Thursday, April 28, 2005

Tough industry

Did ya'll see recent PR WEEK agency rankings?

First off, I applaud the fact that the publication broke out the results of the oligarch-style conglomerates from the independents. It was nice to see apples compared to apples. The big guys' results unfairly skewed the results in past years.

What struck me in particular, though, was how relentlessly tough the PR industry can be:

The #1 player was Edelman, with about $150M in billings.

The #2 player was Waggener Edstrom - roughly ONE-HALF the size of Edelman, at $77M. Ruder-Finn, at #3, was equivalent in size.

The #4 player listed was the MWW Group - which was roughly ONE-HALF the size of Wag-Ed, at about $40M!

Taking a look at just the largest oligarch, Omnicom, you see that ALL of that conglomerate's PR agencies' combined revenues added about $90M to the bottom line. Average that $90M across Omnicom's 7 agencies and you get an average of just $12M per firm.

(Obviously that's not an accurate yardstick: Omnicom's group includes Ketchum, Fleishman-Hillard and Porter-Novelli, three of our industry's most important stars, and these three units alone probably accounted for the bulk of Omnicom's PR revenues. But to me, that's even scarier. What if these 3 Omnicom agencies made up 100 percent of Omnicom's PR revenue? That $90M divided by 3 equals $30M per firm, which is top-10, sure, but sooooo far behind Edelman and, let's face it, $30M is a lot of money but it's just a stone's throw away from what 2nd tier agencies were raking-in during the Bubble Days.)

And it's all downhill from there, folks: by the time you get to ranking #15, you're looking at agencies that made $10M or less last year. That includes familiar names like Horn Group, Hoffman, Bite, Outcast, etc. And last year, let's not forget, was a pretty good year for most firms!

Why are we doing this, again? ;)

Meanwhile, even though we've got to be extra-creative to attune and disseminate our clients' messages across channels ranging from the blogosphere to the TODAY Show to EE Times, the advertising guys still get all the big dough, the cool cars and get to hang with the supermodels.

Pretty pictures, catchy tunes and gimmickry trump us every time. Why? Hold on, lemme pull-out my soapbox....

'Cuz as an industry, PR people continue to shy away from bottom-line metrics that would validate our contributions to client revenues.

If you're curious, SHIFT Communications came in at #64. Not too shabby after just 2 years in business, but I was kinda' bummed to see that number at first. I started to feel a little better when I calculated that of the top 65 firms, we were 13th in terms of growth rates. We're shooting for the top 50 this year; wish us luck.

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