WPP and Omicom post poor PR results for Q1 – why?

The two largest marketing services companies in the world, Omnicom and WPP, posted poor results this week for their first quarter activities. Both saw some significant declines in revenues and both pointed to weakness in their PR businesses. In normal times I’d take some pleasure in such results but in these times I don’t. I’d prefer to see an industry that is proving resilient in this economy. Of course you could argue that the drop in PR sales is to be expected given the overall slump in the economy. You could also argue that PR is doing relatively well. Unfortunately in both cases, they made the opposite point – namely that PR was actually doing worse than some other disciplines such as advertising. This really makes me scratch my head. When marketing budgets are tight it doesn’t make sense to spend on advertising versus PR. Every piece of data I’ve seen says PR is more cost effective than advertising. So why are some companies doing this? Here are the reasons I can think of:

1. Ad agencies are doing a better job of showing their digital credentials
2. Ad agencies are doing a better job of using metrics to show the effectiveness of their campaigns
3. Ad spend may have been committed in Q1 and therefore harder to cut than discretionary PR projects
4. Some businesses may have already cut advertising out of their mix, thus leaving PR as the only real choice
5. Of course it could also say something about their PR agencies versus their ad firms

Put another way I wonder whether the Q2 sales of these groups will be more revealing in terms of real trends in PR versus advertising. I guess we’ll see.


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