’d businesses wanting to increase their comms/marketing presence in APAC and coming to us with new or extended briefs. We’ve experienced growth, through the period, in strategic comms — more traditional PR & social; reputation management — as well as for our digital and content marketing services, as you’d expect. In many cases, clients who have been impacted less by the pandemic, have doubled down on traditional PR, and focused extra spend on digital marketing where they can see immediate value."
Lee Nugent, Asia-Pacific regional director, Archetype
Additional reporting by Aarti Shah, Diana Marszalek and Maja Pawinska Sims.