Half of Australia’s small independent public relations agencies could close in the next five years, one of Australia’s most seasoned PR professionals has warned.
Savage: Half of the PR industry will be gone in five years time.
Delivering the closing keynote at the Commscon conference in Sydney yesterday Chris Savage, the former COO of STW Communications and founder of Ogilvy PR Australia, warned: “My view is that there are some 400 public relations agencies in the Sydney yellow pages – 90% of them have 10 people or less.
“I believe there in five years time there will be 10% that will be thriving. There be then 40% – so around 160 firms – eking out a living and the rest will have closed. Half of our industry will be gone in five years time.”
Savage explained that this view was built on the basis many of these agencies were failing to differentiate themselves, their product or their people, amid a climate of increased competition from other non-PR agencies.
“The small businesses that are not differentiated, that are not underpinned with technology, that can’t keep up with the changes that are happening will fall by the wayside,” said Savage.
“Here’s the bad news, the ad agencies aren’t scared of PR anymore,” he said citing the likes of creative agency The Hallway which has built up its own PR offering within the agency.
“Fifteen years ago they wouldn’t touch PR because we were the ‘dark arts’. Not anymore – it’s not that complex. Yes you have to bring a skill set but it is all merging and becoming the same sort of thing and they are not scared of it anymore.”
According to Savage too many PR agencies fail a key test of clearly enunciating the separates from their rivals.
“These smaller agencies that can’t add depth to what they are providing will suffer and fall away,” said Savage.
“What is your differentiator? You got to be good, you’ve got to be fast and be good value but what is your X Factor? What’s the one thing about you that stands you out from your competition as an agency?”
Savage, who since leaving STW has launched his own consultancy aimed at helping agency businesses drive growth, said it was important for leaders to be able to clearly explain their unique proposition.
“Superficial is ok,” he said speaking about how an agency builds its proposition. “It doesn’t have to be too in depth, but claim something. Everybody says the same thing but there has to be one thing that separates you from everyone else.
“There is a lot of turbulence in our industry. Conditions are perfect for PR companies, for in-house PR professionals to evolve and stay current and at the table.”
Savage also reviewed the competitive landscape in Australia and globally noting many people asked him which PR agencies did he see as market leaders.
“There are two companies who I think are setting the pace in PR globally and they are: Edelman and Weber Shandwick,” he said.
Savage also spoke about how he had spent time with Edelman in their New York office and looking at their work.
“I was astounded,” he said. “They were speaking a language I didn’t know, they had a mindset that I wasn’t having. These guys are setting the agenda on how modern day PR should work and how you should build your business and your team.
“The only company that Edelman talks about, as who they are worried about is Weber Shandwick. That’s who they are watching.”
He also reviewed the local competitive landscape and while noting his bias toward Ogilvy PR also singled out the likes of Weber Shandwick, One Green Bean and Sl.ing & Stone as PR agencies to watch, as well as media agency Atomic 212.
“In Australia it is a little bit different,” he said. On the Australian set up in my view, I know I was the founder of Oglivy PR – I was their first employee – and we built it into the biggest PR company in Australia and so I reckon Ogilvy PR is the one to look at as the leader in this market, as the one to look at, under the leadership of Kieran Moore.
“I think Weber Shandwick is on the way up here. I think in the last two years under the new leadership of Ava Lawler this is a business you should watch.”
Savage took aim however at Edelman noting the recent CEO change, saying: “I think Edelman has faded a bit in the last few years since Michelle Hutton left that role two years ago.
“However, they have a new person leading that business and by all reports that person has the knowledge the skills, the momentum, the chutzpah to take that business forward. That’s the multinationals.”
Savage also gave his view on other agencies to watch telling the room: “In the local scene you always have to watch One Green Bean.
“They are an amazing business and the thing about One Green Bean and I have met a lot of their people, Kat Thomas used to work in one of my agencies, they are smart but they are no smarter than anyone else. They don’t have brilliantly smart people who are way ahead of anyone else – they don’t.
“What they have is boldness. What they do is that they act bigger than they are – they dance with controversy, they push themselves forward and claim the spot at the big table and it’s that attitude that differentiates them and has underpinned their growth over the last few years.
“I also love what Sling & Stone are doing, if you know that business. I like it a lot. I love the ideas coming out of Atomic 212 they are not even a PR business but they are doing really well. I love what Zing is doing with virtual reality that is also something we all need to look into.”