Regional Market Outlook on Public Relations

  • The industry's geographic spread largely reflects the relative size of the states and territories, in terms of population and economic activity
  • Population and business numbers also influence the industry's geographic distribution
  • Large PR agencies tend to be located close to major advertising agencies in the cities
  • This is because many advertising agencies own PR firms, as well as the close association required for integrated marketing and promotional campaigns
  • The industry is mainly concentrated in New South Wales, with an estimated 34.2 percent of enterprises and 33.9 percent of industry revenue in 2018–2019, while Victoria accounts for an additional 25.9 percent of enterprises and 26.1 percent of industry revenue

trends-public-relations-australia-market

Industry Outlook: Opportunities and Challenges in the Canadian Advertising Industry

Opportunities

  • Industry profit has steadily increased over the past five years, due to strong demand
  • Activities, such as viral video production, have blurred the line between PR and advertising
  • Larger players are forecast to gain greater economies of scale through mergers and acquisitions

Challenges

  • One of the biggest issues the PR and communications industry has been grappling with for the last few years is talent, from recruiting juniors to retaining highly skilled and well trained employees

Drivers and Constraints

  • About 13 percent growth in average consultancy revenue compared to 2016–2017. This is the largest annual revenue growth in the last 10 years
  • Firms planning to grow are forecasting a future growth of 15 percent, on an average

Drivers

Demand from advertising agencies

  • In Australia, a considerable amount of PR spend comes from advertising agencies. This is because many advertising agencies own PR firms, as well as the close association required for integrated marketing and promotional campaigns

Demand from internet publishing and broadcasting

  • The industry is expected to grow significantly over the next five years, with increased internet connectivity and speeds and growth in online news content and PR

Total business profit

  • Corporate profits in Australia rose by 0.8 percent to an all-time high of A$ 90.06 billion in Q4 2018

Constraints

Talent crunch

  • One of the biggest issues the PR and communications industry has been grappling with for the last few years is talent, from recruiting juniors to retaining highly skilled and well trained employees.
  • Agencies are recruiting from competitors, due to lack of skilled resources in the industry. Mid-level talent is cited as a major concern in North American agencies

Constrained PR budgets

  • Client-side budgets increased by an average of just 3–5 percent in 2017, and budgets are expected to increase even more slowly during the next five years, by roughly 2–3 percent per year. This is mainly due to the difficulties in measuring and evaluating the results of any of the PR campaigns

Porter’s Five Forces Analysis: Australia

Agencies are trying to improve their service capabilities (especially digital services such as social media and digital content creation) to offer a holistic service portfolio to buyers. This would further create competition among PR agencies, which would increase the buyer power

Supplier Power

  • Fragmented Supply Base:The PR firms industry is highly fragmented, with the majority of companies operating on a local or regional basis, to cater to local businesses that require PR services.
  • Low Market Share Concentration: The top four companies are expected to make up just under 30 percent of total revenue.

Barriers to New Entrants

The PR Firms in Australia have low level of barriers to entry. Among the 1,000+ PR agencies 82.9 percent of employ one to nine workers.

  • Competition - High
  • Concentration - Low
  • Life Cycle Stage - Mature
  • Capital Intensity - Low
  • Technology Change - Medium
  • Regulation & Policy - Low
  • Industry Assistance - Low

Intensity of Rivalry

  • Number of Agencies: The industry has a high level of internal competition, due to the large number of PR agencies– 1000+
  • Cross Domain Relations: There is high competition among the agencies. PR firms have links with advertising agencies in developing integrated promotional solutions for their clients.
  • Basis of Competition: PR Agencies in Australia primarily compete on the basis of client service, overall quality of the work, ability to meet deadlines, stability of staff, attention to detail, quality of writing and creativity.

Threat of Substitutes

Cross Domain competition: Companies in the industry compete against marketing agencies, management consultants and advertising agencies, which have increasingly diversified their service offerings. Advertising agencies have primarily acquired PR firms in growth areas of social and mobile media to offer clients integrated solution for communication needs.

Buyer Power

  • New Regulations: Rolling out of new banking and finance regulation has been continuing since 2012, banking and finance firms have sought PR firms to lobby government and maintain regulatory affairs.