The CEOs of the world's largest public relations agencies have weathered the downturn better than their advertising counterparts and are forecasting an upbeat financial future even as the larger ad industry takes a beating.
Richard Edelman, CEO of Edelman, said his firm has clawed back about half its pandemic-related losses. BCW's Donna Imperato projects a mild revenue decrease in the low single digits this year. And FleishmanHillard's John Saunders said he expects the agency to have its "best year" in terms of profit.
"They need PR to help them through crises and they need strategic consulting versus going out there with 'rah rah' ads when people are not purchasing products," Imperato said.
Crisis has been good business for PR firms
The pandemic has been a boon for PR firms as CEOs call on them to help with situations like communicating to their employees on health and safety issues and reassuring shareholders on their recovery efforts. PR firms have seen this uptick before, during the #MeToo movement and increase in shareholder activism.
An Edelman spokesperson said its crisis assignments more than doubled over the past year. FleishmanHillard launched a new offering called recovery and resurgence in response to pandemic-related concerns from its clients.
PR agencies hope this uptick in crisis services will last as they show their value in helping protect corporations' brands and shareholder value.
"The coronavirus situation helped client see the real value of having a strategic consultant with an earned media legacy," Imperato said. "[We work on] reputation and everything critical to a corporate brand and can execute through every channel like paid media advertising to e-commerce to earned and digital."
PR firms have also reported increased demand from firms looking for help on their stances around race-related matters in the wake of Black Lives Matter protests.
FleishmanHillard launched its own diversity, equity, and inclusion offering, True Mosaic, in June, and it's worked with more than 60 clients. Edelman's team for race justice issues has had more than 400 engagements since the Black Lives Matter started with clients like Good Humor, Dove Men + Care, and Mutual of Omaha. BCW created what it calls a Polycultural Consulting Unit to work with clients in industries like consumer electronics, consumer packaged goods, pharmaceutical, technology, and wine and spirits.
"We're going to need to staff up because the [polycultural] team isn't large enough to meet all the requests right now," Imperato said.
PR agencies are taking aim at ad agencies with new creative and digital arms
In another example of how the lines between PR and advertising are blurring, PR agencies are pushing into new areas of business like ad creative and digital work that's traditionally done by ad agencies.
Edelman is trying to grow its advertising business by hiring ad agency veterans like Judy John and has won some business in the pandemic as clients halted traditional marketing and wanted to show how they were helping people in need.
WPP-owned BCW in 2018 acquired a 200-person creative and digital firm called HZDG and over the past year, has focused on creating an e-commerce team that's pitching the ability to build websites and apps for clients and run performance media campaigns.
FleishmanHillard is expanding beyond its core corporate and media relations services, hiring digital and creative executives to work with its account teams and pitch new services like design and production.
"I would like us to be able to win more creative work from our existing clients and build a melting pot for new opportunities," Saunders said.
These same CEOs expressed some caution about their business outlook, saying if coronavirus cases continue to rise, clients may pull back on PR campaigns.
It's also unclear how much market share PR agencies like Edelman can win from advertising agencies that have traditionally dominated.
Greg Paull, principal at R3 Worldwide, which runs ad agency account reviews, said his company has included Edelman in a "number of large-scale local and global reviews" because the agency has significantly improved its creative offering in recent years, hiring big-name talent.
"In the end, marketers want big thinking and innovation that will drive business outcomes for them – they don't care if it comes from an advertising agency or an agency historically strong at PR," Paull said.
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