Wednesday, February 07, 2007
Council of PR survey says industry is booming again... especially for the small agencies
This survey interested me, mostly because the Council is usually a great mouthpiece for the bigger agencies in our industry. Yet the survey they released this week says that the real growth in the US agency business is set to come in the agencies below $4m in billings. These firms, the surveys says, are expecting to grow at nearly 20% this year, whereas average growth (presumably including the small high growth firms) is likely to be around 14%. If we take out the small firms that suggests the bigger firms are probably forecasting growth of around 10% which is still not bad. Now I know the law of big numbers would suggest that larger agencies may find it harder to grow at high rates but I wonder if this survey is telling us another story. In my mind there are several possibilities. First it could be that small agencies are soaking up the demand from all the small clients that big agencies don't want. This would make sense, especially if the economic data suggested it was the small businesses in America that are generating the real economic growth. But that last point doesn't seem entirely plausible given the numbers that have been put out by major energy, retail and tech companies lately. The second possibility is that clients are less excited by the big agencies. This seems possible but would not seems to match our Group's experience where the largest of our firms is seeing a very full new business pipeline. My last theory is that the market is simply very tight and this actually means that only those businesses that have people to do the work can get hired. The large agencies are quite happy to grow at a decent pace and hire accordingly. Smaller agencies are often happy to take the growth when it's there and given the labor laws in the US this means they can hire freely knowing that if things go against them they can relatively easily cut back, especially as smaller firms. Whatever, the real reason is it is great to see the industry so optimistic about its future.