Even a cursory glance at this year's league table will confirm that 2001 was painful for the UK's public relations industry. At best it was a year of nil growth, and some estimates suggest industry income may have dropped by as much as 15%.
The total income of the 145 agencies that submitted information is actually up 4.75% at pounds 576m, but this exaggerates performance. That's because some participants claim substantial growth largely as the result of acquisitions, which do not represent growth for the sector as a whole. Staff numbers are now around 7266, a 6% drop on the situation 12 months ago.
Agency heads think this recessionary period has been more painful than the last major downturn a decade ago. One reason is that the industry is much bigger, and dominated by publicly quoted groups that act quickly to cut costs and maintain margins at the first sign of trouble.
'The last time round we were a pretty realistic business, and recession wasn't such a shock to an industry that was still small and resilient,' says GCI chairman Adrian Wheeler. 'The industry takes itself too seriously. As a result, it has over-extended itself.'
All of which raises a number of important questions, such as why PR has suffered more than, say, direct marketing, and what the prospects for recovery may be.
Signs of recovery
Directors interviewed for this survey are mainly cautious about the immediate outlook, but there are signs that those elusive green shoots are starting to push through.
'Internally, we are budgeting for a zero increase in revenues in 2002,' says Incepta Group chief executive Richard Nichols. 'We think that is the prudent way to manage the business. We took action to control costs last year, so we're well positioned to take advantage of any upturn.'
'I change my mind every day about the outlook,' admits Allan Biggar, chief executive at Burson-Marsteller. 'We're predicting a flat year, but four months into it we are exceeding all our top-line and bottom-line targets.'
Almost everyone, in fact, has a view on the economy. 'Client confidence in the UK is fragile, whereas in the US it was destroyed,' says Donna Zurcher, managing director at Ogilvy PR. 'Here, I think it can be repaired fairly quickly.'
Golin/Harris, with some important account wins under its belt, including the US Cotton Council, Bass, and Getty Images, is expecting positive growth this year. Grayling reports that, untypically, it had a disappointing start to 2001, followed by a near-record second half. The first quarter of this year proved to be better than expected.
And Neil Hedges, chief executive at Fishburn Hedges, adds another optimistic note: 'In the end, last year was perfectly reasonable for us, and we think 2002 is also looking good. We are certainly ahead of budget.'
Several factors contribute to why 2001 was so difficult for many. Areas of specialisation were crucial. Stock market uncertainty meant fewer share placings, mergers and acquisitions, which was bad news for City PR firms. Public affairs, on the other hand, climbed up the agenda.
Healthcare was very healthy, but the IT sector was mixed, and dotcoms in particular were a disaster. It's also argued that US-based global corporations, in general, were quicker to cut budgets than European clients.
By their very nature, some of these sectors - the City, international - have a London bias. The Public Relations Consultants Association (PRCA) recently asked Jim Surguy, managing director of Results Business Consulting, to run a nationwide series of seminars on operating in a recession. The reaction he met in the provinces was 'what recession?'
Surguy believes that the PR sector has a number of weaknesses. Not least, it has an image crisis at the moment, fuelled by all the talk of government spin, the Countess of Wessex agency …