Paul Holmes 20 Sep 2011 // 11:00PM GMT
Optimism about the future of the public relations agency business surged in 2011, as firms in most regions benefited from the beginnings of an economic recovery.
But there was a marked difference between the UK and continental Europe—where optimism remained at roughly 2010 levels—and other markets, where it increased dramatically, according to more than 200 agency leaders responding to our global rankings survey.
When asked whether they agreed with the statement that they were optimistic about the future of the public relations business in their own markets, respondents in North America were the most likely to agree strongly (an average of better than 8.5 on a scale of one to 10), just slightly ahead of their counterparts in the Asia-Pacific region (8.44) and Eastern Europe (8.13).
But responses were very different in Western Europe (7.57, up slightly over last year’s 7.14) and the UK (7.52, more or less unchanged), where agency leaders continue to suffer from the lingering effects of the global economic crisis.
While 29.4 percent of respondents in Western Europe cited general economic conditions as one of the major obstacles to growth (second only to the ability to recruit top talent on a list of 17 possible factors), just 7.4 percent of UK respondents listed the economy as a major obstacle. In the latter market, the ability to attract top talent was by far the most significant issue (cited by 66 percent of respondents, more than in any other region), with pressure to make financial targets or profit margins the second most pressing concern.
Globally, people issues continue to be the most troubling for agency leaders. The ability to attract top talent was cited by 52.6 percent of respondents as a major obstacle to agency growth, making it once again the biggest concern around the world, as it has been since we began to survey agency leaders four years ago.
When asked whether they agreed that there was a plentiful supply of talented people in their region, agency leaders expressed greater concern than last year (agreeing at a rate of 6.41, compared to 6.5 in 2009). Concern was particularly high in the Asia-Pacific region (4.92) and the developing markets of Eastern Europe and Africa & the Middle East (5.4).
The economy remains a significant concern, cited by 20.6 percent of respondents around the world: it was a concern for 28 percent in North America, despite the general optimism about the industry’s future in that market, and despite the fact that North American agencies are growing faster than those in other regions.
The number three concern, for the first time, is increased competition from other disciplines, which was identified as a major issue by 20.6 percent of respondents worldwide (respondents were allowed to select a maximum of three from the list). Concern about this issue was most widespread in Eastern Europe (33.3 percent) and North America (25.3 percent), and least troubling in the UK (14.8 percent), where it lagged behind competition from other PR firms (cited by 18.5 percent).
Despite these issues, most agency leaders around the world see encouraging trends that should hold the industry in good stead for the long-term.
For example, when asked whether they agreed that CEOs in their region “take reputation seriously,” the average score (on a scale of one to 10) was 7.6, about even with last year’s score on the same question. In developed markets, sentiment was even more positive: in North America, agreement with that level was around 8.1; in the UK, 7.8.
Agency leaders also agreed that companies are taking social responsibility more seriously (7.17 globally, up from 7.07 last year) and that they understand the need to balance the needs of shareholders with those of other stakeholders (6.99, up from 6.75 last year).
There was also some positive sentiment when agency leaders were asked whether they felt marketers were spending more money on public relations relative to other disciplines, up from 5.87 in 2009 to 5.91 in 2010—the second consecutive year of modest improvement. Again, optimism on this issue was most notable in the most developed markets: 6.67 in North America and 6.11 in the UK.
And when agency leaders were asked whether clients were willing to turn to public relations firms for non-traditional services such as corporate advertising, digital communications, and word-of-mouth, agreement levels were high (7.22) globally and even higher (7.79) in the US. That question was not asked last year.