Uncork those champagne bottles! It's a great time to be in PR!
Or more precisely, it’s a great time not to be in the ad business.
Global ad spending is slated to plunge 6.9 percent to $453.2B this year, according to Zenith Optimedia. That’s the biggest decline in 29 years. American marketers will jump off an even steeper ad cliff as outlays will plummet 8.7 percent to $156.9B.
And why is WPP so "hot?" It's because the conglomerate is not as exposed to advertising like rivals Omnicom and Interpublic. WPP’s genius CEO, Martin Sorrell, gets 60 percent of revenues from businesses such as PR, market research and direct mail.
Sir Martin may be challenged to pay off the more-than-$900M "bridge loan" used to bankroll his TNS deal. But that is another story.
My bet is the notion that PR tops advertising during a downturn is based on a certain amount of wishful thinking. PR's advantages are built on effectiveness, cheapness and the ability to target influencers. There is no comparison however between the ability of advertising and PR to drive the economy. Ad spending is gauged in dollars; PR outlays are measured in dimes.
PR's rosier future, relative to advertising, must be taken with a handful of salt. The recently released O’Dwyer '08 rankings of PR firms showed many "downers" for the year. Execs candidly told us they yanked the numbers because they were dismal.
To me, that is a sign of weakness that clients and potential clients should take note of. The 51 dropouts including George Regan’s firm in Boston; Lippert/Heilshorn and HealthStar in New York, and Jackson Spalding in Atlanta. [There are heroes such as San Francisco's Sam Singer. He joined the '08 rankings despite reporting a nine percent decline in fees at Singer Associates to $5.6M.]
The PR business tanked during Q3 in '08. The economy hasn't perked up much since the slide began. Keep those champagne bottles corked.