It’s been a funny old PR year. Some firms have had a tough time. Some firms have sadly gone bust, but many, possibly the majority, have seen growth of 5-10%. And in a decent number of cases, they’ve grown more than that.
So it’s a difficult year to try and sum up, but on the show today, I’m joined by W founder Warren Johnson, and we’re going to talk through the key themes and challenges that 2023 has brought to the PR agency market.
Warren founded W Communications in 2009, and it now has global revenues of £25m and an employee headcount of 200 globally, with 120 in London at W, 40 at Lotus, 25 employees in Singapore and 15 in New York.
W has grown at low double digit growth in 2023.
Before we start, The PRmoment Awards 2024 are now - OPEN! The final entry deadline is on Friday, 26th January.
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2 mins How has 2023 been for W Communications?
“We’ve delivered our EBITA numbers, but it’s felt like a real slog this year.”
“We had a super strong start to the year; the summer was very flat, and we’ve seen a strong recovery in Q4.”
4 mins Ben Smith asks Warren: “Does W have lots of fantastic clients who don’t spend enough money?”
“The dynamics of the industry have changed radically over the past couple of years and we’re now at this weird hybrid of low retainers with projects on top…When the economy starts spluttering, that model collapses a bit.”
“Nothing got cancelled. It just got delayed!”
“That's why we’re seeing bankruptcies; this is coming off the back of the biggest wage inflation we’ve seen in a couple of decades.”
“There was a massive fight for talent last year. People overpaid for often mediocre talent… So you’ve got the highest wage bill you’ve looked at, just as the days of the guaranteed retainer become a thing of the past.”
“A lot of PR people want to be liked… If your revenue is dropping, the only way to protect your margin is to reduce headcount. And most people don’t like to do that.”
9.30 mins Why are clients reducing spend?
10.30 mins Are clients willing to pay for the extra specialist advice that agencies are employing?
11 mins How is PR’s battle with other marketing services agencies going?
“We’re (PR) is doing great. It feels like there are a lot more social briefs knocking around.”
“If you can apply an earned media mindset and lens to influencer, to talent, through to live, through to advertising, you are going to provide solutions that can often be more cost-effective than what their (the client) is normally getting.”
12 mins Has the gradual reduction of retainer accounts and the formation of a low retainer/project hybrid client relationship made the PR agency business model less profitable than it used to be?
“We’re looking at a much more dynamic, agile resource-based (talent) system now for agencies.”
14 mins How can PR firms rebuild their margin?
“There is still the same amount of money in the market, you just need a sharper business model.”
“The opportunity to go beyond PR is vast…we’re increasingly doing earned advertising campaigns. Clients are interested in a more earned mindset when it comes to above the line.”
“The last two ye