The good news first: the Swiss PR industry is on the upswing. According to the BPRA's market statistics, however, this only applies to the big players among the BPRA agencies: the top 5 Farner Consulting, Trimedia, Burson-Marsteller, Freicom and Communicators Zurich recorded growth of 5.1 to 7.4 percent in 2008 and generated net fee income of between CHF 4.4 and 14.4 million. The top 4 even took on new staff last year. Overall, however, only one in two of the 16 BPRA agencies achieved revenue growth in 2008, namely between 2.7 and 9.1 percent. Fee income stagnated at a high level in 2008: 255 employees generated a net fee volume of CHF 61.6 million (2007: CHF 61.5 million). And this is likely to continue: Only every third agency expects its fee income to increase in 2009.
The middle class is breaking awayMedium-sized BPRA agencies in particular have been dealt a severe blow by the economic downturn. Their turnover fell sharply in 2008, in some cases by double-digit figures. Of all BPRA agencies, Knobel was hit the hardest with a drop of 33.5 percent. One positive exception is the Basel agency Intext Communications, which recorded the highest fee growth of all BPRA agencies in 2008 at 9.1 percent.
"Medium-sized agencies now have to decide whether they want to grow or shrink," says BPRA board member Roman Geiser from Burson-Marsteller. "Full service no longer works because there are too many highly specialized small agencies. In the medium term, there will only be a few medium-sized agencies left in Switzerland." So the air is getting thin in the middle. Peter P. Knobel, owner of Knobel and President of the BPRA since 2006, considers the situation for medium-sized agencies to be very difficult. He himself is faced with the decision to grow his ten-man agency or to specialize in a niche with a small team. His gut reaction is naturally to opt for growth, but this is anything but easy with owner-managed agencies. "Owner-managed agencies have a special culture," explains Knobel. "Everyone works with everyone else and a lot of things go through the owner's desk, especially the acquisition of new clients." Of course, this only works up to a certain company size.
For owner-managed agencies, growth through an increase in personnel means that they have to implement a new corporate culture, new processes and possibly also new hierarchies. This is a development that the core team, which has worked together for years and is tied to the owner, does not necessarily support. An attractive alternative for Knobel is therefore a merger with another medium-sized, owner-managed agency. This would create a company with one turnover and a uniform external image, but two teams that function relatively independently of each other operationally. It is possible that such a structure will develop into the business model of the future for medium-sized agencies.
Small ones need specialist knowledgeLike the turnover of medium-sized agencies, that of small agencies is currently stagnating. Small agencies can only score points if they offer a high level of expertise and clearly specialize in a specific topic, such as pharmaceuticals or energy - two of the sectors that the BPRA predicts will grow. However, small agencies must be able to offer the full range of communication services. Even though companies are increasingly tending to allocate their budgets on a project-by-project basis, they still like to obtain their communication from a single source.
A head start in terms of knowledge and experience is becoming an important selection criterion for agencies of all sizes. "More and more people who have good PR know-how are working on the client side," emphasizes Roman Geiser. "PR absolutely has to follow suit. Training and professionalization will become increasingly important in the future." Because more and more highly specialized communication products are being created, functional expertise is particularly in demand, for example knowledge of investor relations, change management or media training. Some agencies surveyed by the BPRA also see themselves forced to focus on one sector. They rate the energy sector, politics, the real estate and construction industries as well as pharmaceuticals, biotechnology, medical technology and chemicals as sectors with good to reasonable growth potential. Unsurprisingly, from the PR professionals' point of view, financial service providers and, lagging far behind, ICT guarantee losses.
Battle for the bestThe demand for specialist knowledge also has an impact on the employees that the PR industry is looking for. Compared to previous generations, the next generation of PR professionals is under even more pressure to perform: the egg-laying, wool-milk sow - or PR all-rounder, as it is more commonly known - has always been in demand among young professionals, and that is nothing new. Now, however, young PR professionals should not only have excellent knowledge from their specialist studies and a high level of communication competence, but also be able to demonstrate sound experience with all communication channels. They should also be prepared to work on call due to the increasing number of project assignments.
It remains to be seen how realistic these demands are. In a market where knowledge is once again gaining in value, it is not entirely unfounded to hope that companies and agencies will at some point start spending money again to attract and retain proven experts. This is the only way they can stand out from the crowd. Eliane Birchmeier, owner of Birchmeier Partner and member of the BPRA Board, talks about the "war of talent". "Highly qualified employees, permanent investment in PR knowledge and familiarity with the latest PR tools will determine the survival of agencies in the future."
Speed increasesIn addition to the professionalization of PR, the BPRA has observed other trends: Agencies are receiving significantly fewer direct commissions. More and more often, they have to compete for budgets in pitches, and with increasingly shorter deadlines. "The importance of relationships and agencies' known market positions is decreasing," says Geiser. In addition, the budgets allocated for PR measures are shrinking noticeably as a result of the crisis and business is becoming more volatile. Companies are increasingly buying PR project capacities, consulting or strategy expertise on a selective basis. They are hoping that marketing communication will cushion the losses caused by the reduction in advertising. Another trend is the stagnation of internationalization. It is true that 9 of the 16 BPRA agencies are part of an international network. "Nevertheless, as in the previous year, there was no pronounced trend towards further internationalization of the PR business in 2008," emphasizes BPRA President Knobel.
Quality makes the best businessEven though the PR industry as a whole is anything but doing well, BPRA agencies recorded 26.8 percent higher added value in 2008 than market participants not organized in the BPRA. "This is a clear indication that the particularly demanding PR tasks are preferentially awarded to BPRA member agencies," said Roman Geiser. In 2005, the BPRA introduced the Consultancy Management Standard CMS II quality audit in Switzerland, in which dimensions such as project and campaign management, customer satisfaction, personnel management, leadership, corporate and financial planning and the development of new business are assessed. All 16 BPRA agencies are CMS II-certified, making Switzerland the country with the highest rate in Europe. "Obviously, the value of our certification is rated highly by companies and institutions," says BPRA President Knobel. "The federal government, federal government-run companies and the cantons require proof of CMS II or a comparable certificate as a prerequisite for participation in tenders." This is probably one of the reasons why the BPRA regularly welcomes new members, such as Jung von Matt/Public Relations and Pleon C-Matrix recently.
BPRA agencies and service providers are expecting double-digit growth in 2009. "I think this forecast is very ambitious," says Eliane Birchmeier. "But optimism is good for the industry." The BPRA experts agree that marketing communication will be the main driver of sales in the future. The prerequisite for this is unprejudiced cooperation with advertising. "The broader PR agencies are positioned in the future and the more integrated communication solutions they offer from a single source, the more crisis-resistant they will be," emphasizes Birchmeier. "PR agencies also need to question their pricing so that they don't lose smaller clients to PR service providers." In future, clients will demand one more thing from their PR agencies: proof that their PR measures are effective. New survey instruments will be needed to prove this - which will create new business areas for PR effectiveness research.
Anne-Friederike Wilhelm
BPRA diagramsBPRA in briefThe BPRA is an association of leading PR agencies that is affiliated to the International Communications Consultancy Organization ICCO. Since 1976, the BPRA has represented professional policy concerns, ensured market transparency and promoted quality in PR. The association offers its members a fee schedule, sample contracts, a checklist for competitive presentations and lists warning of clients who have had negative experiences with PR agencies. Every year, the BPRA also compiles audited market statistics that reflect trends and developments in the industry - and which are regarded as an early indicator of general economic development in Switzerland.