Public Relations

Public Relations Market Analysis and Global Outlook

• The global public relations market size will grow from $100.39 billion in 2022 to $107.05 billion in 2023 at a CAGR of 6.6%.

• The independent firms continuing to outperform their publicly-held peers although publicly-held firms account for more than 40 percent of the overall global market.

• This growth is mainly due to the companies rearranging their operations and recovering from the COVID-19 impact and Russia-Ukraine war. Other key factors influencing market growth include cost reduction initiatives by companies and workforce planning along with introduction of digital transformation strategies to navigate the technology advancements.

Public Relations Global Market Maturity

• The public affairs agency and specialty market (agencies specialized in a particular PR service area or business sector) in Latin America is still in the evolution phase, with the presence of very few specialized PR agencies

• The major challenge in European and North American markets is to find and retain critical talent at a time when the need for talent to manage specialized areas, like digital PR, is increasing

Public Relations Industry Trends

• The North American and European markets for PR are mature, with ongoing mergers and acquisitions to increase geographic reach, industry-specific expertise and service execution expertise in areas such as media relations and digital and social media

• As expectations increase for demonstration of return on investment for all communications spending, there has been (and will continue to be) an increased focus on measurement and evaluation, where most of the buyers are investing 5–7 percent of their PR budgets in measurement. However, measurement and evaluation remains a weakness of the industry overall, and buyers are looking for improved methods for PR to be viewed credibly by other functional departments, such as marketing, sales and financial

• Acquisitions or new strategic alliances and partnerships have been robust in the Latin America and Asia Pacific regions, The PR industry has been growing significantly, especially as consumer buying power has been rising in developing markets

• Recent geographical expansions of PR agencies reflect a trend that indicates that buyers are looking at reducing roster size and want to have global contracts with incumbents

Public Relations Industry Drivers and Constraints 

Buyers are looking to work with their incumbents to create measurable Key Performance Indicators (KPIs), which take into account both quantitative and qualitative variables. However, the difficulties in measuring and evaluating agencies would remain a major constraint for the PR industry

Drivers

Rapid Use of Social Media:

• Increased adoption of social media is leading to increased spend in digital PR, with earned media being the dominant revenue driver

Increase In-house PR teams:

• A few of the top Brands are building PR teams internally that address most of the requirements of the Brand via traditional and digital mediums with an objective of building reputation among various stakeholders

Rise in Technology Adoption:

• The PR industry is experiencing changes in response to new technology, expansion of new communication channels and greater use of data analytics

Constraints

Talent Crunch: PR Firms are not Mastering Digital and Other New Technologies

• There is a growing need for diverse talent among resources to meet the PR agencies’ demand for skilled resources in digital mediums

• Digital agencies are increasingly preferred over PR agencies for any of the digital PR requirements, due to the PR agencies’ lack of digital expertise

• In North America, agencies are recruiting from rival firms, due to the 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 are expected to decreased by an average of just 3–5 percent in 2023, and budgets are expected to decrease even more significantly during the next five years, by roughly 1–2 percent per year. This is mainly due to the ongoing inflations as well as difficulties in measuring and evaluating the results of any of the PR campaigns

Sourcing Models: Comparative Analysis

• The sourcing model would differ based on the type of PR service and the objectives of the PR campaign. For certain specialized services, such as digital PR and public affairs, buyers look at following the unbundling approach

• Adopting a selective sourcing and unbundling approach provides the buyers with maximum cost-saving opportunities with no execution risk and higher quality