Arun Sudhaman 29 Apr 2019 // 6:00AM GMT
The global PR industry grew by 5% in 2018, based on the Holmes Report's definitive annual ranking of the world's top 250 PR firms, which is now live.
The Global Top 250, which provides the clearest picture available of global PR industry size and growth, is based on submissions from more than 400 PR firms across the world, along with revenue estimates for those firms that chose not to submit.
The research reveals that the Top 250 PR firms reported fee income of around $12.3bn in 2018, compared to $11.7bn for last year's Top 250 ranking. That growth was underpinned by a rebound from the world's Top 10 PR firms, which improved their toplines by 4.9% on a constant currency basis, compared to +3.3% in 2017, led by strong performances from BlueFocus (up 10.8% in constant currency terms), Brunswick (+7.7%), Ogilvy (+9.6%), FleishmanHillard (+6%) and Weber Shandwick (+5%).
“This is the best growth we have seen from the world’s biggest PR agencies in some time,” said Paul Holmes, founder of The Holmes Report. “There are a number of reasons, including strong years for some big players, the restructuring at Ogilvy — which brought together a lot of PR and influencer work from around the group — and the growth of specialist player Brunswick and disruptive Chinese company Blue Focus, breaking into the top 10 and shaking things up.”
Accounting for the numerous firms that reported outside of the Top 250, along with the vast number of smaller firms that do not provide revenue figures, the Holmes Report estimates the size of the global PR agency industry at $15.5bn, up from $15bn in 2018.
Meanwhile, the 'floor' for the Top 250 rises marginally, from $4.8m last year to $4.9m this year reflecting both growth and the popularity of the ranking with firms from across the globe.
Global Top 250 Growth
A stronger US dollar hampered the many firms that report in non-USD currencies. Accordingly, USD growth for the Global 250 only reached 5.3% last year, compared to 5.1% in 2017. Constant currency growth, however, increased to 9.7% compared to 5.1% in 2017, based on a like-for-like comparison of those firms reporting fee income for 2018 and 2017.
This figure, though, remains somewhat misleading as it does not take into account the disproportionately high number of firms that chose not to report their revenue this year. Significant players that are 'missing in action' this year include Instinctif Partners, Kreab, Rud Pedersen, Exposure, Iris Culture, Maitland, TRACCS, RF|Binder, Peppercomm, Catalyst, Nebo and ROI.
"When firms decline to report revenues, it’s rarely a sign that they enjoyed a successful year," said Holmes. "It’s clear that while some firms continue to perform strongly, others were victims of the disruption that is increasingly roiling the industry. If there’s a word for the industry’s performance in 2018, it’s probably ‘uneven.’"
While fee income has been estimated for several of these firms, it is difficult to avoid the conclusion that firms are aiming to avoid public scrutiny of their numbers. Accordingly, the Holmes Report believes that a more accurate measure of industry growth comes from comparing the reported USD revenue from this year's Top 250 vs last year's Top 250 group, resulting in a figure of +5%, the same as last year's growth. It should be noted, however, that a stronger US dollar serves to lower growth this year.
The Global 250 also reveals the following:
• For US PR firms ($7.9bn), growth was 6.1%, a welcome rebound from 2.6% one year ago.
• For all PR firms reporting in USD ($10bn), growth was 5.9%, up from 3.4% in 2016.
• UK PR firms reporting in GBP (accounting for around $725m, or £567m) declined by 0.8% in reported (USD) terms thanks to the stronger dollar. They grew 4.8% in constant currency terms, compared to +4.2% one year ago
• PR firms reporting in Euros ($1bn), grew 4.1% in reported (USD) terms, or +9% in constant currency terms.
• German PR firms ($645m), grew 4.% in reported (USD) terms, or +9.5% in constant currency terms.
Midsize vs Top 10
The world's Top 10 PR firms reported fee income of $5.5bn, up 2.6% in reported (USD) terms compared to 0.9% in 2017. The top 10 grew their topline by 4.9% in constant currency terms, led by strong performances from BlueFocus (up 10.8% in constant currency terms), Brunswick (+7.7%), FleishmanHillard (+6%), Weber Shandwick (+5%) and Ogilvy (+9.6%, thanks in part to a beneficial restructuring).
Once again, midsize PR firms — defined for these purposes as those within $50m to $250m — helped to power growth, underscoring this tier of agencies' ability to lead the market in terms of both growth and innovation. Midsize firms were up 9.1% in reported (USD) terms, or 12.8% on a constant currency basis.
Within this group, several agencies recorded eye-catching growth of more than 15%, including Japan's Vector (+29%), W2O Group (+23%), GCI Health (+40%), Hering Schuppener (+23%), SKD Knickerbocker (+40%), Sweden's H&H (+31%), Prosek Partners (+21%), Kyodo PR (+21%), M Booth (+17%), CL Relate (+19%), 5W (+21%) and Adfactors (+20%).
“More and more, it’s apparent that the middle of the market is the place to be right now,” said Holmes. “In the past, there were concerns that midsize firms might get squeezed between the global giants—who in theory can do everything everywhere for their clients—and specialist boutiques who did one thing really, really well. But the reality is that midsize firms are big enough to offer all the integrated resources in digital and social and influencer and content creation that clients need today, but small enough to be nimble and flexible and adapt quickly to a fast-changing marketplace.”
Public vs Independent
While independent PR firms have comfortably outgrown their publicly-held peers for several years now, that divide narrowed in 2018, with independent PR firms increasing fee income by 9.2% on a constant currency basis to around $5.4bn, or +6.9% in reported USD terms.
All publicly-owned firms, meanwhile, reported fee income of $7bn, growing 11% on a constant currency basis, or +4.2% in reported USD terms, and accounting for around 45% of the overall market.
However, the divide between independent and public PR agencies is seen more clearly seen when analysing the performance of the Big 4 holding groups, whose PR operations grew by just 3.3% to $4.8bn.
The Big 4 (Omnicom, IPG, WPP, Publicis) account for around 30% of the overall global PR market, at $4.8bn. Independent PR firms reported fee income of $5.4bn, again outstripping the PR operations of the Big 4 holding groups, a divide that grows larger every year.
Revenue per capita
Revenue per capita increased slightly to $162,000 in this year's Rankings up from $159,000 last year.
Holding Groups / Networks
WPP holds onto top spot among holding group PR operations, despite the impact of a stronger US dollar, which caused its PR firms to decline overall to £1.13bn ($1.45bn) compared to £1.17bn in 2017. On an organic basis, WPP's PR firms were up 2.6% in 2018.
At $1.44bn, Omnicom's PR operations are the second biggest in the world, up 1.8% on an organic basis, and 4% in reported (USD) terms. Interpublic's CMG unit reported $1.3bn, but this includes several firms that do not specialise in PR.
Further analysis of the world's fastest-growing PR firms and other key trends will follow over the coming weeks.