The ability to attract top talent is now the biggest concern for public relations agency leaders around the world, according to a survey conducted by The Holmes Report and the International Communications Consultancies Organisation (ICCO) as part of the World PR Report.
The findings come after the World PR Report yesterday revealed that global PR industry optimism has rebounded, led by increasing marketing spend on PR and rising digital budgets — all of which is contributing to improved agency profitability. Despite the improved sentiment, certain challenges remain pressing, not least talent and overall communications budgets.
Almost four out of 10 (39.9%) consultancy principals responding to our survey cited “staff recruitment” as one of the most significant challenges facing PR firms in their market. That was an increase over last year, when recruitment was second (36.9%) behind concerns about overall economic conditions (37.6%).
Economic conditions were a less pressing concern this year, with just 25.8 percent identifying them as one of the three greatest challenges to their growth—although many (31.5%) continued to worry that clients are unwilling to commit sufficient funds to public relations.
“The recession may be over in most markets around the world,” says Paul Holmes, publisher/CEO of The Holmes Report, “but many clients are still reluctant to spend on public relations, and agencies are feeling the pressure to deliver more for less.”
The survey identified a number of concerns that may be contributing to that problem.
The first is increased competition. This year, more than a quarter of responding firms (25.5%) cited competition from other marketing disciplines as a major obstacle to growth—that continues a steady increase from 22.9% of respondents in 2013, and 20.6% in 2012. Similarly, 22.8% cited competition from other PR firms as one of their toughest challenges, up from 18.2% in 2013 and just 15.5% in 2012.
The second is the ability to master digital and other new technologies—although PR firms do appear to be rising to the challenge, as this issue was cited by 22.5% of respondents this year, compared to 25.2% last year.
The third is measurement and evaluation. While this was cited by just 13.8% of respondents (down from 17.5%) last year, it seems likely that there is some correlation between the industry’s ongoing measurement problems and the unwillingness of clients to invest sufficient funds. Says Holmes, “If we were providing clients with convincing metrics to show that PR impacts their performance, we would surely be seeing higher levels of investment.”
The fourth is client education. Around one in five (19%) suggested that client understanding of PR was a significant obstacle to growth, and an ever greater number (24%) worried that clients were too focused on the short-term.
“The fact that talent is now the leading issue for PR agencies globally shows that growing pains are once again top of the agenda, while economic conditions have slipped down the list,” added ICCO chief executive Francis Ingham. “This is reassuring to some extent, but there is some concern over the growing pressures brought on by competition from other marketing disciplines – leading to this continuing reluctance from clients to spend on PR.
“As the global PR industry’s talents become increasingly diverse, it is inevitable that competition with other disciplines will be an everyday experience — an interesting dynamic which I believe can only help us to hone our abilities.”
Increased spending on digital and social media remains by far the most significant driver of public relations agency growth around the world, with 69.5% of respondents identifying digital as one of their three top growth drivers (compared to 75.3% last year).
Indeed, digital was top in every region around the world, most notably in the UK, where it was cited by 80.3% of respondents.
But perhaps the most interesting development of the year saw a surge in marketing communication (53.6%) compared to corporate reputation (45.8%). Last year those two areas were seen as almost equal with corporate reputation slightly ahead (49.7%, compared to 46.4% who cited marketing communications).
Marketing communications was strongest in North America (where it was cited by 60.5% of respondents), Eastern Europe (56.0%), and Asia (54.6%). The only regions in which growth in corporate reputation outpaced marketing were Latin America (47.1% compared to 35.3%); Western Europe (46.6% compared to 39.8%); and the Middle East and Africa (48.1% compared to 37.0%).
Latin America was most bullish on public affairs (41.8%), some way ahead of Australia (36.6%), while developing markets such as Latin America (23.5%) and Africa and the Middle East (22.2%) were the biggest growth markets for corporate social responsibility.
Australian firms, meanwhile, saw the by far most significant growth in investor relations and financial communications (27.3%), while Western Europe (15.5%) and the Middle East and Africa (18.5%) are the two regions where employee communication is making a significant contribution to agency growth.
Looking ahead, agency principals expect digital to continue driving growth (77.8%), along with marketing communications (51.9%) and corporate reputation (52.2%).
In terms of industry sectors, consumer products and technology were the two clear leaders globally—except in Australia, where healthcare was the biggest source of growth.
The consumer products sector was the number one source of growth in North America (where it was cited by 48.1% of respondents); Latin America (56.2%); Western Europe (47.6%); and Asia (59.4%). Technology was the top growth sector in the UK (56.5%) and Eastern Europe (52.0%). The two sectors tied (57.1%) in the Middle East and Africa. Healthcare was cited by 45.5% of firms in Australia.
Agency forecasts, however, indicate a slightly different picture. Technology and consumer products remain the key drivers of growth over the next few years, but 49% of respondents point to healthcare as a source of growth over the next few years, compared to just 34% last year.
Global Investment Plans
Last year, PR firms continued their investment in social media community management (68.9% listed that among their top three growth areas), multimedia content creation (37.1%), and digital build and production (26.2%)—but also in senior counsel (37.0%) and, somewhat surprisingly, media relations (35.1%).
At the other end of the scale, research (7.2%) and professional development were the areas of lowest investment.
Looking ahead, digital is likely to be the area of greatest focus: 52.7% expect to continue spending heavily on social media community management; 40.6% on digital production; and 38.9% on multimedia content.
But there is also a surge of interest in measurement and analytics, which is likely to see the fourth highest investment in 2014, cited as a priority by 31.2%. Add in the number who expect to increase spending on insight and planning (20.1%) and other research (11.4%) and it is clear that data and analytics-related investment is on the increase.
Other priorities for firms around the world include senior counsel (26.5%) and creativity (24.2%).
Interest in expanding social media community management is strongest in the Middle East and Africa (70.4%) and weakest in Latin America (25.0%). Enthusiasm for digital build and production is highest in Eastern Europe (58.0%) and lowest in Western Europe (31.4%). And multimedia content production is a top priority in the UK (54.4%) but barely registers in Australia (9.1%).
Senior counsel is a high priority in Australia (45.5%) and in Latin America (37.5%), while measurement and analytics garners the greatest interest in the most developed markets: the UK (41.3%) and North America (39.8%).