Barcelona, 12th May 2010 – The international public relations consultancy sector is holding its own despite the economic crisis: corporate and crisis communications are big business, marketers are shifting budgets to PR, and digital is a key component for growth in the coming year according to the 2010 World Report, published today by the International Communications Consultancy Organisation (ICCO).
Revenues
2009 revenues for the broad majority of countries surveyed showed little to no variation over 2008. The most developed PR markets – the US and the UK – reported a drop of five percent in revenues on average. A few European countries reported double digit growth, with Norway and Ireland at plus nine percent and Portugal growing at an estimated eight percent. But it was Brazil who came out top with a highly impressive 20 percent growth in revenues, defying a flat GDP for the country as a whole.
Not all countries fared as well: Slovenia took the hardest hit, showing an annual decline of thirty percent in consultancy revenues, while Belgium and Russia saw a decline of nearly 15 percent and Slovakia 10 percent.
Service Demand
Crisis and corporate communications were the leading practice areas in terms of revenue generation for consultancies, being the most lucrative service in 17 and 12 countries respectively. Consumer and brand marketing communications were also cited by half of the 24 countries surveyed as high performing areas in 2009.
PR vs. Marketing
Compared to other disciplines, PR fared well internationally when it comes to share of spend. 15 of the 24 countries surveyed reported an overall increase in the proportion of client budgets dedicated to PR, coming directly at the expense of other marketing services such as advertising. Seven countries reported that PR’s budget share remained stable, while Turkey was the only country to see a reduction in PR spend in relation to other disciplines.
Not surprisingly perhaps, all countries predicted that PR’s share of the budget pie would grow during 2010.
Digital Communications
Whether they call it “new media”, “new technologies”, or “digital communications”, ICCO’s members all agreed that digital was an important driver to growth in 2009, and the majority are expecting double digit growth in digital revenues this year. The percentage of overall fee income derived from digital still remains low, however, ranging from an estimated five to 15 percent.
2010 Outlook
The world economy is still under considerable pressure – and this will undoubtedly impact revenues for 2010 – but when asked for a general assessment of local market conditions, 12 countries[1] expected to see an improvement this year with an additional eight[2] predicting stable conditions.
Only three geographies (Italy, Spain and India) felt that conditions would deteriorate further, in line with predictions for contracting GDP for those countries.
When asked specifically about PR consultancy forecasts, a total of 14 countries said they expect to see revenues increase in 2010 (Austria, Belgium, Brazil, Czech Republic, Finland, Germany, India, Norway, Poland, Portugal, Russia, Sweden, Switzerland and Turkey) while five expect overall revenues to remain the same (Denmark, France, Italy, Slovakia and the US), and four are predicting a decline versus 2009 levels (Ireland, Slovenia, Spain and the UK).
The countries predicting growth expect it to be driven by: an increase in international business and foreign direct investment; demand for PR driven by the private sector looking to rebuild reputations damaged during the worst of the downturn; and a continued shift of budgets to PR from other marketing disciplines.
Challenges Ahead
The report identified four top challenges facing PR consultancies internationally:
- Client expectations versus available budgets
- Pricing and profitability
- Competition
- Staffing
Commenting on the ICCO 2010 World Report findings, ICCO President Richard Houghton said;
“It has without doubt been a tough year for PR consultancies across the ICCO membership. But the majority of members are optimistic that, with a combination of tight business management, development of digital services and a bit of support from the local and international economies, 2010 will see growth return.
“It will be those agencies that can juggle recruitment and retention of quality consultants with client pressure on budgets and the need to seamlessly integrate digital communications into more traditional campaigns that will win out over the next year,” he added.
[1] Belgium, Brazil, Finland, France, Norway, Poland, Russia, Sweden, Switzerland, Turkey, the UK and the US
[2] Austria, Czech Republic, Denmark, Germany, Ireland, Portugal, Slovakia and Slovenia
ICCO World Report 2010 