This week’s “merger of equals” (we’ll see how that turns out) between global ad giants Omnicom and Publicis shed light on how public companies can become conglomerates, essentially holding companies, for ad agencies. The same is true for PR, as several national and global public relations firms are owned by public companies, even while often operating under brand names established by their founders. These firms employ some really smart and talented professionals and work with clients with some of the best brands (or the biggest issues) on the planet.
But the new level of awareness of public companies owning dozens of agency names that this merger brought should make those who purchase PR services stop and think about with whom they are doing business. Ideally, at privately-held, independent firms, business culture and client service must come first. If you do those things well, we really believe your firm will enjoy financial success. But I can’t imagine having to do what we do every day in a public company environment. How could we possibly truly focus on making our clients happy when the top business imperative must be to make Wall Street happy? How could we truly focus on strategic communications results when the top business priority is to “hit the numbers” with financial results to meet or beat analysts’ expectations?
In advertising, perhaps it works because of the revenues and margins possible with national and/or global clients. But in PR in recent years, we have seen clients become more cost sensitive, more attentive to time-absorbing tactics that big firms have historically employed and more interested in value-added services than battalions of “arms and legs.” All of the trends we see should be making the publicly-owned firms nervous.
Looking at other types of professional service firms, the largest law and accounting firms are privately owned by professionals themselves. They build their businesses on service and trust and keep profits to themselves. That seems to be a model that will also best serve the public relations business into the future.