Why has mainstream PR stopped growing?

The PR industry has stopped growing. The annual PR Consultants Analysis, which reviews the top 1000 PR consultancies, is an annual study whose 2006 findings were also depressing. The 2007 report states that average sales growth has fallen to zero. Pre-tax margins remain around 4%.

Roughly two companies in five experienced falling sales last year. One quarter are in serious financial difficulty. On average, firms in the poorest-performing quartile suffered a 25% fall in sales, while their invoices took on average 79 days to be paid.

According to Christopher Evans, the senior analyst on the Plimsoll report, “the next six months will be a time for tough decisions and painful measures as their managers attempt to put them back on a firm financial footing.” PR agencies are often short on financial prudence and use discredited metrics. However, it is PR’s trivial reputation and weak brand alignment that undermines it. That also partly explains why many AR managers avoid the PR label.

Of course, every cloud has a silver lining. There are segements withing marketing communications where sales are growing, including analyst relations, as we have discussed before. Indeed, spending on most forms of marketing seems to be rising.

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