The agency sweet spot

Public relations, increasingly being called to the marketing table first, is shining in a broader advertising industry where margins are squeezed and pitches are getting tighter.

The future is earned, socially-enabled content, often built for specific platforms or devices, and public relations is well-placed to deliver.

In a challenging market, public relations has tended to be more resilient than the main business of advertising, according to industry analysts.

This is one reason why margins at PR units within the big advertising holding companies have improved in the last couple of years.

Another is the growing demand for earned media where third parties take up and adopt the thrust of a campaign, giving it currency beyond paid advertising. This includes the traditional news story via a mainstream publication but also now the growing universe of social media platforms, via text, audio and video.

This feeds into the stepped change in the way people now consume media. We’re all on our phones or other mobile devices, looking for authentic storytelling, a genuine piece of content that resonates with today’s life, information we can use, a social issue we can back, a movement to be a part of.

In dollar terms, these PR units, while smaller in dollar terms than the core advertising and media engines of the holding companies, regularly outpace other profit centres in terms of margins.

In Australia, WPP AUNZ’s Public Relations and Public Affairs has recorded margins as high as 24% (half year to December 2018), well ahead of the core Advertising, Media Investment Management. But PR is a smaller revenue base.

In the six months to June 2019, PR pulled in about $29 million with a margin of 16.6%, which was only beaten by Data Investment Management at 17.2%. The margin for Advertising and Media Investment Management — with sales of $236.7 million for the six months — was 9.9%.

For the full year in 2019, PR at WPP AUNZ had a standout margin of 20% on revenue of $56 million. No other business unit came close.

Jens Monsees, CEO of WPP AUNZ: “We are obviously happy with the current margin, but we want to foster growth.”

He sees PR changing like most

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