2013 heralds change but not catastrophe

Despite a depressed economy, the comms business at least enjoyed a major boost in 2012 from the London Olympic and Paralympic Games, and the Royal Jubilee in the spring.

Unfortunately 2013 has no sporting or cultural events on this scale. No major election campaigns are planned. This, against a backdrop of flat economic forecasts and continuing eurozone problems, suggests a difficult year ahead.

So when, earlier this month, the UK's biggest PR group Huntsworth revealed flat revenues for the third quarter - with the Citigate and Grayling brands continuing to struggle - rumours quickly spread of a post-Olympics slump.

The good news is that there are many encouraging signs to offset such pessimism. Kingston Smith W1's latest report The Financial Performance of Marketing Services Companies 2012, released this week, remains upbeat about the prospects for the PR industry.

It shows gradually increasing PR revenues and agency profitability for the previous financial year. Partner Esther Carder predicts another year of steady growth.

Having survived four years of on-and-off recession, the PR industry feels battle-hardened and grimly determined to grow despite forbidding headwinds. Indeed PRWeek's league table figures suggest PR spend has avoided going into reverse since 2008. The toughest year - 2009 - was close to flat. But since then we have seen eight or nine per cent annualised spending growth.

This is being driven by two trends: the recognition by big firms that reputation is their biggest asset and needs to be nurtured; and the shift towards peer-to-peer, conversational marketing campaigns, which have grabbed share from advertising budgets.

These megatrends will continue in the post-Leveson world of 2013.

But another factor will change the shape of the industry next year. As large organisations have gradually realised the power of PR, they have bolstered their own comms teams. This is creating a shifting dynamic between clients and agencies.

So while spend will hold up overall, it will move into different areas. PR consultancies should plan for less outsourced external relations work, and more strategic 'sounding board' advice. Clients will also be looking for truly breakthrough ideas on creative content and customer engagement.

From this standpoint 2013 doesn't look like Armageddon. Instead it should be further progress in the post-recession battle, where brands and agencies continue to reinvent themselves at pace.

danny.rogers@haymarket.com

This article was first published on prweek.com