There were three significant events in the past week that indicate severe stress in the marketing services business. Publicis announced that its revenue for the year would be down 2.5 percent, causing its stock price to collapse to the lowest level in seven years (a one-day drop of 13 percent). Omnicom’s PR agencies reported a nearly 4 percent decline in revenue for the third quarter, while the rest of the company grew 2 percent. The global CEO of MSL left Publicis and the global COO of Porter Novelli departed Omnicom; neither of them was replaced. Meanwhile, the public relations function at Ogilvy, which hasn’t replaced its global CEO, has seen a significant decline in revenue over the past two years operating as part of the overall Ogilvy offer.
The greatest pressure for the industry was in North America, where continued reductions in marketing budgets are taking a toll on agencies. It has been rumored that one of the advertising industry’s long-standing agencies is down several tens of millions of dollars in revenue this year alone in the U.S., while job cuts continue at other major ad shops.
It is time for those of us who manage PR firms to stand and fight. No more retreating in the face of budget pressures and cutting our way to glory. Our industry needs reinvention, and we can be the ones to lead instead of meekly accepting our fate. Here are the component parts of an effective strategy:
- Promote and Protect—We have a vital differentiation in a time of populism and fake news. We understand how to turn difficult circumstance into learning experience. We also urge brands to do the right thing, to evolve the offer to increase sales of the product.
- Earned Creative—Trustworthy content, fast as the news cycle, social by design, purpose at the core, open to the community. This is a far superior means of reaching stakeholders, who are using ad blockers and opting out for Netflix to avoid paid creative.
- Data-Driven PR—We need to be able to target our content to those who will value it and enhance it. We just hired Yannis Kotziagkiaouridis from Wunderman JWT to build on our data and analytics knowledge, including our unique partnership with Cision and our capacity at Edelman Digital and Edelman Intelligence.
- Blended Teams—Brand, reputation, creative, influencer and digital talent need to work together. We have operated a series of vertical business units focused on specialty. That needs to give way to a more modern inclusive structure to confront complex problems for clients.
- Multi-local—We need to recognize the devolution of the global economy, which makes multinational brand positioning too static and vulnerable to disruption by smaller, national challengers. A global and local approach is necessary, for agility and relevance.
- Senior Talent Runs Clients—Get out from behind the desk and work with clients directly, instead of managing and being administrators. We have much shorter cycle times, which requires judgment based on experience.
- Employees as Most Important Stakeholders—With trust in “My Employer” outranking any other institution, there is a new expectation of CEOs to speak up on issues of the day. Employees want to be part of change; give them the information to speak credibly to their friends and families.
- Compete Directly with Ad Agencies and Digital Firms—We have to be increasingly full-service as others are integrating forward into our business as their own stagnates. Come up with your own creative, based on insights that are uniquely societal or crowd-sourced. Morph your talent so that you can advise on transformation or do brand strategy.
We are doubling down, making astute investments in senior talent, broadening the aspiration to communications partner of choice for companies and brands making substantive change. We are reiterating our position as the House of Trust, with the 20th edition of the Edelman Trust Barometer due in January. We need to push ourselves to do better work delivering tangible benefit, moving from softer benefits of reputation to harder skills of sales, employee retention, engagement and trust. Follow the mantra of French revolutionary George Jacques Danton: “Audacity, more audacity, always audacity.”
Richard Edelman is CEO.