How COVID-19 is affecting the PR Market in the UK and beyond?
Updated: Oct 30, 2020
COVID-19 sadly is having a serious negative impact on the public relations market in the UK. The dynamic PR Industry is suffering from greatly reducing budgets, while agencies are trying hard to avoid staff reductions and/or closing offices around the globe. Without a doubt, COVID-19 handles its negative publicity quite well.
Recently, advertising giant WPP – the world’s largest advertising company – launched a £2bn+ savings plan to support its balance sheet in the face of the COVID-19 pandemic, and after their revenues in China slumped by 23%. Other measures to tackle the coronavirus slow-down across the industry include postponing staff salary increases and a hiring freeze. WPP also revealed that since March this year their clients have been cutting advertising budgets as the virus has spread globally.
On 15th March, Omnicom Group initiated a global work from home policy. Following this, the agency’s CEO John Wren announced to staff that the agency has observed improvements across its Asian markets, particularly China and Singapore after lockdowns have ended and employees are getting back to work.
In contrast, McCann Worldgroup CEO Harris Diamond assured staff that the agency will continue operations while reaffirming their commitment to employee health.
But the COVID-19 worldwide pandemic does not just hit PR professionals with ‘safe’ jobs at reputable agencies. Freelance workers in communications are struggling to make ends meet, with about half considering changing their job and the majority unable to claim the government’s coronavirus package to help the self-employed. Since the Government put the UK into lockdown, 50 per cent of freelancers polled have lost at least 60 per cent of their income, with a staggering 33 per cent reporting that their income has been slashed by 80 per cent or more, according to a research study conducted by The PR Cavalry and Intuit Research.
A survey from #FuturePRoof has found that access to domestic customers (57.4%) and loss of income (80.9%) are the biggest immediate challenges across the PR agencies facing COVID-19 global pandemic, while more than a third of respondents (31.3%) are worried about the cessation of trading.
“Unfortunately, fear took control over small and medium-sized companies in the United Kingdom and they have stopped or limited spending on PR, furthermore also corporations are reducing those expenses. Five of our potential corporate clients told us to contact them about cooperation only after the pandemic. All this, unfortunately, is not optimistic and not only hits the PR industry but also business as such. In my opinion, the more we are afraid of the virus, the more anxious decisions we make and this is to the detriment of not only business but also individual consumers who will lose jobs as redundancies will be inevitable. In my opinion, we should be more rational in our decisions, especially big corporates that have cash reserves to carry on PR activities, but now they have to choose wisely.” Matylda Setlak, MD of Polish All 4 Comms agency
Although access to the latest technology and video-conferencing solutions, as well as decentralization of the teams working remotely, means that some PR agencies are still able to maintain an effective workflow and employee morale.
“The technology sector is certainly being impacted although like the broader economy there are winners and losers. We’ve always had a decentralized team so it is business as usual in terms of workflow and we are optimistic that we will benefit as clients seek greater efficiency,” Toby Walsh, Director at TWPR
Surprisingly, COVID-19 has not changed much when we speak about bilingual PR agencies that are often working across the multicultural borders. It appears that they are better able to handle their workflow without drastic organisational changes and/or decrease in performance. These kinds of PR agencies are generally working across different markets, providing a more diversified portfolio of clients (and income), helping maintain spirits have greater ‘room for manoeuvre’. Even if UK and China relations have been affected due to the government’s lockdown – COVID-19 does not necessarily mean that the business of these bilingual PR consultancies is put on hold, surprisingly they manage their ‘pandemic’ workflow relatively easily – potentially through their build-in resilience thanks to a greater ability to adjust their business strategy across usually at least few markets. Carol Chan, Managing Director of Comms8, says:
“The post-COVID-19 world realizes the economy had heavily relied on China money in the past 10 years. With the pandemic hit China, the hospitality and travel industries were the first to suffer as Chinese tourists stopped travelling abroad. The luxury industry, which 40% of its revenue came from Chinese consumers last year, faces its biggest threat since the 2008 financial crisis. Cross-border trade between the UK and China was halted for almost two months back in February. British brands struggled to export goods into China as Chinese consumers were not in the mood to consume, and warehouses and retailers stopped operating due to lockdown. These impose extraordinary uncertainty on brands, particularly the consumer-facing brands, to continue any marketing campaign and secure budgets in this challenging time. However, technological and B2B brands are more resilient in this climate and continue to invest in growing the Chinese market. As an independent communications consultancy, we are fortunate to have a diversified client portfolio and agile teams across continents to keep our business and operation robust.“
In contrast to the opinion above, Mark Pinner, Managing Director for Interel China sees the COVID-19 impact as a struggle for PR agencies across the world. This starts with cost-cutting while trying to keep high-performance productivity while avoiding making staff redundant. Furthermore, business travel is heavily restricted if not completely stopped, which disrupts new business development especially when there is a need to communicate face-to-face.
“Looking at Asia, although China – and the region more broadly – is recovering from coronavirus earlier than markets in the West, the economic damage has nonetheless been considerable and agencies are struggling across the region. Many clients are under pressure to cut costs: their top focus is on maintaining their business and not laying off employees. Furthermore, a longer-term issue is a difficulty in business travel: this is hampering foreign-invested enterprises that need visits from experts and senior executives based abroad. This impacts agencies, as these visits form the basis of communication opportunities. However, there are a few bright sides: businesses in telecoms or e-commerce, for example, while associations and professional societies are affected less than most commercial enterprises.” Mark Pinner, Managing Director of Interel China
It is unsurprising that COVID-19 has hit the public relations market in the UK and beyond. Press relations cannot stand stagnation and COVID-19 is effectively putting media relations on hold. The direct impact of COVID-19 on small PR agencies may be disastrous, especially if concerning B2B PR consultancies with a limited portfolio of clients. Furthermore, much will depend on agencies’ ability to organise work remotely without losing performance: delivering the same exceptional service to the client.
However, there are still some industry’s sectors that have been less affected by a coronavirus. There is an increasing demand for PR services specialising in certain sectors such as heavy-focused B2B technology, e-commerce, telecoms, pharmaceuticals, and of course crisis communications. PR agencies will soon feel a desperate need to act boldly, especially if clients’ brand perceptions have been badly affected by COVID-19. Clearly this nasty virus did not hire any public relations agency yet and it handles its negative publicity quite well so far. This article has been initially published across the Polish Prowly Magazine - see below: https://prowly.com/magazine/public-relations-market-covid/