What PPC ad spending can tell you about the UK PR sector and other digital tales

As part of a recent SEO analysis of the websites of PR Week’s Top 150 agencies (*), we found that only 37pc of them contained the keyword term “PR” in their home page titles. And barely 15pc used the term “public relations” (a fairly bog standard SEO technique).

We then realised that many firms referred to themselves as communications agencies and/or consultancies. So perhaps they were optimising on these terms?

Nope. A mere six agencies had either of these terms in their page titles.
You might argue that PR firms are using other terms to optimise around. But it doesn’t take much analysis to realise that most PR Week top 150 agency websites pay little or no attention to SEO.
But do they need to optimise their sites? Perhaps they will rank highly on Google in any case for standard industry keyword terms?
At first blush, this looks plausible. For example, for the term “communications consultancy”, Hanover, FD and Freud occupy the top 3 slots. And the term is searched for 29 times per day in the UK on a broad match basis.
But perhaps, these PR firms (and others) are missing a trick?
For example, on the term “communications agency”, no single top 150 PR firm ranks in the top 10. And with the term being searched for 217 times a day in the UK on a broad match basis, that is a lot of potential click throughs (and business) going elsewhere.
But are agencies making up for lack of natural search rankings by using Pay Per Click advertising?
Again, no. We estimate that around 60 companies spent money on Google Adwords around the term “communications agency” in the last 12 months. But not one of them was a top 150 PR firm. The same applied for the term “communications consultancy”. (Even those firms that are using PPC seem to be doing so in a fairly crude manner – they don’t test different ad copy and rarely provide a dedicated landing page).
So what does this all mean? Are top 150 PR firms failing to invest in their own SEO and PPC approaches because they don’t know how to do it? Or because they don’t think it is worth the effort?
Or does it say more about the clients who buy PR services? In other words, PR firms are sticking to non-SEO/PPC business development because they’ve tested it and found that this isn’t the way that their prospects decide how to choose a firm?
Perhaps. But even if this were the case, surely client side PR buyers are still looking to PR firms to give them genuine digital communication insight.
According to a joint PR Week/Brands2Life survey from December 2009, 54pc of communications directors think that their key challenge for 2010 is executing a digital strategy. On the agency side, you’d be hard pushed to find one that doesn’t tout its digital capabilities. For example, the following, taken from a top 150 PR agency site, is typical of what you will find in most PR firm’s marketing collateral:
“Search engine rankings are key to increasing the reach and visibility of your activities online. We optimise content across a range of formats for search engine visibility, from press releases to video content. We also ensure any new campaign is designed with natural search results factored in, to ensure that the right content is ranked and easily accessible.”
In which case, what are clients to make of the fact that most of the content on top 150 PR web sites is patently unoptimised. Or betrays a lack of understanding of other elements of the digital marketing mix such as PPC?
If the PR sector is to take a lead on digital communications, it needs to provide better evidence it can provide clients with the most rounded advice on executing a digital strategy. Its own backyard might be a good place to start.
(*) I’ll happily email the full SEO analysis of the PR Week top 150 to anyone who asks me. Nicely.

An alternative look at the PR Week Top 150 League Table

PR Week published its annual top 150 rankings of UK PR firms a few weeks ago. Adam Parker at Realwire has already produced a good analysis of the figures. I thought I’d throw in some further analysis to try and draw a clearer picture of the state of the UK PR industry.
First, some top line figures. Based on PR Week’s league table, the top 150 UK PR agencies in 2009:
Generated £814 million in fee revenues
Employed 7790 people
Worked on 5683 client accounts and 7154 client projects
Had an average monthly client PR retainer of £6K

In terms of this last figure (and others), I used a rule of thumb that says 80pc of agency fees come from retainer work and 20pc from projects. Clearly this will not apply across the board. Indeed, given the economic climate of the last year, it could be argued that project work should occupy a higher share of total revenue,  And looking at the number of projects that some agencies worked on, it would seem that perhaps even the majority of fee revenue came from projects.
Taking all of that into consideration, the 80/20 split at least provides a starting point for analysis.
On that basis, we arrive at an average monthly client retainer fee of £8K. However, it is worth qualifying this. First, given my rule of thumb, one agency skews the results hugely. According to the PR Week league table, Axon Communications only has one client – but on my ROT, this would provide an average PR retainer of around £179K per month. If we remove Axon from the list, then the average monthly retainer drops to £6K per month.
Next, let’s look at some other performance metrics.
1. Fees per earner
Fees per earner has been a standard metric for evaluating the relative performance of PR firms for decades. Looking at the PR Week figures for 2009, the fee per earner leader board clearly shows that financial PR is the place to be:
Agency                  Fees per earner (£000s)
Brunswick                   280
Finsbury                      280
Maitland                      280
WCG                              235
Financial Dynamics   190
Buchanan                     190
Gavin Anderson          190
Citigate Dewe Rogerson 171
Bell Pottinger Group* 159
Galliard Healthcare Communications 157
WCG is an anomaly (see below).
Of course, profit per earner would be an even better metric, but short of trawling Companies House for the data, the  fee per earner ratio is the one that must suffice for the moment.
Here is the bottom of the fee per earner table:
Agency                 Fees per earner (£000s)
Iris PR                    50
Wolfstar                 50
Bellenden              50
Luchford APM     50
Quantum Public Relations 45
GyroHSR/ Woolley Pau PR 41
Radio Relations 40
Finn Communications 29
Kenyon Fraser 28
ICE 22
Some immediate caveats. In a number of cases, PR fees represent only a proportion of total turnover ie the firm makes money from non-PR fee related activity and the staff numbers refer to the business as a whole. So the fee per PR earner ratio is clearly higher. (However, it does beg the question as to what percentage of total turnover devoted to PR should qualify a firm for entry into the league table).
Also, a number of these lower fee per earner agencies are based outside of London – so may argue that a lower cost base allows them a lower than average fee per earner ratio.
2. Ratio of staff to clients/projects
This metric takes the total number of clients and projects an agency works on and divides through by the total number of staff.  In theory, it should give an indication as to the average number of clients and projects that each agency employee has to deal with. Again, this comes with a number of caveats. Clearly project type, length and budget will vary enormously from agency to agency. Having said that, it is at least an attempt to provide some kind of indicator on agency workload. Combined with fee revenue, it gives a picture of which firms may be performing better than others.
Agency                            Client/project staff ratio                    Change in fee revs 09/08
WCG                                                       33.33
TVC Group                                            14.41                                           -8
Radio Relations                                    11.25                                             2
Grayling Communications                   6.87                                          -22
PPS Group                                               6.71                                            -31
The Reptile Group*                               6.27                                              -7
The Outside Organisation                    6.                                                  2
FWD                                                         5.50                                             -10
The PR Office                                         4.8                                                0
Myriad Public Relations                      4.                                                -3
Again, WCG should be treated as an extreme outlier.  One thing to note though is that nearly all of the agencies with high client/project to staff ratios saw revenue drops.
Odd curiosities

WCG (rank 138) employees only 3 staff according to PR Week – which leads to some anomalous results. Namely, its fee per earner figure is 235K. It also means it has the highest client/project to employee ratio of 33.33.
Grayling stands out for the huge number of client projects it worked on in 2009: a total of 965. Coupled with retainer clients of 430, that’s a total of 1395 clients and projects. Based on my rule of thumb, the average Grayling client is paying around £2K per month. If they are paying more than this, then the average Grayling project is going to be around £1 – 2K.
Axon Communications
According to the PR Week table, Axon only has one client – but generates fee revenue of £2.6 million. Even allowing for the fact that project work may represent a larger than average share of revenue (41 projects), that still suggests that one client represents a large slug of revenue.
This is only a cursory analysis.  As ever, I’m always grateful to PR Week for producing the baseline figures. I’ve no doubt that further insight can be gained into the health of the sector and individual firms with more scrutiny.
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