Martin Sorrell’s WPP Group disappointed the City on Friday with 3rd quarter growth of just 5%, but PR was one of the strongest performing divisions with an 11% increase in revenues to £157m. WPP’s vast portfolio of agencies includes the likes of H&K, Bell Pottinger, BM and Cohn & Wolfe. The Guardian reports that Sorrell is attributing the high growth to social networking. Not PR 2.0 as such, but rather that the attention being paid to social media has apparently highlighted to clients the power of independent editorial, which in turn has boosted PR spend overall.
Sorrell claims that,“Social networking is really recommendation between people about the things that they are interested in and they like… this has stimulated people’s attention in terms of the importance of PR. The people who are going on these sites didn’t want to be monetised, they didn’t want to be advertised to, so again editorial communication is so powerful, they would rather be communities that can exchange views that are untarnished.”
It’s an interesting analysis, but while being in agreement, I think the social networking story is just a small piece in the far wider and more fundamental battle raging between PR and advertising spend. I do love the bit about ‘untarnished’ editorial though, perhaps he was being deliberately ironic?
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Agreed. Nice to see PR revs rise (wonder what the profit margins on these are – even at 10pc that’s only £15m to the bottom line globally) – but it still constitutes a small proportion of WPP’s total revs (11pc?) – that’s the challenge for them (and other large marketing service conglomerates) – the vast bulk of their revenue and profitability still relies on “old media” marketing – which is the very antithesis of the social media approach. Even if social media driven PR revs grew like crazy it would be at the expense of the old cash cows – it will be a difficult but intriguing balancing act for WPP and their ilk.
Comment by Andrew Smith October 22, 2007 @ 6:59 pmI agree Andrew, I think Sorrell seems to partly understand this given his acquisition of 24/7 Real Media and his rumoured interest in digital agency Blast Radius, but its unclear whether he is moving fast enough to keep up with the change. Also is his strategy to expensively acquire new skills rather than instigate a revolution in the hundreds of companies already under the WPP umbrella?
Comment by daljit October 22, 2007 @ 7:39 pm