What is wrong with the big, global, holding company-owned, publicly-traded public relations firms? That’s a question I’ve been asked several times this week, in light of our latest global ranking of public relations firms, which we published over the weekend. Our data show the industry growing at a very healthy 8 percent—but the big holding company PR operations (Omnicom, WPP, Interpublic and others) grew by just about 6 percent, four points less than their independent counterparts. And those firms are not performing much better in 2011. Interpublic, parent to weber Shandwick and GolinHarris, continues to impress (PR revenues up 9.5 percent in the first half of the year) but Publicis (parent to MSLGroup) was up just 5.6 percent; WPP (Burson-Marsteller, Cohn & Wolfe, Hill & Knowlton, Ogilvy) about 5 percent, underperforming other disciplines; and Omnicom (Fleishman-Hillard, Ketchum, Porter Novelli) is basically flat, with growth under 2 percent. This sluggish performance is surprising, because it comes at a time when most analysts agree that public relations is winning an increased share of marketing budgets, mostly because of its ability to manage digital and social media campaigns designed to engage consumers—a trend this publication has discussed at length. And many of the big holding company owned agencies insist that they are benefiting from this shift in marketing spend. So what are the possible explanations for the difficulties of the big agencies (independent Edelman obviously excepted)? One is that several of these agencies have significant exposure in the EMEA region, where the recovery is currently weakest. That’s particularly true for smaller holding companies Chime and Huntsworth, both of which reported minimal growth in the first half of 2011, but also to a certain extent for WPP. Another is that the independent firms are self-selecting for strong performance (weaker firms being less likely to provide numbers). But one also has to wonder whether the holding company ownership structure has something to do with it. Several of these holding companies have invested in building dedicated digital and social media firms, and it’s not inconceivable that many opportunities that would otherwise go to PR firms are being funneled into specialist new media firms. It’s also possible that advertising-dominated holding companies question the need for PR firms to develop extensive content-creation capabilities, seeing that as a duplication of capabilities already existing at ad agencies and other “creative” businesses. In other cases, when “ownership” of a particular channel is disputed, holding company PR firms could be losing out to (or sharing business with) sister agencies. Finally, it may just be that the financial strictures that go along with being part of a publicly-traded companies put those firms at a disadvantage when it comes to making long-term investments. Independent firms can accept a year or two of low single-digit profit margins in order to hire talent ahead of the curve, or build out digital and social media infrastructure. That’s more difficult when a holding company CFO and the shareholders he serves are demanding margins of 20 percent on a quarter-by-quarter basis. Not surprisingly, holding company leaders insist that none of the above factors are a problem. Most of them—in public at least—continue to sing the praises of their parent companies and insist that the benefits (the ability to pitch for giant, integrated business) far outweigh any disadvantages. But that view is increasingly difficult to reconcile with the numbers. Perhaps there is something to learn from IPG, the one holding company that seems to be matching the performance of the sector as a whole. What’s different there is that Harris Diamond, Weber Shandwick’s CEO and a public relations professional by background, is a significant player at the holding company level, with a portfolio that extends beyond PR and a direct line to the C-suite. That may give him a freedom to argue assertively for PR’s autonomy and authority that most of his peers don’t have. My suspicion is that the big holding-company owned agencies may not need to become independents in order to compete, but they certainly need to act more independently.