Clients’ expectations of their public relations agencies are changing in the wake of the digital revolution and increased globalization. Clients have been increasingly looking for flexible and agile communication solutions that reflect their own operations, requiring a global and truly integrated business model for PR agencies.
Evolving client needs
These shifts have been a long time coming alongside changes in society and technology, forcing the industry to move away from its traditional structures and strategies. In 2018, a Forrester report titled ‘Agency Holding Companies Need a Brave New Business Model’, had already suggested PR holding groups should fundamentally rethink their organizational and operational structures in order to survive. PR groups have since been restructuring, “often combining agencies and aiming to build scale in regional hubs, rather than spreading themselves across multiple brands in smaller markets,” according to a recent PRovoke Media article.
But despite these efforts, the biggest industry players are still struggling to adapt to these client-changing demands, losing an important share of the market to mid-size and boutique agencies – most of the top 10 global PR agencies reported low single-digit growth in 2020 and single-digit declines in 2021.
Additionally, in 2021, of 77 US-headquartered agencies with revenue between US$1m – US$10m a year, those with built-in international capacity grew at more than double the rate of agencies with purely domestic offers or with hand-off arrangements to other agencies. It becomes clear that one of the drivers of an exponential growth is without a doubt an integrated global model.
Clients are turning to a more all-hands-on-deck approach that’s scalable and flexible. They need agencies that act as strategic partners, providing unique insights at scale, rapid-response crisis management, and strategies for growth in global markets. And they need to rely on their PR agencies to create and implement communications programs in multiple media markets— some in as many as 10.
This can only be achieved with a cross-border PR model and truly integrated teams where a single lead ensures full integration and efficient use of the same content across markets, local media specialists make sure that client insights and commentary are tailored to the cultural nuances, and the right technology ensures real-time collaboration. Within this model clients get the local expertise, the immediacy and intimacy of a regional team with flexible and agile access to an extensive agency skill set.
Where Innovation Happens
For a long time, any company that needed a multi-market PR strategy and program had two choices: go to the bulge bracket global agencies or string together several boutiques. The former is too expensive for what the client really needs, and most of that money is going to pay for what we call “stranded costs” and corporate overheads. The latter gets too expensive and cumbersome because the client needs to hire someone just to manage boutiques who don’t normally work together.
Nowadays, there is a third option. This third stream is where most of the innovation happens. It’s the hundreds of emerging new firms, with new ideas and integrated approaches, that can deliver large-scale PR campaigns in multiple markets. To maximize market share for clients who enter new territories, agencies need to adapt their communication strategies to local needs and audiences. Agencies also need to build agile and adaptive teams that can bring in new perspectives that challenge the status quo. These are the firms that are challenging the bigger players. That’s where the growth is for our industry. Meeting new, urgent, and important needs.
The big multi-nationals are realizing that their balance sheets are too weighed down with stranded assets that they can no longer afford if they want profitable growth. So, they’re divesting from a lot of their heritage global markets. That creates an opportunity for this new breed of multi-disciplinary groups can truly bring together the right mix of specialist capabilities and support clients’ global expansion in a budget-efficient way.