NEW YORK—Independent PR firms W2O and Lewis both grew by 20% in 2013, driven in part by a sizeable uptick in digital work at the two agencies.
W2O increased revenue to around $75m, from $62m in 2012. The group has grown by almost two-thirds since 2011, when it reported revenues of $48m.
Once best-known for its WCG healthcare brand, W2O now has more than 150 people working in its analytics and data teams, and has launched several new digital-focused offerings in recent months, helping it win business from the likes of P&G and BMC Software and grow existing clients like Verizon and Medtronic.
Lewis PR, meanwhile, has forecast that it will reach $60m in fee income by the end of its July financial year, after reporting organic growth of around 20% for the 2013 calendar year. Factoring in the acquisition of Davies Murphy, Lewis grew 28% in 2013, led by digital and international business.
New Lewis assignments included traditional tech accounts like SAS, VMware and McAfee, along with consumer business from Spotify and Porsche Asia-Pacific.
Both firms pointed to their independence as the underlying factor behind growth, allowing them to reinvest in talent and infrastructure.
“We are in control of our destiny,” said W2O chief financial officer Tony Esposito. “We can hire against prospects, not just existing revenue.”
Compared to their publicly-held peers, furthermore, independent firms typically have more flexibility when it comes to profitability. For example, W2O has leeway to distribute 50% of profits to employees and make hefty infrastructure investments.
Yet, even for independents, balancing investment with profitability remains an ongoing consideration. “We don’t have to do it at the same level [as publicly owned agencies] but we still have to run a disciplined, tight ship too,” CEO Jim Weiss points out. “It’s not just fantasy-land.”
In 2013, W2O's key investment areas were analytics, digital healthcare and software as a service. This year, the group expects media relations to account for slightly less than half of its revenues, followed by analytics, digital and software/online content. In 2014 Weiss also plans to keep a close watch on the company’s culture to ensure it retains its talent and work quality amid growth.
Lewis chief financial officer James Oehlcke, meanwhile, noted that the agency’s commitment to reinvestment gave it an edge over publicly-held firms. “This is the key to our continued success. Because of the unique way we are funded, we have more investment at our disposal than companies three times the size.”
Lewis is aiming to expand via acquisition and affiliation this year, reinvesting the majority of its earnings in staff training, client service improvements and office upgrades.
The encouraging results from the two independent agencies come after Edelman’s DJE holding group reported organic growth of 12.9% in 2013, to $771m. Of that, Edelman grew 12% to $741m, while sister firm Zeno was up 39% to $30m. Edelman’s Asia-Pacific, Middle East and Africa region increased by 18%, while digital revenues grew 33% to account for more than one-sixth of agency earnings.
Recent years have seen growth at independent PR agencies outstrip their publicly-held peers, as analysed in detail by the Holmes Report/ICCO World PR Report.
Last week Omnicom Group reported that its PR firms grew by 1.5% in 2013. Interpublic Group, owner of a smaller set of operations, including Weber Shandwick and GolinHarris, again fared better — up more than 7.8% for the year. WPP is due to report its 2013 results next week.